Ceat to open Bangladesh plant within two years

On 8 February Indian tyre maker Ceat Ltd informed the Bombay Stock Exchange that its Board of Directors has agreed on plans to establish a new facility in Bangladesh. The plant will be capable of producing 65 tonnes of tyres per day, the BSE filing stated.

The company’s official filing provided no further information on the project, however various Indian media sources have published additional details. The Economic Times and Hindu Business line report the Bangladesh plant will be built with an investment of around Rs 2.5 billion (£31.7 million); production is expected to start before the end of the 2013 Indian financial year and the Business Line quotes Ceat deputy managing director Anant Goenka as stating truck and light truck tyres will account for 80 per cent of total production capacity, and tyres for two and three wheelers and ‘last mile’ vehicles the remainder. Speaking with the Press Trust of India, Ceat managing director Paras Chowdhary also shared that the plant will initially specialise in the production of cross-ply tyres.

“This will be the first such big tyre plant in Bangladesh. The country has only a few small tyre plants,” Chowdhary told PTI. “The products will be mainly for the Bangladesh market.” He commented that Ceat is currently looking for a suitable site for the manufacturing facility: “We are hopeful of starting construction work in the next three to six months. The plant will be operational within little over two years.”

Bangladesh is the company’s second overseas manufacturing location – Ceat currently operates three plants in Sri Lanka through its Ceat Kelani Holding joint venture alongside its three Indian facilities and is said to enjoy a market share of about 50 per cent in Sri Lanka; Ceat reports the joint venture company holds a “dominant market share” in all tyre categories. “Over the next three years, we will be looking at increasing our market share in Bangladesh up to about 40 per cent,” related deputy managing director Goenka to the Hindu Business Line. “We have a strong presence in Sri Lanka as the only tyre manufacturer. We hope to replicate the same in Bangladesh.”
Sharing other project details, Goenka said the required investment funds will be raised through a mix of equity and at least 60 per cent debt, and approximately 80 per cent of the raw materials for the plant will be imported from India and South-East Asia. “We will be competing mainly with imports and, therefore, have a cost advantage,” he said. “There is good demand for Indian-manufactured tyres out there.”