The Hindu Business Line : Ceat in talks with partners for 2 greenfield projects

The Vice-President for Sales & Marketing, Mr Arnab Banerjee, told Business Line that the company is in talks with a few international players for its two greenfield projects which is expected to cost nearly Rs 800 crore.

“We should be able to finalise the partners soon. The production should start within a couple of years,” he said. Ceat plans to hold a majority stake in both these ventures.

One of the greenfield plants will be set up in Maharashtra and will have between 40 and 80 tonnes per day of incremental capacity.

Part of the capacity will be shifted from its Bhandup plant while the capacity of the other plant will be between 100-150 tonnes per day .

It will be located either in Tamil Nadu, Karnataka or Gujarat. The company’s current capacity is about 400 tonnes per day and it outsources about 100 tonnes per day of tyres from smaller manufacturers.

Increasing exports

Once these two plants start production, Ceat plans to start exporting passenger car tyres, Mr Banerjee said.

He said that Ceat is the largest exporter of tyres from India and the company plans to set up sales and marketing offices in several countries as a first step towards consolidating and increasing its exports. Ceat exported about Rs 350 crore worth of various types of tyres for commercial vehicles between April 2007 and December 2007. This was 20 per cent of its total turnover during the period.

“Our exports are profitable part of our business and we expect to maintain the same share till we add new capacities,” Mr Banerjee said.

Brand strategy

Ceat follows a dual brand strategy for its exports. As Ceat is Pirelli brand worldwide, the company sells Ceat products in those countries where Pirelli is not present and in those countries including those in Europe, it sells the tyres under the Altura brand.

Mr Banerjee said the company is able to compete with other Indian brands because its cost per unit ownership is better than the rest even though its prices are between 5-8 per cent higher than the competing brands. But its prices were lower than those of international brands.

For the third quarter ending December 2007, Ceat’s net profit rose 63 per cent to Rs 19.22 crore while its gross sales grew 5 per cent to Rs 630 crore.

More Stories on : New Projects | Tyres

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