Ceat boosting TBR capacity to meet international growth ahead of US launch

In January 2022, Ceat announced it had “curbed” its ambition in the truck and bus radial segment and was looking to shift its investment focus to off-highway tyres. The company now appears to have reconsidered this step and is reactivating previously approved TBR capacity expansion plans.

Thanks to “good feedback and acceptance in international markets” driving TBR exports, capacity utilisation at Ceat’s factory in Halol, India has now exceeded 90 per cent. “Therefore, we think it is important to resume the Chennai TBR expansion,” shared Arnab Banerjee, managing director and chief executive officer of Ceat Limited, during an earnings call on 26 July. These words appear to reverse the decision the company took early last year, when the then managing director, Anant Goenka, announced Ceat had elected to “indefinitely postpone” phase two of its TBR project.

Ceat’s Board of Directors has already approved this project, which in its entirety will lift monthly capacity by 90,000 tyres. Half of this capacity increase will be added in the first phase that Ceat now intends to implement. “The total capex over the years will be around INR 700 crores (Rs 7 billion, £66.46 million, $85.05 million),” says Banerjee. “This investment fits well into our plan of incurring bite-sized capex every year and into our pecking order of capital allocation across categories.”

Europe, America sales doubled

According to Banerjee, Ceat now achieves almost a fifth of its sales in international markets. Exports made up 18 per cent of the Indian tyre maker’s revenues in the three months to 30 June 2023, or around Rs 5.28 billion (£50.13 million, US$64.15 million). The managing director and chief executive officer reports that sales in “focused geographies” – the EU and the Americas – have doubled in the past four years.

Most of the 2 million or so passenger car tyres that Ceat exports each year are sold in the EU, shares Banerjee. He adds that the truck and bus tyre line-up launched in the region last year has “seen good acceptance by customers.” Ceat now aims to debut its TBR range in the USA in the first three months of 2024, the final quarter of its current financial year.

“The US launch will start from FY’24, Q4, starting with TBR and then following with the first range of SKUs of PCR,” comments Banerjee. While he believes setting a specific turnover target is “very difficult,” Banerjee says Ceat is “pretty bullish” about ramping up its business in the USA even more quickly than it did in Europe.