A

SUMMER TRAINING REPORT

ON
MARKETING SURVEY ON CEAT TYRE
SUBMITTED TO
KURUKSHETRA UNIVERSITY, KURUKSHETRA
IN PARTIAL FULLFILLMENT FOR THE DEGREE OF
“MASTER OF BUSINESS ADMINISTRATION”
(2009-2011)
SUPERVISED BY: SUBMITTED BY:
Sunil Kumar Singh Dr. Monica Ban
sal
Roll No. 9639 Assistant Profess
or
MBA 3rd Sem.

DEPARTMENT OF MANAGEMENT STUDIES,

JCDM COLLEGE OF ENGINEERING, BARNALA ROAD, SIRSA
Jan Nayak Ch. Devi Lal College Of Engineering
Post Box 81, Barnala Road, Sirsa-125055
Ph: 01666-248800, Fax: 248802
GUIDE CERTIFICATE
This is to certify that Mr. Sunil Kumar Singh, roll no. 9639, university roll no………………., a
tudent of Master of Business Administration in Department of Management Studies,
Jan Nayak Chaudhary Devi Lal College of Engineering, Sirsa has successfully com
pleted the Summer Training Project Report on “Market Survey on Ceat Tyre” at CEAT un
der my guidance towards the partial fulfillment of his Master of Business Admini
stration.

(Dr. Kuldeep Singh) (Dr. Monica Bansal)

Head and professor
Assistant professor
Deptt. of management studies Deptt. of management s
tudies
STUDENT DECLARATION
I Sunil Kumar Singh, a student of MBA, at Department of Management Studies, JCD
M College Of Engineering, Kurukshetra university, Kurukshetra, hereby declare th
at this Project Report under the title “Maketing Survey on Ceat Tyre” is the record
of my original work under the guidance of Dr. Monica Bansal, Assistant Professo
r, Department of Management Studies, JCDM College Of Engineering. This report h
as never been submitted to anywhere else for award of any degree/diploma.

Place: Sirsa SUNIL KUMAR SINGH Dat

e:
(MBA)
PREFACE
Practical training is an important part of management courses. Theoretical studi
es are not sufficient to get into corporate world and understand the complexitie
s of large-scale organizations.
Practical training exposes us to real practices of management in the organizatio
n. It also exposes students to the treasures of experience, knowledge and leanin
g which prerequisites of making a successful career are.
I deem it privilege to have undergone this project. I acknowledge that the pract
ical training that I got from this cannot be gained otherwise. I found my projec
t very interesting and challenging.

(SUNIL KUMAR SINGH)

ACKNOWLEDGEMENT
The present work is an effort to throw some light on “Marketing Survey on Ceat Ty
res”. The work would not have been possible to come to the present shape without t
he able guidance, supervision and help to me by number of people.
With deep sense of gratitude I acknowledged the encouragement and guidance recei
ved by my organizational guide Mr. Subhra Kanti Bhattacharjee (AM) and other sta
ff members.
I am thankful to Dr. Monica Bansal, Assistant Professor Department of Management
Studies, JCDM College of Engineering, Sirsa for her encouragement and providing
other assistances whenever required.
I would like to thank Dr. Kuldeep Singh, Professor & Head of Department of Manag
ement Studies at JCDM COE, Sirsa who helped me in making this project and for hi
s constant support and inspiration.
I convey my heartful affection to all those people who helped and supported me d
uring the course, for completion of my Project Report.

(Sunil Kumar Singh)

Tables of Contents
Sr. No Content Page No.
Guide Certificate 2
Company Certificate 3
Declaration 4
Preface 5
Acknowledgement 6
Executive Summary 7
(1) Introduction 8
1.1 Industry Basic 8
1.2 Ceat India 10
1.3 History 11
1.4 Literature Review 11
(2) Indian Tyre Industry 13
(3) Marketing Strategy 18
(4) Limitation of the Research 25
(5) Database And Research Methodology 26
(6) Data Collection 27
(7) SWOT Analysis 49
(8) Summary Report
8.1 Customer Summary Report 50
8.2 Fitter Summary Report 51
8.3 Dealer’s Summary Report 52
(9) Questionnaire 53
(10) Bibliography 62

INTRODUCTION
Ceat Ltd, a part of the RPG Goenka group, is the second largest tyre manufacture
r in the country after MRF. Ceat manufactures truck & bus, passenger car, scoote
r and LCV tyres. The company is a dominant player in the truck & bus and passeng
er car tyre segments with a market share of 14% and 17% respectively. In FY2000,
Ceat did well to posting a 21%yoy sales growth in the replacement market for tr
uck & bus tyres. It is presently focusing on catering to the fast growing passen
ger car and two-wheeler industry. Towards this, it is commissioning a new radial
tyre factory in June 2000.
Industry basics
Tyre industry is capital intensive and as capacities come in spurts, it leads to
constant demand-supply imbalances and consequent cyclicality in prices. Variabl
e cost is also very high, with raw materials forming nearly 70% of the costs. Pr
ofit margins are therefore thin. Production process is technology intensive and
globally huge sums are invested in R&D. Tyre demand is a derived demand, depende
nt on the auto industry, both for OEM and replacement market. The major segments
are Truck & Bus (T&B) tyres and car tyres. Value share of T&B segment is about
73%. This segment is highly competitive and margins are typically lower than in
the car tyres segment. Replacement market forms the largest segment (about 58%),
followed by OEM (about 22%). Export accounts for about 15%. With global demand
slowing down, there is a consolidation of capacities through mergers etc. The do
mestic tyre industry broadly mirrors the market characteristics of the global in
dustry. However, due to rough road conditions, the more rugged, suitable and che
aper cross ply tyres are in vogue. Consumption of natural rubber is, therefore,
proportionately higher. The government has decided to impose 10% safeguard duty
on carbon black and hiking benchmark prices of natural rubber (25-30% of sales)
in February 1999. Its impact was felt only to an extent as prices of these commo
dities are ruling at historical lows in the global market.
Ceat is part of the RPG group, which is diversified, with presence in major sect
ors like power, fertilizers, pharmaceuticals, tyres, computer, telecom, financia
l services etc. The group stumbled trying to grow via diverse platforms and has
many companies that have turned sick. But lately the strategy seems to be one of
restructuring and consolidation. The group is divided into 4 broad areas - rubb
er & allied products, power, electronics & telecom and chemicals. Ceat’s investmen
ts in its subsidiaries have also come down this fiscal which is a sign of pruden
ce on the management. BUSINESS DESCRIPTION
Ceat is a manufacturing company, which produces rubber, tire, nylon fabric produ
cts, nylon tire yarn, glass fiber, automotive flaps, filament mats and other rub
ber products for the automotive markets in India. The company has a well establi
shed research and development center that evaluates the application and developm
ent of new raw materials, compounds and tire sizes. It produces tires for two an
d three wheeled vehicles, passenger cars, LCVs, trucks and buses. Ceat exports t
o almost 50 countries, with the US being the largest destination.
The company also provides investment financial services through Meteoric Industr
ial Finance and Atlantic Holdings. Automotive tire sales account for around 90%
of revenues, automotive tubes account for about 8% and the remaining revenues co
me from other non-core operations.
The company is pursuing a strategic initiative of intensifying outsourcing to ex
pand its product range and increase production volumes. Ceat has an agreement wi
th Pirelli of Italy for outsourcing radial tires which are being marketed under
the CEAT Spider Radials brand name.
CEAT INDIA
Ceat Limited is a manufacturer of tires in India. Automotive tires comprise the
largest part of the Company s revenue, however it also produces tire flaps, rubb
er tubing and nylon thread. The Company also offers financial services through C
eat Financial Services Limited, including hire purchase, office equipment financ
e, container and equipment/infrastructure leasing and money market operations.

