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Our Bureau

Mumbai, March 10

Tyremaker Ceat, the flagship company of the Rs 13,500-crore RPG Group, has sold seven acres of its vacant land in Bhandup area in Mumbai for Rs 130 crore to Ashford InfoTech Ltd.

The proceeds of the sale will be utilised to part finance Ceat’s Rs 800-crore expansion plan that involves setting up of a Rs 500-crore greenfield radial tyre manufacturing facility and a Rs 300-crore tyre making unit either at Patalganga or Ambernath area near Mumbai.

Mr Paras Chowdhary, Ceat’s Managing Director, told presspersons that Ashford had already paid Rs 120 crore as advance and the balance would be paid within the next four to six months when the deal would be completed.

Ceat had decided to sell the land about six months ago and had been negotiating with various prospective buyers.

After the sale, Ceat would be left with about 24 acres, which would be sold after two years when the two new factories would near completion.

Like most tyre majors such as Apollo and MRF, Ceat has drawn up plans to enter the growing radial tyre market in India, which is estimated to be about eight per cent of the total domestic tyre market of $4.5 billion.

Mr Chowdhary said the company had not finalised the location for the proposed 120 tyre per day radial unit, but it would certainly be outside Maharashtra as the company was looking for freight rationalisation advantages. Its two plans are located in Maharashtra.

As Ceat does not have the technology to make truck radial tyres, it would be looking for a suitable joint venture partner. If it does not get the right partner, it may buy the technology for making radial tyres.

“Both the location of the unit and a possible joint venture partner will be finalised within eight weeks,” he said, adding the plant would be set up within three years from zero date.

The land for the tyre unit proposed either at Patalganga or Ambernath near Mumbai will also be finalised within the next two to three months. After the factory is ready and operations stabilised, Ceat will merge its Bhandup plant with the new manufacturing facility.

Replying to a question, Mr Chowdhary agreed that global tyre majors were looking at India. “With the $4.5-billion Indian tyre market growing by at least $0.5 billion every year, it is a big market for any big player to ignore,” he added.

Faced with ballooning cost of raw materials, including natural rubber, Ceat is planning to go for a two to three per cent price increase in April.

“With rising cost of inputs, I think (tyre) price increases are imminent. In the last 12 months, input prices have risen by 10 to 15 per cent,” said Mr Chowdhary.

Ceat had effected a two per cent hike in its tyre prices in February, but on March 1 it brought down prices after the Union Budget offered some excise duty relief.

While prices of natural rubber were rising, other inputs such as carbon black, nylon and specialty chemicals that depend on crude also rose in tandem with crude oil prices.

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