The Hindu Business Line : Ceat selects US consultant to develop home-grown radial tech

Mumbai, Aug 6 Tyre manufacturer Ceat, part of the Rs 13,500 crore RPG Group, has zeroed in on a US-based global consultancy firm that specialises on radial tyre technology to help it develop a “home-grown” technology for its proposed Rs 600-crore radial tyre unit at Vadodara in Gujarat.

Initially, the company had plans to form a joint venture with a global radial tyre manufacturing company for the Vadodara project and had initiated talks with a few of them. But later, it decided against this proposal, as most of the prospective partners wanted a sizeable stake in the project.

As Ceat was keen on having 100 per cent ownership in the plant, the company, instead, decided to look for a radial technology consultancy firm that could help it develop a suitable technology for radial tyres on Indian roads.

Without naming the firm, Mr Paras Chowdhary, Ceat’s Managing Director, told Business Line that: “We had been talking to several consultancy firms and have identified a US-based firm. We will shortly be signing a MoU.”

“It is not that radial technology is totally unknown to us. We are doing car radial tyres, but we do not do truck and bus radial tyres,” he added.

Ceat recently signed an MoU with the Gujarat Government for land for the project and it expects to take possession of the land within four weeks. The 140-tonne a day capacity plant is scheduled to commence trial production before September 2010.

It will produce 10,000 car radials and 1,000 truck and bus radials a day.

This project forms part of the Rs 1,000 crore expansion programme lined up by the company, which includes Rs 300 crore for re-location of its Bhandup plant on the outskirts of Mumbai.

Financing plan

As part of its financing plan to raise Rs 1,000 crore to fund the expansion, Ceat will be selling the remaining 24 acres it holds in Bhandup.

“We will do this at an appropriate time depending on the prevailing real estate market —we have a three-year period to raise the money,” Mr Chowdhary said.

Apart from the land sale, the funding programme includes borrowings and internal generations.

Radial tyre market

Ceat, like other tyre makers, is bullish on the radial tyre market in the country, as radials have not penetrated the market to the level as in other countries, except in the car segment.

About 90 per cent of the car tyres in the country are at present using radials. “But, cars account for only about 12 per cent of India’s tyre business,” Mr Chowdhary pointed out.

Trucks and buses, which have a lion’s share of 56 per cent of India’s tyre business, are radialised to the extent of hardly 7-8 per cent, while countries like the US, Europe and Japan are close to achieving 100 per cent radialisation.

“But the trend (in trucks and buses) is catching on and we expect the truck and bus radial tyre market to grow rapidly from 2010,” he said.

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Ceat setting up greenfield radial facility in Gujarat

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