History
CEAT stands for Cavi Electrici Affini Torino (Electrical Cables and Allied Produ
cts of Turin).
CEAT International was first established in 1924 at Turino in Italy and manufact
ured cables for telephones and railways.
In 1958, CEAT came to India, and CEAT Tyres of India Ltd was established in coll
aboration with the TATA Group.
In 1982, the RPG Group took over CEAT Tyres of India, and in 1990, renamed the c
ompany CEAT Ltd.
LITERATURE REVIEW
Ceat Ltd, a part of the RPG Goenka group, is the second largest tyre manufacture
r in the country after MRF. Ceat manufactures truck & bus, passenger car, scoote
r and LCV tyres. The company is a dominant player in the truck & bus and passeng
er car tyre segments with a market share of 14% and 17% respectively. In FY2000,
Ceat did well to posting a 21%yoy sales growth in the replacement market for tr
uck & bus tyres. It is presently focusing on catering to the fast growing passen
ger car and two-wheeler industry. Towards this, it is commissioning a new radial
tyre factory in June 2000.
Industry basics
Tyre industry is capital intensive and as capacities come in spurts, it leads to
constant demand-supply imbalances and consequent cyclicality in prices. Variabl
e cost is also very high, with raw materials forming nearly 70% of the costs. Pr
ofit margins are therefore thin. Production process is technology intensive and
globally huge sums are invested in R&D. Tyre demand is a derived demand, depende
nt on the auto industry, both for OEM and replacement market. The major segments
are Truck & Bus (T&B) tyres and car tyres. Value share of T&B segment is about
73%. This segment is highly competitive and margins are typically lower than in
the car tyres segment. Replacement market forms the largest segment (about 58%),
followed by OEM (about 22%). Export accounts for about 15%. With global demand
slowing down, there is a consolidation of capacities through mergers etc. The do
mestic tyre industry broadly mirrors the market characteristics of the global in
dustry. However, due to rough road conditions, the more rugged, suitable and che
aper cross ply tyres are in vogue. Consumption of natural rubber is, therefore,
proportionately higher. The government has decided to impose 10% safeguard duty
on carbon black and hiking benchmark prices of natural rubber (25-30% of sales)
in February 1999. Its impact was felt only to an extent as prices of these commo
dities are ruling at historical lows in the global market.
Ceat is part of the RPG group, which is diversified, with presence in major sect
ors like power, fertilizers, pharmaceuticals, tyres, computer, telecom, financia
l services etc. The group stumbled trying to grow via diverse platforms and has
many companies that have turned sick. But lately the strategy seems to be one of
restructuring and consolidation. The group is divided into 4 broad areas - rubb
er & allied products, power, electronics & telecom and chemicals. Ceat’s investmen
ts in its subsidiaries have also come down this fiscal which is a sign of pruden
ce on the management.
Indian Tyre Industry
The tyre industry has witnessed a CAGR of 8.3% over the last decade mainly fuell
ed by the strong growth in the domestic auto industry. Though the replacement ma
rket has driven the industry growth for long time, the OEM market has seen a rob
ust growth over the last couple of years.
The industry is highly capital intensive, as it requires around Rs4bn to setup a
radial tyre plant with a capacity of 1.5mn tyres and around Rs1.5-2bn for a cro
ssply tyre plant of a capacity to manufacture 1.5mn tyres.
The profitability of the industry has high correlation with the prices of key ra
w materials such as rubber and crude oil as they account for more than 70% of th
e total costs. The raw material to sales ratio in the industry is around 65%.
The industry has high entry barriers because of its capital intensive nature and
low operating margins. With demand increasing at a steady pace, the industry is
expected to go through a consolidation phase.
The industry is dominated by four players viz MRF, Apollo Tyres, JK Industries a
nd Ceat and enjoys more than 70% of the total market share.
The fortunes of the industry are linked to the trend in the domestic auto indust
ry, retreading, trend in road transportation and spending on road infrastructure
.
The companies have lined up further expansion plans to meet the increasing deman
d.
India Infoline Sector Studies : Indian Tyre Industry is available in Acrobat Rea
der (PDF) format. The Report provides exhaustive information on the Indian Tyre
Sector, the demand drivers, trends in the industry (with respect to production,
exports, market share), key characteristics of the Indian market and profile of
leading players in India.

Boards okay Harrisons rubber division merger with Ceat

Our Bureau
MUMBAI, April 19
THE process of consolidating the rubber business of the Rs 6,700-crore RPG Enter
prises got under way with the boards of Ceat Ltd and Harrisons Malayalam Ltd (HM
L) approving the scheme of arrangement involving the demerger of the rubber divi
sion of HML and its transfer to Ceat.
The appointed date of the Scheme of Arrangement is fixed as October 1, 2002.
Under the demerger plan for HML, Ceat will issue 95,03,900 equity shares of Rs 1
0 each to HML and 36,91,081 equity shares of Rs 10 each to the shareholders of H
ML in the ratio of one share for five equity shares held by these shareholders.
The existing paid-up capital of HML will be reduced from Rs 18.45 crore to Rs 9.
23 crore by reducing the paid-up value of each equity share of Rs 10 each to Rs
5 each. Besides, Ceat s investment portfolio will be demerged and transferred to
Meteoric Industrial Finance Company (MIFL), one of Ceat s non-banking financial
subsidiaries.
Under this demerger, MIFL will issue 3,52,13,320 equity shares to shareholders o
f Ceat in the ratio of one equity share of MIFL of Re 1 each for every one equit
y share of Ceat of Rs 10 each held by such shareholders in Ceat. This scheme wil
l provide reclassification of the unissued equity shares of Rs 10 each of MIFL i
nto equity shares of Re 1 each.
Post this issue of shares, MIFL will cease to be a subsidiary of Ceat and an app
lication will be made to the Bombay Stock Exchange for listing the company.
The objective of this consolidation is to strengthen the rubber business by crea
ting backward integration for Ceat, an official press release said quoting Mr Ha
rsh Goenka, Chairman, RPG Enterprises.
"With the merger of HML s rubber division and the divestment of all its non-tyre
assets Ceat will be able to focus on its tyre business and also improve its opt
ion for sourcing this important raw material for its tyre manufacturing activiti
es and bring about synergistic effects, RPG Enterprises said in the press rele
ase.
Ceat had earlier said that the merger of the rubber division of HML with itself
would improve the company s options for sourcing this important raw material for
its tyre manufacturing activities and bring about synergic effects.
HML s rubber division has a turnover of Rs 50 crore from a crop output of about
10,000 tonnes per annum, while Ceat s natural rubber consumption was approximate
ly 50,000 tonnes worth Rs 260 crore last year.
As regards HML, the demerger of the rubber division will help it to focus on its
core business area of tea. The financial restructuring would enable the busines
s to grow not only its tea business but also consider expansion into new agricul
ture related food products.
The Board of HML also gave its approval for a scheme of amalgamation of its 100
per cent subsidiaries, Harrisons Agro Products Ltd, Harrisons Rubber Products Lt
d and Harrisons Malayalam Financial Services Ltd with itself.
The valuers to the Scheme are SBI Capital Markets & KPMG and the advisors are Lo
dha & Co.
The scheme is subject to the sanction of the courts and the National Company Law
Tribunal. Ceat, MIFL and HML and its subsidiaries will apply to the High Courts
for approval. Khaitan & Co has been appointed as advocates to the scheme for th
is purpose.

