The Hindu Business Line : Ceat plans sourcing tyres from China, Vietnam

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The outsourcing has increased due to rupee appreciation and lack of a diverse tyre range in the domestic market.
The company intends importing 18,000 passenger car radials from its newly established Sri Lankan plant.

Mumbai April 25 Ceat Tyres is set to outsource tyres from China and Vietnam for sales in India. Ceat has tied up with two companies in China to outsource truck and bus radials.

Initially, the company imported 100-odd tyres for quality and durability clinic tests for a six-month period.

Based on the positive feedback, the company will import 1,000 units on a monthly basis, said Mr Paras K. Chowdhary, Managing Director, Ceat Tyres.

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The company has been importing truck and bus radials from Pirelli's facilities in Egypt and Turkey.

The latter has been supplying 600-700 units on a monthly basis; but with the rise in demand for the product Ceat opted for other players in the international market.

With import of tyres from China, the company intends creating two brands in the commercial vehicle tyre segment to avoid cannibalisation of the brands.

The Chinese tyres will be branded as the `Economy' range while the Pirelli tyres would be branded as `Premium' range.

The company has started importing OTR tyres (specific range) from Vietnam and will be tested further based on market feedback, said Mr Chowdhary.

Plant Expansion

As of today, outsourcing of tyres (imports and local outsourcing) makes up for 20 per cent of the company's total revenue and is likely to touch 25 per cent this year.

This is largely due to rupee appreciation and lack of a diverse tyre range in the domestic market, said Mr Chowdhary. As of now, the company is completely outsourcing tubes (for all the segments) and tyres for the two- and three-wheeler segment of the local market. Simultaneously, the company has invested Rs 50 crore in expansion of its radial tyre plant at Nashik. The Nashik plant has a production capacity of 40,000 tyres per month, which is likely to touch 65,000 tyres. The company intends importing 18,000 passenger car radials from its newly established Sri Lankan plant. The company's shares on the BSE closed on Wednesday at Rs 148.35, down 1.72 per cent from the previous close.