The Hindu Business Line : Ceat plans Rs 500-cr greenfield plant

Bangalore, Nov. 29 Ceat Tyres is planning to set up a greenfield plant for the manufacture of passenger car tyres with an investment of about Rs 500 crore.

The tyre company is also planning to increase outsourcing of its tyres 25 to 30 per cent from the current level of 20 per cent. It is also looking at increasing the prices of its tyres between two-three per cent in December, Ceat Tyres’ Vice-President for marketing Mr Arnab Banerjee told Business Line.

Mr Banerjee said the company plans to identify a location for setting up the greenfield plant soon. Currently, Ceat Tyres, considered the fourth largest tyre maker in India by volume, has less than 10 per cent share of the passenger car tyres’ market. The tyre maker wants to ride on the back of a boom in the passenger car market to increase its share and hence is keen to set up the new plant which will be used exclusively for manufacturing tyres for passenger cars.

The capacity of the plant is expected to be between three-four lakhtyres per month, Mr Banerjee said. He also said because of the increase in raw material costs, Ceat might increase the prices of its tyres between two-three per cent.

Outsourcing

Mr Banerjee said Ceat plans to increase outsourcing all categories of tyres from outside India and some of that could come from China. “There is a huge opportunity to collaborate with Chinese companies,” he said. He said it takes nearly 24 months to set up a tyre plant and hence it was easier to outsource products.

“If we can get products from tomorrow itself through outsourcing, we would like to explore that option first,” Mr Banerjee said. He said outsourcing has the twin advantage of getting tyres at lesser costs as well as of better quality.

According to a report by Motilal Oswal, an equity research firm, Ceat wants to increase its outsourcing of tyres from low cost countries like China and Vietnam to plug the gaps in its product portfolio to increase volumes and profitability.

Relocation

Ceat is also planning to relocate its Bhandup plant in Mumbai to either Ambarnath or Patalganga. It plans to sell the entire 30-acre property at Bhandup over a period of two years.