MARKETING STRATEGY
Boards okay Harrisons rubber division merger with Ceat
Our Bureau
MUMBAI, April 19
THE process of consolidating the rubber business of the Rs 6,700-crore RPG Enter
prises got under way with the boards of Ceat Ltd and Harrisons Malayalam Ltd (HM
L) approving the scheme of arrangement involving the demerger of the rubber divi
sion of HML and its transfer to Ceat.
The appointed date of the Scheme of Arrangement is fixed as October 1, 2002.
Under the demerger plan for HML, Ceat will issue 95,03,900 equity shares of Rs 1
0 each to HML and 36,91,081 equity shares of Rs 10 each to the shareholders of H
ML in the ratio of one share for five equity shares held by these shareholders.
The existing paid-up capital of HML will be reduced from Rs 18.45 crore to Rs 9.
23 crore by reducing the paid-up value of each equity share of Rs 10 each to Rs
5 each. Besides, Ceat s investment portfolio will be demerged and transferred to
Meteoric Industrial Finance Company (MIFL), one of Ceat s non-banking financial
subsidiaries.
Under this demerger, MIFL will issue 3,52,13,320 equity shares to shareholders o
f Ceat in the ratio of one equity share of MIFL of Re 1 each for every one equit
y share of Ceat of Rs 10 each held by such shareholders in Ceat. This scheme wil
l provide reclassification of the unissued equity shares of Rs 10 each of MIFL i
nto equity shares of Re 1 each.
Post this issue of shares, MIFL will cease to be a subsidiary of Ceat and an app
lication will be made to the Bombay Stock Exchange for listing the company.
The objective of this consolidation is to strengthen the rubber business by crea
ting backward integration for Ceat, an official press release said quoting Mr Ha
rsh Goenka, Chairman, RPG Enterprises.
"With the merger of HML s rubber division and the divestment of all its non-tyre
assets Ceat will be able to focus on its tyre business and also improve its opt
ion for sourcing this important raw material for its tyre manufacturing activiti
es and bring about synergistic effects, RPG Enterprises said in the press rele
ase.
Ceat had earlier said that the merger of the rubber division of HML with itself
would improve the company s options for sourcing this important raw material for
its tyre manufacturing activities and bring about synergic effects.
HML s rubber division has a turnover of Rs 50 crore from a crop output of about
10,000 tonnes per annum, while Ceat s natural rubber consumption was approximate
ly 50,000 tonnes worth Rs 260 crore last year.
As regards HML, the demerger of the rubber division will help it to focus on its
core business area of tea. The financial restructuring would enable the busines
s to grow not only its tea business but also consider expansion into new agricul
ture related food products.
The Board of HML also gave its approval for a scheme of amalgamation of its 100
per cent subsidiaries, Harrisons Agro Products Ltd, Harrisons Rubber Products Lt
d and Harrisons Malayalam Financial Services Ltd with itself.
The valuers to the Scheme are SBI Capital Markets & KPMG and the advisors are Lo
dha & Co.
The scheme is subject to the sanction of the courts and the National Company Law
Tribunal. Ceat, MIFL and HML and its subsidiaries will apply to the High Courts
for approval. Khaitan & Co has been appointed as advocates to the scheme for th
is purpose.

Ceat Limited
AVAILABLE NOW! LABOR PRODUCTIVITY BENCHMARKS AND VERTICAL GAP ANALYSIS ON CEAT L
imited
Published today by ICON Group International, Ltd. Two of the most comprehensive
studies to date on labor productivity and vertical gap analysis benchmarks for C
eat Limited (BOM).
The methodologist for this unique study is Philip Parker, Eli Lilly Chair Profes
sor of Innovation, Business and Society at INSEAD (Fontainebleau, France and Sin
gapore). According to Professor Parker, “With the globalization of markets, greate
r foreign competition, and the reduction of barriers to entry, it becomes all th
e more important to benchmark a company’s financial indicators on a worldwide basi
s. World stock markets have recently witnessed a return to fundamental financial
analysis. ” The goal of the reports is to assist consultants, financial managers,
strategic planners, and corporate officers in gauging certain indicators of Cea
t Limited’s financial and human resource structure.
The report has benchmarked Ceat Limited against competing firms in the Tires and
Inner Tubes Manufacturing industry worldwide—going beyond traditional methods of
company benchmarking. The results are two specialized reports: (1) global financ
ial benchmarks using common-size statement ratios (vertical analysis), and (2) l
abor productivity and utilization measures collected across borders.
Coverage
Two reports, financial ratios and labor productivity ratios, are available for C
eat Limited. Each report reveals productivity and industry ranks for Ceat Limite
d in the Tires and Inner Tubes Manufacturing industry. Reports for the following
and many other Tires and Inner Tubes Manufacturing companies are available now:
Bridgestone Corporation
Brisa Bridgestone Sabanci Lastik Sanayi ve Ticaret AS
Ceat Limited, Compagnie Financiere Michelin, Compagnie Generale des Etablissemen
ts Michelin
Continental AG
Cooper Tire & Rubber Co
DMIB Berhad (Malaysia)
Dunlop Africa Limited
Feng Tay Enterprise Co Ltd
Goodyear (Thailand) Public Company Limited
Goodyear Indonesia P.T.
Hankook Tire Co. Ltd.
Heung Ah Corp
Kenda Rubber Industrial Co., Ltd.
Kumho Industrial Company Limited
Marangoni S.p.A.
Nexen Tire
Pirelli S.p.A.
Sumitomo Rubber Industries Ltd.
The Goodyear Tire & Rubber Co
Toyo Tire & Rubber Co., Ltd.
Vredestein NV

