Sri Lanka is a major player in the Indian Ocean and it holds the highest GDP per capita in South Asia. It also has serious competition on all fronts, however. According to your personal experience, how do you see Sri Lanka’s industrial and economic landscape evolving in the next five years?
The next five years are going to be unpredictable and it is going to be difficult operating in the current economic environment. Covid has impacted the industry and our management practices have not been good enough to put the country on the right path, which is why we are seeing economic stagnation. Also, the external value of our currency is decreasing rapidly posing a lot of challenges to the local industries.
Two of the main problems we are currently facing concern raw materials and energy security. This situation is the most volatile that the country has ever seen. It is very difficult to make solid predictions for the evolution the next five years, we need proper policies and programs to be put in place or the country’s economic situation will probably worsen.
Since independence the country has diversified its economy and is developing a very competitive industrial sector. Could you please brief our readers about the strengths and the potential in the Sri Lankan manufacturing and trading sectors?
I have been running this company for the past 25 years, and my current prognostic is that there are certain industrial sectors where Sri Lanka can be competitive like rubber related products. However, when it comes to ceramic products, Sri Lanka is no longer a competitive country.
The biggest problem we face in our industry is raw material security since we don’t import a lot of bulk raw materials. We have a high population volume on a small island, and we end up mining too close to residential areas which creates a whole lot of problems. This is why we cannot achieve the economic scale necessary to improve the performance of the ceramic industry.
Lanka Tiles has been importing foreign products to distribute and sell in the local market until the import ban was put in place at the start of the Covid pandemic. We were running factories in India and we saw firsthand just how competitive the Indian industry can be. Due to the economic situation in India, the same imported raw materials from the same suppliers we use here such as glazes and chemicals, were a lot cheaper in India compared to Sri Lanka, which puts us at a huge economic disadvantage.
Lanka Tiles is equipped with all the technology we need to run a streamline production, it is the cost of manufacturing that is far too high for us to really compete in the mass market within the ceramic industry. In order to move our mass products into a niche market where we could export competitively, we identified a need for mosaic tiles as it was something China could no longer provide to the USA due to the anti-dumping list. So, we started a joint venture with China and the USA to move a mosaic factory from China to Sri Lanka.
Lanka Tiles was incorporated in 1975 and has grown constantly and exponentially through the years. Could you please explain for our readers the story behind Lanka Tiles? What are your main goals for 2022?
Lanka Tiles started in 1975 as a joint entity between a Japanese company called Danto and a government corporation then called Ceylon Ceramics Corporation. Lanka Tiles is also the first joint venture between a Sri Lankan company and a foreign company in our country’s history and it is 100% export oriented.
We started production in an up country village called Balangoda where we produced to export to the USA. This plant was shut down in the early 2000’s as the product we were making was no longer competitive due to the old technology. We left the US market until ten years ago when we were able to re-enter with the mosaic tile and small tile production in our new facilities.
We are the largest local tile manufacturer in the Sri Lankan market and we export to over 20 countries, which makes us the largest exporter of ceramic tiles in the country. With the profits of our ceramic industry, we have diversified our operations to areas such as packaging, aluminum and other complimentary products, all under the Lanka Tiles profile.
Your company produces, brands and exports seven collections of high-end quality porcelain and ceramic products. Which are your most successful products? What differentiates Lanka Tiles from its competition?
Porcelain tiles are our most successful product; however, our recent products in the mosaic tile collection, which are oriented to the USA market, have harvested a considerable success and we are now also available locally. We have also been participating in the largest floor covering exhibition in the USA every year for over 20 years, which is one way to market our products.
We also produce high-quality, tailor-made products for our customers in any size they require, including small orders such as 300 to 400 square meters; all with a quick delivery time. Another differentiating factor is that we have a large portfolio that not many other manufacturers can offer.
We have faith in our country and we believe that we will come out with the active participation of our incredibly resilient people.
Lanka Tiles exports to more than 20 countries around the world and has the potential of growth in several markets. Which markets are you planning to expand? Are you looking for international partners?
The main markets that we would like to grow in are the USA and Australia. We have good established contacts in the west coast of the USA and we are now designing our expansion strategy for the east coast.
We are looking for international partners in order to prevent the volatility of our country’s economy. We were working with several factories in India prior to 2019 and we would like to re-establish those contacts and settle new joint ventures with potential partners in competitive nations such as India and Pakistan.
The United States of America is the main economic partner of Sri Lanka, its annual trade represents over 24% of all Sri Lanka’s exports. Could you give us some insights about Lanka Tiles commercial relations with the United States? What is your strategy to gain presence in the US market?
We are focused on improving our distribution footprint within the USA, because most of our customers cannot really buy in containers. The retailers we are working with at the moment control about 70% of USA’s tile market. However, in order to expand our presence in the market, we need to tap into small customers and have warehouses within the US so that customers can buy tiles by the square meter.
We are looking for international partners in order to prevent the volatility of our country’s economy. We were working with several factories in India prior to 2019 and we would like to re-establish those contacts and settle new joint ventures with potential partners in competitive nations such as India and Pakistan.
Lanka Tiles is one of the most respected companies in Sri Lanka and it has grown and contribute to the country under your management. Please tell us a bit more about your background: in your personal life, what are you most proud of?
I graduated in Business Administration from a local university and I am a fellow member of the Institute of Chartered Accountants of Sri Lanka. I also hold a post graduate diploma in Buddhism as well as a masters in Buddhism. Career wise my initial training was at KPMG, thereafter I worked for a stock broking company that was linked to Merrill Lynch, and I was working at their local office. 25 years ago I started running Lanka Tiles as CEO and I am still here now. This is a professional company and I am a hired CEO, it is not a family business.
I am proud of my family, especially my children. I am also proud of my devotion to my country and the time I dedicate to empower people through my other social work such as the Young Men’s Buddhist Association where we are doing a lot of things. One of the projects we are doing right now is educational, we are teaching English to Buddhist monks on an online platform. There are 800 Temple Schools in the country that provide education to about 40,000 monks and one of the major handicaps the Buddhist monks have is the lack of English language knowledge.
We are also doing another program to empower the youth and give them fresh hope for Sri Lanka. One of the ways we are doing this is to try and help these young educated people to transform their education into an income, teaching them how to market their education and skills in a labour environment. We want to create a sense of belonging among the younger generations since 90% of our young population wants to leave the country but only about 10% end up doing it. If we don’t address this issue it could lead to another social unrest.
We are trying to educate them about the internet and how to make money working online. There are now about 100,000 young professionals who are actively working on online platforms such as Upwork or Fiver and I would like to make it 200,000 and provide them with technical support and knowledge. We are linking up with SLIIT to enable their lecturers to teach the youth on how they can set up their digital profiles and which skills they should be marketing.
What is your final message for the readers the USA Today across the world?
We have faith in our country and we believe that we will come out with the active participation of our incredibly resilient people. International investors and the international community should have faith in this Sri Lanka.
