Ceat plans global push with new factory

Ceat, the country's fourth biggest tyre producer, is charting  expansion plans for the international market, with launches planned in various countries, including the US, the world's biggest tyre market.

The company, based in this city, aims to have an extended presence in European and Latin American countries once its new Rs630-crore radial tyre factory at Halol, Gujarat (30 km from Vadodara) comes on stream in the last quarter of this year, said a top official.

Anant Goenka, deputy managing director, Ceat, said: "We have set up offices in Europe; likewise, we can have them in the US. We are also exploring the possibility of outsourcing manufacturing, which could be in China, Vietnam or Thailand, for they bring in better technology and lower investment."

About 25-30 per cent of the company's production is outsourced in the country. The Halol plant is geared to produce 300,000 passenger car radials and 40,000 truck and bus radials every month.

"We will look at the US market once our Halol unit is brought on stream. The US is a highly radialised market. We do supply cross-ply tyres to that market but at a very small scale," he added. 

The company hopes to double its exports to Rs1,000 crore over the next three years. About 15-20 per cent of its present production of 580 tonnes per day is exported. The Halol facility will add 150 tonnes a day, which can be scaled up to 550 tonnes per day.

The company today acquired the Ceat brand from Pirelli & C SpA for ¤9 million (Rs55 crore), the valuation of which was done by KPMG. This transaction allows Ceat to have control in markets where Pirelli owned the Ceat trademark, mostly  European countries.

"The acquisition is strategically important to us, as it is the main brand of the company and it allows us to market it in whichever market we choose," stated Goenka.

Pirelli will continue to hold exclusive licences to use the Ceat brand in Europe, Latin America, Turkey and Mexico till December 31, 2011. The deal also includes a non-exclusive license to Pirelli to market and sell the Ceat brand till December 31, 2012. 

Ceat is currently the owner of the company brand name in nine countries — India, Sri Lanka, Bangladesh, Myanmar, Pakistan, Bhutan, Nepal, Afghanistan and Vietnam. This acquisition will allow the company to export radial and cross-ply tyres to the world.

Ceat presently exports to Europe and South America under the 'Altura' brand name. It will retain the name, as it has developed a strong customer base.

About half its exports are done under the Altura brand, created about 10 years earlier, while the balance is carried out under the Ceat brand.