Yokohama Rubber Company, Limited

• The vertical analysis deals with questions like: How has Ceat Limited’s asset stru
cture varied compared to global benchmarks for the Tires and Inner Tubes Manufac
turing industry? Does it generally hold more cash and other short-term assets, o
r does it tend to concentrate its assets in physical plant and equipment? On the
liability side, does Ceat Limited typically have a higher percent of payables c
ompared to the benchmarks, or does it hold a higher concentration of long-term d
ebt? Does Ceat Limited have a relatively higher cost of goods sold, operating co
sts, or income taxes compared to global benchmarks? Have Ceat Limited’s returns on
equity been higher or its profit margins greater?
• While the labor productivity analysis answers the following: What has been the r
atio of short-term and long-term assets to employee? What are typical capital-la
bor ratios? What are the average sales and net profits per employee compared to
global benchmarks?
• Professor Parker notes, "We are intrigued by the wide variations in basic financ
ial and productivity measures between Ceat Limited and other Tires and Inner Tub
es Manufacturing companies. The Earnings Before Interest And Taxes (EBIT), for e
xample, varied from -2.1 to 64.21. We see this type of variation in the hundreds
of ratios that we estimate.”
Methodology: Uncovering Gaps
Most vertical analyses merely focus on benchmarking against domestic ratios, oft
en published by government agencies or commercial sources. In contrast, the repo
rt calculates thousands of industry norms by looking at firms at the global leve
l, pooling statistics on tens of thousands of companies across over 40 countries
, and applying a seven-stage methodology:
(1) identification of industry classifications,
(2) firm-level data collection and aggregation,
(3) standardization of raw statistics,
(4) filtering outliers,
(5) calculation of global norms,
(6) projection of deviations and gaps, and
(7) projection of ranks and percentiles. For each part of the financial statemen
t, the larger structural differences and gaps between Ceat Limited. and the glob
al benchmarks are provided with summary tables of ranks and percentiles.
TYRE manufacturer Ceat Ltd is on the road to recovery. Yet even as it leaves its
losses behind, refuses to borrow and enhances sales, there are sectoral issues
it must confront. Mr Paras K. Chowdhary, Managing Director, Ceat, spoke recently
to Business Line on the domestic tyre industry and challenges before it.
LIMITATION OF THE RESEARCH
This report is for information purposes only and does not construe to be any inv
estment, legal or taxation advice. It is not intended as an offer or solicitatio
n for the purchase and sale of any financial instrument. Any action taken by you
on the basis of the information contained herein is your responsibility alone a
nd India Infoline Ltd (hereinafter referred as IIL) and its subsidiaries or its
employees or directors, associates will not be liable in any manner for the cons
equences of such action taken by you. We have exercised due diligence in checkin
g the correctness and authenticity of the information contained herein, but do n
ot represent that it is accurate or complete. IIL or any of its subsidiaries or
associates or employees shall not be in any way responsible for any loss or dama
ge that may arise to any person from any inadvertent error in the information co
ntained in this publication. The recipients of this report should rely on their
own investigations. IIL and/or its subsidiaries and/or directors, employees or a
ssociates may have interests or positions, financial or otherwise.
DATABASE AND RESEARCH METHODOLOGY
The research Methodology defines the is the purpose of the research, how
it proceeds, how to measure progress and what constitute success with respect t
o the objectives determined for carrying out the research study, the appropriate
research design formulated is detailed below.
Exploratory research: this kind of research has the primary objective of develop
ment of insights into the problem. it studies the main area where the problem li
es and also tries to evaluate some appropriate courses of action.
The research methodology for the present study has been adopted to reflect these
realties and help reach the logical conclusion in an objective and scientific m
anner.
The important component of research methodology such as, method of data
collection, tools for processing of the data and reporting format of the study,
are enumerated as follows:
DATA COLLECTION
The present study contemplated an exploratory research.
Secondary data: secondary data which is already available and published .it coul
d be internal and external source of data.
Internal source: which originates from the specific field or area where research
is carried out e.g. publish brouchers, official reports etc.
External source: which originates outside the field of study like books, periodi
cals ,journals, newspapers and the internet.
NATURE OF DATA
Secondary data has been used which is collected through articles, reports, journ
als, magazines, newspapers reports prepared by research scholars, universities a
nd internet.
TOOLS AND TECHNIQES
Analysis of data has been done with help of various statistical tools like the t
ables and graphs.
DATA PRESENTATION AND ANALYSIS
This Report features up to a ten-year record of the equity Price history for Cea
t Limited. Tabular results include the High, Low and Closing price for the quart
er. There is also a calculation of percentage change in price for both Quarterly
and Annual periods. Price values are adjusted for stock splits and dividends.
• Ceat Limited. The Group s principal activities are to manufacture and distribute
automotive tyres, tubes and flaps. The products include nylon fabric, nylon tyr
e yarn, glass fibre, automotive flaps, filament mats and other rubber products.
The Group also provides investment financial services. The Group supplies to ove
r 50 countries with the major business links in the United States of America, Si
ngapore, the United Arab Emirates, Bangladesh, Philippines, Afghanistan, and Nig
eria and other Asian, Middle East and African countries.

Layout and Content of a Typical Report

Tyre Industry April 2004 update
The tyre production in India witnessed a growth of 29.8% on a yoy basis in the m
onth of April 04. The most significant growth was seen in the production of the
passenger car segment, which saw a jump of 59% to 936,853 in April 2004 as again
st 588,238 in April 2003. Other significant segments were the motorcycle segment
and the tractor segment. The motorcycle segment witnessed a growth of more than
29% and the tractor segment (Front, Rear and Trailer) registered a growth of mo
re than 25%.
• The contribution of the tyre and bus segment to the total production in April 20
04 reduced to 18.8% from 21.6% in April 2003. The passenger car segment, which c
ontributed 16.3% in April 2003, increased its share in total production to 20%.
The share of the tractor segment decreased from 5.1% to 4.9% for the same period
.
• If any indication from these figures have to be taken, the growth in the passeng
er segment would be more than that in the commercial vehicle segment in the near
future. In the recent past, there has been an ostensible shift in the demand of
two wheelers from scooters to motorcycles. The figures for the production of ty
res in the respective segment envisage the scenario to continue in the near term
. Above average pre-monsoon showers are expected to give positive triggers to th
e demand of tractors. Increasing production of tractor tyres is an indicator for
the same.
• Exports of tyres grew by a substantial 39.6% in April 2004 to 291,409 from 208,7
10 in April 2003. The major contributors to this growth were the passenger car a
nd the scooter segments by registering a growth of 200% and 293%. During FY04, e
xports contributed to the tune of 20.6% and 6% to total production of tyres in t
ruck & bus and passenger car segments respectively. The same figures for the res
pective segments were 17.7% and 5.5% in April 2004. In FY04, the exports contrib
uted 4.6% of the total tractor tyres production, which decreased to 2.9% in Apri
l 2004. This further indicates that the domestic auto industry is all set to wit
ness a substantial growth.
Production Exports
(In mn) Apr-04 Apr-03 Growth Apr-04 Apr-03 Growth
Truck & Bus 880,275 777,280 13.3 154,695 123,760 25.0
LCV 291,828 219,895 32.7 62,677 45,475 37.8
Jeep 130,774 100,235 30.5
Passenger Car 936,853 588,238 59.3 51,573 17,157 200.6
Total 4-wheeler 2,239,730 1,685,648 32.9 268,945 186,392 44.3
Tractor (Front) 108,756 94,360 15.3 1,104 1,955 (43.5)
Tractor (Rear) 80,309 58,056 38.3 5,326 11,244 (52.6)
Tractor (Trailer) 40,590 30,860 31.5 217 226 (4.0)
Total Tractor 229,655 183,276 25.3 6,647 13,425 (50.5)
Scooter 796,918 611,033 30.4 12,225 3,110 293.1
Motor Cycle 1,362,593 1,054,453 29.2 2,750 1,975 39.2
Moped 8,205 18,508 (55.7) 4 646 (99.4)
Total 2-wheeler 2,167,716 1,683,994 28.7 14,979 5,731 161.4
Animal Drawn Vehicle 9,514 18,585 (48.8)
Industrial 23,068 26,769 (13.8) 50 1,958 (97.4)
Off the Road 4,613 3,176 45.2 788 1,204 (34.6)
Total Others 37,195 48,530 (23.4) 838 3,162 (73.5)
Final Total 4,674,296 3,601,448 29.8 291,409 208,710 39.6

