Export opportunity in Europe continues to be strong for Indian tyre-makers despite Covid-19: CEAT MD Anant Goenka

Nandana James Mumbai | Updated on July 30, 2020

Anant Goenka, Managing Director, CEAT Tyres   -  THE HINDU

Despite the lockdowns and uncertainties that have gripped the European market amid the Covid-19 pandemic, there is still an export opportunity for Indian tyre companies and it is important that they capitalise on it, said Anant Goenka, Managing Director, CEAT Ltd, flagship company of the RPG Group. This is also despite exports posing challenges for the company amid the pandemic, he said.

These countries are looking at shifting supply chains to India and wanting to de-risk themselves from China, he said.

Tyre-maker CEAT also had plans to grow in excess of 50 per cent annually in Spain, Italy and the UK amid the dumping duty imposed on Chinese tyres by Europe and the US. While this may not happen this year due to the uncertainties wrought by the pandemic, going forward, there is a huge opportunity, Goenka told BusinessLine.

The government has also recently put imported tyres under the restricted list, which would require importers to procure a license to import tyres, rendering it a cumbersome process, he said. This results in a 50-60 per cent drop in import of tyres, he added. “To that extent, the import of tyres has come down and that will have a fair amount of impact on demand — that will increase the market size for domestic players. This is a good measure and (will be) a gain from now onwards,” explained Goenka.

Around 60 per cent of CEAT’s revenue comes from the replacement segment, around 30-35 per cent from OEMs and 15 per cent from exports. With the rural markets showing positivity, and tractor and two-wheeler sales taking place there, the replacement market has picked up pretty well and is showing the highest buoyancy, said Goenka.

“We are also starting to see some positive shoots on the OEM side, which was weak all the way until June...Now, things have started returning to relatively decent levels — (about) 75 per cent kind of normal demand — except commercial vehicles. CVs continue to be weak,” said Goenka. Exports also continue to face some challenge, with countries opening up and ports getting congested, he pointed out.

As of now, CEAT is operating at over 90 per cent capacity utilisation.

The company also had planned capital expenditure of ₹800-900 crore for this fiscal year, which had to be reduced to ₹500-600 crore because of the slowdown.

On expectations from the government, he said that from a macro perspective, labour reforms will be welcome. Specifically for the tyre industry, with duty on natural rubber being “very high” at 25 per cent, a reduction in this would be welcome, he said.

Published on July 30, 2020

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