CEAT to invest Rs. 2,800 crores over next five years


Established in 1958, CEAT, part of the RPG Group, is one of India’s leading tyre manufacturers with strong presence across global markets. Today, CEAT produces over 26 million tyres a year promising safe rides to all its customers. The replacement market gives the company its maximum revenue at 64%, followed by OEM and exports which bring in 24% and 12% revenue respectively.

Mr. H. V. Goenka, Chairman, RPG Group

The company has manufacturing facilities at Bhandup, Nashik, Halol and Nagpur. CEAT meets close to two-thirds of its production through in-house plants and secures the rest from various outsourcing partners on conversion cost basis and bought-out basis. It operates in Sri Lanka through a 50:50 JV, named CEAT Kelani Holdings Company (Private) Ltd. CEAT, through its subsidiary, has initiated construction of an off-highway tyre plant at Ambernath, Maharashtra.

The company enjoys a market share of 12% in India’s tyre market and manufactures more than 95,000 tyres per day. It has invested heavily in the development of a state-of-the-art R&D centre at Halol to enable a funnel of innovative new products. It has also worked extensively in the last few years to expand its distribution network across the country. A comprehensive network of more than 4,500 dealers and over 30,000 sub-dealers has helped it extend reach to all parts of the country.

Investment plans

CEAT has committed an investment of Rs. 2,800 crores over the next five years, as indicated in the company’s annual report for FY17. The company’s greenfield facility for two and three-wheeler tyres (Nagpur) and its brownfield facility for passenger car and utility vehicle tyres (Halol) have already been commissioned and are currently under ramp-up.

“Our new 2W plant at Nagpur is being developed on the lines of a smart plant. Through digitalisation, we aim to improve our operational efficiency. Mistake proofing, Auto Safety Interlocks, Centralised Recipe Management and Warehouse Management are also a part of this project. This will be a stepping stone in the journey of CEAT where machines will talk to each other and improvise to deliver quality products based on algorithms”, says Mr. H.V. Goenka, Chairman, RPG Group.

CEAT has commissioned a greenfield unit for manufacturing two-three wheeler tyres at Butibori, near Nagpur, Maharashtra in March 2016. It is expected to reach its full capacity of 40,000 tyres per day by the end of FY 2017-18. The brownfield project at Halol for manufacturing of Passenger Vehicle (PV) tyres is also under ramp up currently. Further, CEAT is setting up a greenfield off highway tyres (OHT) radial plant in Ambernath, through its wholly-owned subsidiary CEAT Specialty Tyres Ltd. (CSTL). CSTL will be investing Rs. 330 crores for phase 1 capacity of 40 MT/day, which will be further ramped up to 100 MT/day. The company shall be investing over Rs. 2,800 crores for capacity expansion in passenger car radials, two-wheeler and truck bus radial segment in next few years.

Strong partnerships

CEAT has further strengthened its reach with strong OEM partnerships. Honda Activa 125, Maruti Suzuki Wagon R, Ashok Leyland and Volvo Eicher LCV are a few new associations built to widen the reach. During FY 2016-17, CEAT has been ranked No.1 in India for customer satisfaction in the passenger car and utility vehicle tyre segment, according to the J. D. Power 2017 India Original Equipment Tyre Customer Satisfaction Index (TCSI) study.

Now in its 17th year, the study measures satisfaction among original equipment tyre owners during the first 12 to 24 months of ownership. Redesigned in 2010, the study measures overall satisfaction by examining four factors listed in the order of importance – Appearance, Durability, Ride and Traction/Handling. The result is a testimony to CEAT’s continued focus on developing best-in-class products through a robust customer insighting process backed by a strong R&D team.

Export business

CEAT is one of the major exporters among India’s tyre manufacturers. Geographically, the company has stratified the export market into seven clusters. This has helped CEAT to better understand customer needs and design market-specific products.

CEAT has consolidated its position in Bangladesh and Sri Lanka by forming joint ventures with strategic partners. The new plant at Ambernath for off highway tyres will increase the company’s product offering for the US and European markets in FY 2017-18. Moreover, the state-of-the-art Nagpur plant will bolster capabilities in the motorcycle tyre segment.

CEAT was ranked No.1 in J. D. Power 2017 Study Results in Passenger car and Utility vehicle segment for new vehicles. Its Halol plant was presented the ‘Sword of Honour’ Award by the British Safety Council, while it also received 5-Star rating from the British Safety Council for upgraded safety measures implemented. CEAT won the “End to End Customer Solution” category at the 6th Annual Manufacturing & Supply Chain Awards, 2016.