Business Description: Ceat Limited. The Group s principal activities are to manu
facture and distribute automotive tyres, tubes and flaps. The products include n
ylon fabric, nylon tyre yarn, glass fibre, automotive flaps, filament mats and o
ther rubber products. The Group also provides investment financial services. The
Group supplies to over 50 countries with the major business links in the United
States of America, Singapore, the United Arab Emirates, Bangladesh, Philippines
, Afghanistan, and Nigeria and other Asian, Middle East and African countries.
STOCK CHART
Recent stock performance
1 Week 2.9%
4 Weeks 2.7%
13 Weeks -8.7%
52 Weeks -26.0%
Vision and Mission
• “CEAT will each time every time provide Total Customer Satisfaction through produc
ts and services of highest quality and reliability.
• CEAT will nurture an exciting and challenging working environment embedded with
fairness and free, frank exchange of views.”
Current Scenario
Manufactures over 6 million tyres every year.
Enjoys 55% of the local market for light truck and truck tyres.
Operates from plants in Mumbai and Nasik.
Exports to USA, Africa and other parts of Asia.
Has a robust network consisting of 36 regional offices, over 3,500 dealers and m
ore than 100 C&F agents.
Has a dedicated Customer Service department, comprising Customer Service Manager
s in all four divisional offices, assisted by 50 Service Engineers.
CEAT & Cricket
The first international rating system
In 1995, the Professional Management Group (PMG) and CEAT decided to transform c
ricket into an experience, bigger and more exciting than anything players and fa
ns had ever witnessed. They decided to reward the performances of players at the
international level.
Thus was born the first International Rating System—CEAT Cricket Rating (CCR)—a syst
em to reward outstanding performances across every sphere of cricket—batting, bowl
ing, fielding and even wicket-keeping!
A comprehensive award system
CCR encompasses all international matches (Test matches and One-day Internationa
ls) played over twelve months, between May 1 and April 30. It rewards both, indi
vidual players as well as teams, and is indeed the world’s most credible cricket r
ating.
A lifelong title
After twelve months of scoring centuries, sending stumps flying and taking impos
sible catches, the best cricketer receives his most fulfilling reward—the ‘CEAT Inte
rnational Cricketer of the Year’. And of course, the most enduring team is rewarde
d too. It wins the ‘CEAT International Team of the Year’.
In 1996, Brian Lara won the first CEAT International Cricketer award. A year l
ater, Pakistan won the first CEAT International Team award. During the World C
up in 1999, CEAT instituted the CEAT International Cricketer of the World Cup
award, and it went to Rahul Dravid for his phenomenal performance.
The experts’ decision is final
CCR is adeptly managed by a Governing Council comprising cricket legends Sunil G
avaskar, Clive Lloyd and Ian Chappell. The day-to-day affairs are overseen by Sa
njay Manjerekar, the Executive Director of the Council.

