Ceat to Build Third Indian Facility

India’s Ceat Tyres is investing approximately £70 million to £80 million in the establishment of the company’s third domestic Greenfield plant. The decision to build such a facility has been prompted by the global demand for commercial vehicle tyres, which the company intends to produce at the new site. Passenger car radials will also be produced at the facility. The Ceat group is presently looking for a suitable site in the states of Maharashtra, Gujarat or the excise-free zones of Uttarakhand. The new capacity will boost the company’s current overall capacity by 100 tonnes per day to 400 tonnes per day.

“We want to increase our output to cater to the export market,” said Arnab Banerjee, Ceat’s vice-president ofsales and marketing. “For this, the company will set up a greenfield unit in the country. About 60 to 70 per cent of the output will be shipped abroad.”

The investment will be spread over three to four years, starting from the financial 2008 year when the project is expected to commence. The company intends to fund the project with a mix of debt and equity. However, no details of the ratio have been declared. Additionally, Ceat has decided to part finance the project using the proceeds from the sale of 6.5 acres of real estate in Mumbai. The company expects to obtain approximately £15 to £18 million from this sale.

At present Ceat derives about 25 per cent of its total revenues from exports, earning the company some £45 million to £60 million annually. Ceat expects, according to Banerjee, to double this figure within the next three years through focusing upon attaining a significant market share in South America, Europe and North America.