Ceat Chooses Consultancy Over Strategic Partner

Ceat Limited is reportedly no longer seeking a strategic partner for its planned radial facility in Baroda, India, and is instead receiving technological assistance and know-how from a US based consultancy firm. The tyremaker has sought a partner for assistance in setting up a more than Rs 6 billion (£72.6 million) truck and bus radial factory for more than a year, and in February Sales and Marketing vice-president Arnab Banerjee felt confident enough on the likelihood of this to say that Ceat “should be able to finalise the partners soon.”

India’s The Financial Express newspaper reports ‘sources close to the development’ have offered several reasons why Ceat has embarked on its current course of action: International tyre companies wanted to float a separate company, appoint an independent CEO and hold a 51 per cent share in the new venture. “We were looking at a strategic partner for the new radial plant in Baroda and wanted to tie up with an international tyre company. But the strategy did not work out,” said managing director Paras K Chowdhary, managing director. The chosen technology sharing arrangement is more in keeping with Ceat’s own wants, and will be in place for a period of five years.

The facility is expected to start production in the next two years and is expected to have an initial capacity of 100 tonnes per day. The 53 hectare plant will produce into both passenger car and truck radials. It is possible that Ceat’s passenger car tyre facility in Nasik may be integrated into the new factory.

Commenting on the state of radialisation in India, Chowdary said the in the bus and truck tyre market it currently stands at 10 per cent, while it is almost universal for passenger cars. “Radialisation makes up to around 15 per cent – 17 per cent of the total Rs 19,500 crore (£2.36 billion) turnover of the tyre industry,” he added.