EXPORT
• Having been in the export business for over forty years, CEAT today enjoys 14% o
f the Indian market share of global exports, clients in over seventy countries,
and a turnover of US $47 million.
Exporting technologically advanced products
• From five world-class plants, three in India and one in Sri Lanka, we manufactur
e a wide range of tyres for all user segments including trucks, buses, and LCVs.
We also export farm, industrial, grader, OTR, car, scooter, auto-rickshaw, moto
rcycle and passenger car radials.
Enjoying large market shares
• Our individual market shares include 64% in Singapore, 22% in UAE and 22% in Phi
lippines. We also send our products into USA, Bangladesh, Pakistan, Vietnam, Ira
n, Nigeria, Egypt and other African, Middle-East and Far-East Asian countries.
Meeting global standards
• With our manufacturing processes being globally approved by DOT (Department of T
ransportation) and IN-METRO, our products have direct entry into the US and Lati
n American markets.
Honoured with Quality certificates
• We are the first Indian tyre company to receive an ISO certificate (ISO/TS 16949
: 2002, in the year 2003-2004). Over the last ten years, we have consistently be
en receiving export awards from AIRAI and CAPEXIL. A rare honour, indeed.
RESULTS AND DISCUSSIONS
Business
Ceat is the second largest tyre manufacturer in the country. In FY2000, it produ
ced 5.72mn number of tyres as compared to 5.24mn units in FY99, a rise of 9%yoy.
Tyres
Ceat manufactures truck & bus, passenger car, scooter and LCV tyres. Ceat has an
extensive distribution network of more than 3,000 dealers. Though known for its
quality and successful brands such as Formula I, Endura, Secura, Samrat, Maestr
o, Stamina etc, market aggressiveness has been much lower than competitors like
MRF or Apollo. During the year, Ceat posted a rise of 21%yoy in truck tyre sales
in the replacement market in value terms. This was made possible by the 22%yoy
increase in the production of truck tyres. In FY2000, sales of tyres contribute
d to 90.3% to the total turnover. During the year, the company has launched new
products under the brand names ‘Fleet Master’, ‘Turbo Lug’ and ‘Elevata’.
Tubes and flaps
The company does not have any production facility for manufacturing of tubes and
flaps. It sources the products from other manufacturing units. In FY2000, sales
of tubes and flaps contributed to 9.6% of total turnover. It sold 5.03mn tubes
as compared to 4.47mn in FY99 and 1.34mn flaps as compared to 1.15mn in FY99.
Exports
Ceat is the second largest tyre exporter after J K Industries. Export sales on a
FOB basis has fallen by 9.5%yoy from Rs1.2bn in FY99 to Rs1.08bn in FY2000. Exp
ort sales were hampered by a demand decline in the US market.
Its Sri Lankan venture Associated Ceat Pvt Ltd has a 55% share of the Sri Lankan
market. In November 1998, the company tied up with a local firm, Kelani Tyres L
td. This merger would have combined production capacity of 34 metric tons. The t
urnover of the JV grew from Sri Lanka Rs1.29bn in FY99 to SL Rs1.36bn in FY2000.
Profit before tax rose 28%yoy to SL Rs75mn.
Expansion plans
The company has planned a capex of Rs1bn spread over the FY2000 and FY01. While
Rs400mn will be spent on capacity upgradations, Rs600mn will be utilized for a n
ew radial facility at its Nashik plant, which as part of the first phase will st
art commercial production in June 2000. A greenfield project is likely to be set
up in the second phase. The company had taken over Rado Tyres in Kerala in FY98
and plans to increase its manufacturing capacity from 15,000 to 40,000 in the f
irst phase and 70,000 in the next phase.
Outlook
Ceat’s fortunes are now (post restructuring) entirely linked to the tyre industry’s
fortunes. As a leading player in the commercial vehicle, passenger car market an
d two-wheeler tyre segments, it is expected that the company would take advantag
e of the continuing growth in these segments. The new radial tyre plant coming u
p in Nashik would help the company find a foothold in the fast growing segment.
Even in the export market, the company is reducing its dependence on standard bi
as-ply products and concentrating on niches. The company has done well by ration
alizing its debt portfolio by replacing short-term loans with long term financin
g from FIs. This has brought down interest costs as has been witnessed in FY2000
. However, with sale of investments in its many subsidiaries, Ceat can no longer
prop its operational income with ‘other’ income. Moreover, operating margin will be
affected by the rise in prices of raw material inputs. With augmented capacitie
s for car radial tyres and two/three wheeler tyres and initiatives in the field
of supply chain management and controlling costs, Ceat is expected to do reasona
bly well for the rest of the fiscal.
Demand determinants
• Growth of automobile industry will increase vehicle population and thereby the d
emand for tyres in the OEM as well as the replacement markets.
• Relative importance of road transport and long distance travel by road leading t
o increased need to replace tyres.
• Development of export market will also enable higher capacity utilization levels
.
• Economic scenario and credit availability will determine ability to purchase aut
omobiles and in turn spur demand for tyres.
• Retreading saves up to 80% on original cost and this will have a negative impact
on fresh demand.
• Radialisation increases the life of tyres and reduces the need for a replacement
, which may inhibit volume growth.
Earning drivers
• Raw material price fluctuations: Prices of natural rubber, an agricultural commo
dity. Other raw materials are mainly petrochemical based and movements are cycli
cal.
Freeing imports of radial tyres will affect margins in that segment.
Ceat Tyres targets 14 per cent growth
MUMBAI, Sept 15 (PTI) —R P Goenka controlled Ceat Ltd has set a sales target of ar
ound Rs 1400 crore for the current year while the profits of the company are exp
ected to increase by 14 per cent over last year.
In the first five months of the current fiscal, the company has recorded sales o
f Rs 533 crore which is 19 per cent more than the corresponding period last year
, Vice-Chairman Harsh Goenka told shareholders at its 40th AGM here today.
“In order to emerge as a market leader, the company’s management has set a growth ta
rget “of 14 per cent against a projected industry growth of 6 per cent,” he said.
The company intends at least a one per cent growth in market shares in all the s
egments it operates in, Goenka said. At present, in scooter tyres it has a marke
t share of 21 per cent, motorcycles 11 per cent and car tyres 19 per cent.
Export turnover is expected to be around Rs 140 crore this fiscal, Goenka said.
It mainly exports to the United States, West Asia, Africa and South America.
Ceat’s exports last year dipped to Rs 128 crore from the previous year’s Rs 153 cror
e chiefly due to the South Asian crisis and lack of demand from the US and Latin
American countries.
Essel Packaging: The Board of Directors of Essel Packaging Limited yesterday ann
ounced payment of a special “millennium” dividend of 150 per cent to its equity shar
eholders.
FUTURE SCOPE OF CEAT TYRES
Demand for tyres is derived from demand for automobiles. Therefore it is a ‘derive
d demand’ product and its fortunes are very closely linked to those of the auto se
gment. Within the tyre industry the trucks and buses (T&B) segment accounts for
more than 70% of sales. Though scooters and motorcycle tyre demand also plays a
vital role, in value terms, CVs gain significance.
Tyre varieties can be divided into two categories – cross ply and radial. The dome
stic industry is dominated by cross-ply tyres, due to the poor conditions of roa
ds in the country and overloading of CVs. This is also the reason why penetratio
n of radial tyres in the CV segment is negligible and finds presence only in the
passenger car segment. On the other hand, radial tyres dominate western markets
. Radial tyres can be differentiated on the type of belt used – fiberglass, steel
and nylon. Worldwide, steel belted radials are more popular due to their perform
ance advantage.
There are three major consumer segments for tyres namely replacement segment, Or
iginal Equipment Manufacturers (OEMs) and exports. Though fortunes of the sector
are closely tied with the automobile industry, replacement demand continues to
remain the key growth driver. Replacement demand accounts for as high as 57% of
industry volumes. However, the contribution from OEM and replacement segments va
ries across sub-segments in the auto sector. For instance, for the passenger car
segment, demand is balanced from replacement and OEM categories i.e. 50:50.
Another key transition that is taking place in the industry is the entry of mult
inationals like Good Year, Bridgestone and Michelin in the domestic market. MNC
tyre makers have cornered a higher market share in India in the last three years
due to their international relationships apart from superior technology. Since
Honda, Hyundai and Toyota have an international sourcing agreement with Bridgest
one, it is also the preferred supplier in India. Goodyear is believed to be the
preferred supplier for Ford India.
An extensive distribution network and strong brand recall are factors critical t
o tyre sales. Brand building is given a lot of importance by manufacturers, who
allot 2-3% of sales to advertising. With the introduction of radial tyres, even
technology has assumed significance. All foreign cars introduced in the country
are on radial tyres.
Raw materials constitute 60%-70% of production cost of tyres. Natural rubber and
Nylon cord fabrics are the most critical raw materials as it accounts for 50% o
f total raw material cost. Since most of the raw materials are crude derivatives
, a rise in prices has a negative impact on margins.
The export market holds tremendous potential for domestic manufacturers. Tyre ex
ports have grown at an annual compounded rate of 27% over the past 10 years. Ind
ian tyres are exported to 56 countries, which are primarily developing countries
.
NEW LAUNCHES OF CEAT TYRES
CEAT slashes prices of truck, bus tyres
CEAT-Kelani Associated Holdings (Pvt) Ltd., the leading tyre manufacturer in Sri
Lanka has announced a major reduction in the retail prices of lighttruck, truck
and bus tyres.
"Effective December 10, 2001 this reduction would make CEAT the most affordable
tyre when compared to all international brands sold in the local market, the com
pany s General Manager (Sales & Marketing) Ashwin Padukone said.
"In a market battered by the economic downturn, the ability of the customer to b
uy new tyres at the correct time has dwindled. As a result many vehicles are see
n on the road with bald tyres, which seriously jeopardises the safety of the cus
tomers and their vehicles." Mr. Padukone said - "Using new tyres on the front wh
eel, has been established as the safest and the recommended option for safety re
asons. We anticipate that this price reduction will encourage consumers to repla
ce with new tyres at the right time," he said.
The anticipated benefit of the increase in offtake and the consequent capacity u
tilization, has been factored into the price reduction and has been passed onto
the consumers, Mr. Padukone added. CEAT-Kelani Associated Holdings (Pvt) Ltd., a
joint venture company established in 1999, represents the strategic alliance be
tween Kelani Tyres Ltd., AMW Group, NDB and CEAT Ltd. of India. The holding comp
any has two manufacturing arms, one in Kalutara and the other at Kelaniya.
COLLABORATIONS
A high percentage of fibre glass produced in the world is used for re inforceme
nt of plastics The main products maiketed by the fibre glass plants are Mats, Ro
vings, Woven Rovings, Yarns etc. The use of end products i.e. fibre glass reinfo
rced plastics are mostly in pipes and tanks, boats transport sector, furniture,
crash helmets etc The formulation chosen for continuous fibre glass production
is generally known as E-glass. This has become standard the world over as it per
forms well in practice and is used widely. The fibre glass produced in India is
Eglass only. The process of manufacture of fibre glass consists of several steps
e.g. batch preparation, production of glass melt, glass filament conditioning,
winding, drying of glass cakes, conversion to saleable products.
In late seventies, the background of the licensing policy was to issue a large
number of letters of intent with a capacity of 2000 Tonnes per annum expandable
to 4000 tonnes per annum capacity. At that time only one unit Fibre Glass RlWngt
on (FGP) was working at Thane-Bombay with a licensed capacity of 1290 tonnes per
annum. Out of 6 letters of intent issued, only 2 units i.e. Deccan Fibre Glass
Ltd, (now known as Glass Fibre Division, CEAT Tyres) and UP Twiga Fibre Glass Li
mited (now closed since December 1982) were installed in early eighties. The oth
er units did not materialise mainly due to inadequate market demand The present
guideline of licensing is that no new licence is to be issued till 1990, since t
he installed capacity in the country is around 5000 tonnes per annum against the
present demand of 2400 tonnes per annum.
FGP Ltd, started production in mid sixties with remelt technology based on impo
rted E-glass marbles. In 1974 they started their own unit melter for manufacture
of E-glass with a licensed melting capacity of 1290 tonnes per annum #»nd the ins
talled finishing equipment capacity of 2650 tonnes per annum. The company is fun
ctioning with about 70 to 80 per cent of their licensed capacity.
UP TWIGA Fibre Glass Ltd, was started in 1980 at Sikandrabad in Ottar Pradesh.
The capacity of the plant is 2000 tonnes per annum with electric Pochet Furnace.
The unit could not develop proper market for its products.
The unit, had to close down in December 1982 and has not restarted as yet Deccan
Fibre Glass Ltd, came into being in 1981 at Ntehboobnagar in Andhra Pradesh. In
1983 the unit was merged with CEAT Tyres Ltd, and is presently known as Glass F
ibre Division, CEAT Tyres Ltd, The installed capacity is 1770 tonnes per annum w
ith electric Pochet Furnace. The per formance of the unit is not satisfactory an
d the production varies between 40 to 50 per cent of licensed capacity. The main
reason for dismal capacity utilization is inadequate market demand.
1.1.7. AW the three fibre glass units were put up with foreign collaboration. Th
e collaboration agreements were more or less similar, irrespective of the
country of collaboration. The major scope of collaboration was:
a) Provision of technology
b) Basic engineering of the plant
c) Detailed engineering and design of special equipment and supply of
materials
d) Procurement and supply of special equipment
e) Commissioning and Supervisory services.
f) Arrangement of training of personnel in collaborator s place

SWOT ANALYSIS

Strengths
• Right products, quality and reliability.
• Superior product performance vs. competitors.
• Brand Image
• Products have required accreditations.
• High degree of customer satisfaction.
• Weaknesses
• Not very popular in the international market
• Delivery-staff need training.
• Customer service staff need training.
• Processes and systems, etc
• Management cover insufficient.
Opportunities
• Profit margins will be good.
• Could extend to overseas.
• Could seek better supplier deals.
• An applied research centre to create opportunities for developing techniques to
provide added-value services Threats
• Vulnerable to reactive attack by major competitors.
• Lack of infrastructure in rural areas could constrain investment.
• High volume/low cost market is intensely competitive.
QUESTIONNAIRE
Excerpts from the interview:
How do you see 2002-03 shaping up?
• The year so far has been good for the industry. All the tyre companies had good
results in Q1, we too. In Q2 also, that trend continued - Apollo was the most im
pressive and compared to the previous similar period Ceat was also impressive. N
ow at end-Q3, I am noticing a mild depression in demand. I don t know the reason
- December demand is always a little low, but then this year even October-Novem
ber demand saw a mild fall.
• It could be due to some after-effect of poor rains. But Q3 is a period of high t
yre production. Therefore, there is a little extra-supply in the market at prese
nt. Companies are now trying to export more to take care of this problem.
But is not the global automobile market sluggish?
• I am talking of trucks and LCVs. I won t say the market worldwide is down. In fa
ct, January-December last year most tyre companies posted good results. But yes,
the kind of growth that was expected did not happen. However due to the 9/11 at
tack in the US, crude oil prices fell and when that happens everything else fall
s - synthetic rubbers, caprolactum - all went down by 20, 30 or 40 per cent.
• The result was that even if the demand was low, it did not matter due to bigger
gains on raw material costs. If good things happen for bad reasons, nobody talks
of it! Until June this year, the situation was good because crude recovered but
did not go above $23-24. Later, owing to issues like tension in the Middle East
, crude flared up, touching $30-31. I have not seen a scenario, where within nin
e months you see crude at $17 and $31. Almost 80 per cent up! If your main raw m
aterial swings by 80 per cent, its derivatives also swing. At this point in time
, raw material cost is another issue facing the industry. It is a substantial in
crease.
So, Q4 and into next year, it is a dicey market one is looking at...
• Q3 demand is more or less the same as Q2. It is seasonally a little weaker than
Q2. But in this particular quarter, I think there will be some pressure on margi
ns. In Q4, at least for the first two months, the pressure will be even more due
to all the increases that started coming in from July/September - their real ef
fect comes a few months later.
• Two or three situations are likely. The tyre industry may be able to pass on the
price increase. Can t say whether it will happen or not because there are now f
our major players and there is quite a fight going on in the market place. There
is the possibility that in the Budget, the import duty on raw materials will co
me down again - could be a five per cent decline.
• There is also a feeling that by February/March the tension in the Middle East ma
y settle down a bit, so you could see crude prices stabilising at $22-24. If so,
raw material prices will fall. Besides, the rupee has not depreciated against t
he dollar; it has somewhat appreciated. Thereafter the industry may be on a stro
nger footing.
What could be the impact on the domestic tyre industry, of the rounds of consoli
dation beginning to happen?
• The market in India is worth about Rs 10,000 crore. It is in the hands of four b
ig players, two medium players and few small players. The big four - and here I
am assuming Vikrant and JK are merged - are likely to have a 2002-03 turnover of
Rs 8,000 crore. The two medium players - Goodyear and Birla - should account fo
r Rs 1,000-1,200 crore. The rest should notch up another Rs 1,000 crore. About 1
5 years ago, we were 12 big players. But in my opinion, we will see further cons
olidation and nobody should be under the illusion that he is big enough to be no
t gobbled up. I would expect in the next two years, the number of players from f
our plus two, to be reduced by at least one. One more player should get out of b
usiness in the next two years and every two years you should see a player gettin
g out. Ultimately, it will be a business of just four players.
• I am not necessarily saying that the medium ones will go, because Goodyear will
not - they have taken a decision to remain in the business. They may lose money,
but they will stick around, they have deep pockets. Out of the other five, one
or two will be gobbled up over the next five years. The strategy has to be - fir
st you take adequate steps to ensure you are not gobbled up. Second, you must ha
ve a topline whereby you get 20 per cent of the business. So, if you have a mark
et size of Rs 10,000 crore, the minimum critical mass is Rs 2,000 crore. If you
don t reach that, the chances of your going out of business are high.
• Worldwide the industry is highly consolidated. It is a $70-billion market and ou
rs is $2 billion. All Indian players rank between 10 and 20 globally. The top th
ree worldwide are in the range of $12-13 billion, the biggest among us is MRF, a
bout half a billion dollars. If you go to the middle level - like Continental, P
irelli or Yokohama - they are about $2-2.5 billion. So, we are still one-fifth t
he size of medium players globally. But on the other hand, if you reach $1 billi
on, you will be in the top 10.
So what is Ceat s strategy here?
• Strategy won t be any different for Ceat. For all, it hinges on three factors -
topline, then technology - it changes every 4-5 years and most Indian players ar
e not prepared for technology changes. They will have to look for outside help i
n the form of collaboration or partnership.
• Modernisation and minimum critical mass is the other factor. If you try to do so
me of these things early - like we tried to set up a radial plant in league with
Goodyear long time back but were doing it ahead of time - we lost heavily as a
result and had to pull out of the joint venture.
• Likewise, everyone is thinking when to get into radials; but when India will rad
ialise is a million dollar question.
• JK is attempting it, they have a radial facility in Vikrant; but they are unable
to utilise that capacity. They have I think 20,000 plus capacity, but are able
to sell around 3,000 in India. Apollo has announced they will put up a pilot rad
ial facility in Vadodara and they will come up with production early next year.
• All this is very nice to hear. If you go deep, you won t find clear answers from
any company because it depends a lot on Government policy, how infrastructure c
omes up. If roads are not good, radials won t come.
Are you looking for a technology partner?
• I think everybody is! I won t say we are looking for a partner; we are looking f
or an association. It is clear for JK, Modi and Apollo because they have a colla
borator.
• But in the case of MRF and Ceat, there is no clear signal because we don t have
a technology partner today. I am sure over time both of us will figure out who c
an be our technology partner.
Does a technology partner imply an equity partnership?
• Most of the tyre companies abroad are not well placed for equity participation.
Bridgestone lost a lot of money in the US after which they are not keen to set u
p plants.
• Michelin does not operate in partnerships, they like 100 per cent ownership or m
ajority ownership with the rest held by the public. They don t like to have a bi
g local partner anywhere. The European economy has not done well, so the earning
s of European tyre companies are down and they are not keen to invest.
• The weakness with Indian companies is technology. But they are wary of joint ven
tures or partnerships.
• On the other hand, retained earnings at our tyre companies is poor, Rs 10-20 cro
re a year. You can t get technology for that price! So, it is not a simple jigsa
w puzzle to be fixed.
Ceat plans to set up Rs 250-cr truck radial unit
Our Bureau
CHENNAI, June 9
CEAT Ltd plans to invest Rs 250 crore to set up a unit to manufacture radial tyr
es for trucks, according to Mr Kalyan K. Paul, Vice-President, Sales and Marketi
ng, Ceat Ltd. He said that the unit would have the capacity to manufacture 50,00
0 to 60,000 tyres per month.
• Mr Paul said that internationally the market was moving towards radials and the
company expected the Indian market would also grow in that direction, especially
with the proposed investment into the road sector, which was expected to bring
in better roads. The company has imported radial truck tyres from China to test
the market, with the first consignment of 300 to 350 tyres coming in two months
ago. The company manufactures radials for passenger cars and this capacity is ex
pected to be ramped up from 35,000 to one lakh tyres per month. The investment i
n the expansion is around Rs 75 crore to Rs 80 crore in the current year, Mr Pau
l said.
• In the two and three-wheeler segment, the company, which has followed a policy o
f outsourcing, has increased production capacity from 60,000 to five lakh tyres
per month, he said. The company has chalked out an aggressive sales strategy to
increase market share and planned to tie up with leading original equipment manu
facturers. It also plans to increase its imports from the Sri Lankan unit. At pr
esent, the imports from Sri Lanka account for almost 5 per cent of the turnover.
• Ceat plans to spend Rs 15 crore on advertising this year, Mr Paul said. He said
that the company is also actively getting into building relationships with the t
ransporters and is spending Rs 1 crore on AIDS awareness and other lifestyle iss
ues which are centric to this sector. This campaign is expected to cover almost
all the transport hubs in the country, Mr Paul said.
CEAT Limited continued on its turnaround plan by registering a PBT of Rs. 9 cror
e and Operating Profit (PBIDT) of Rs.27.3 crore (up 58 percent) during the First
Quarter ended 30th June 2002. The sales of the company’s products grew by 9.7% to
Rs. 352 crore as against Rs. 321 crore for the corresponding quarter last year
Announcing the Q1 Results, Mr. Paras K. Chowdhary, Managing Director, CEAT Limit
ed said, "These results are a confirmation of the turnaround of our company, whi
ch has been brought about by the CEAT team through greater customer focus and in
creased operational efficiencies.
CEAT is targeting to become a Rs. 1500 crore business this year. We will achieve
this
Improves Market Share in Truck & LCV (Light Commercial Vehicles) Tyres
Truck tyres constitute the largest segment in the Indian tyre market. Maximum gr
owth has been recorded by the company in this segment, where several new product
s were launched to increase the market share to 17%, up from 13% last year. In t
he LCV tyre segment, CEAT’s market share increased to 18%, up from 13% last year.
To meet the growing demand, the company has also started outsourcing Truck tyres
 from its subsidiary company in Srilanka, CEAT Kelani and from TCIL (Tyre Corpor
ation of India Limited), Kolkatta. Combined with CEAT’s own capacities, this would
help in further improvement in the market share in the large Truck Tyre segment
.

To strengthen in Two - Three Wheeler Tyres

• CEAT is aiming at doubling its market share in the rapidly growing two wheeler s
egment, over the next twelve months. To achieve this, CEAT has started outsourci
ng its products in this segment from two new modern manufacturing facilities at
Hyderabad and Vadodara. The product range is also being geared up to meet the ra
pidly growing demand for motor-cycle tyres. The Hyderabad facility has already s
tarted manufacturing motor-cycle tyres, while the Vadodara facility is expected
to be operational by the last quarter of the current financial year.
• Ceat Limited is a major player in the Indian Tyre market. It is present in all s
egments of the tyre market. It has ISO 9000 approved manufacturing facilities at
Mumbai and Nashik. It employs nearly 4800 employees. Ceat is a part of the Rs.6
700 crore RPG Enterprises, amongst the leading industrial groups in India.
Bibliography

SL. NO. BOOKS AUTHOR

1. Marketing Management PHILIP KOTLER

2. Marketing Management Dr.PANDAY RASTOGI