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Quarter Figures Reveal Mixed Results for Indian Manufacturers

Recently released quarterly results for India’s Ceat Ltd show robust growth in the quarter to 30 September 2007. While net sales increased by a respectable but unremarkable 8.5 per cent over the same three months of 2006, to Rs5.83 billion (£72.65 million), operating profit more than doubled during the period. For the quarter to 20 September 2007 Ceat achieved an operating profit of Rs 622.9 million (£7.76 million), up from Rs 307,3 million (£3.82 million) a year earlier. Pre-tax profit showed an even more impressive increase, rising to Rs405.6 million (£5.1 million), a 470.5 per cent increase on the September 2006 figure of Rs71.1 million (£885,600).

11th December 2007/by Tyrepress Editors

Ceat Close to Land Sale Deal

India’s Ceat Ltd is reportedly close to closing a deal that will see 2.8 hectares of surplus land at its Mumbai factory sold off. This sale will most likely take place some time before March 2008, according to managing director Paras K. Chowdhary. He added that the proceeds from the sale would be injected into the company’s plans to expand capacity.

“We are very close to finalising the sale. We had wanted to close it by September but it has been delayed.” he said. “A large part of the expansion will be met from the sale and internal accruals.”

10th December 2007/by Tyrepress Editors

Ceat OTR Factory Plans in Final Stage

Plans by India’s Ceat Ltd to build a factory for the production of 60 tonne OTR tyres should be finalised by the end of the year or shortly afterwards, and construction of the new facility, located near the city of Patalganga in western India, is anticipated to begin by next May. The newspaper Hindu Business Line also reports that ‘sources’ claim discussions between Ceat and possible partners are in an “advanced stage”, indicating that a second-tier tyre major is the most likely collaborator for such a project. The Hindu Business Line named Yokohama, Toyo, Cooper, Kumho and Hankook as likely providers of “decent radial technologies.”

27th November 2007/by Tyrepress Editors

Tyre Sector is India’s Second Best Performer

An analysis of India’s manufacturing sectors, reported in Indian daily The Financial Express, has revealed that the tyre sector, after electronics, was the best performer during the July to September 2007 period. The total net profit figure of the eight tyre companies under the spotlight grew by 139.9 per cent to Rs 1.175 billion (£14.56 million) during the three month period, as opposed to Rs 489.90 million (£6.07 million) during July to September 2006. Of these eight firms, CEAT showed a particularly significant growth in net profit, increasing by 565.8 per cent to RS 255 million (£3.16 million) from Rs 38.3 million (£474,600) a year earlier. The total sales of this group of tyremakers increase by 4.52 per cent during the same three-month period.

20th November 2007/by Tyrepress Editors

Ceat Outsourcing up 25% in Q3

Outsourcing is becoming an ever-larger focus for Ceat, India’s fourth-largest tyre manufacturer. Following the announcement of the company’s July-September results chief financial officer K J Roa reported that, of the 44,000 tonnes of tyres sold during the quarter, up to 10,000 tonnes were sourced from contract manufacturers, including overseas based companies. Compared with the corresponding quarter of 2006, outsourcing grew by 25 per cent whilst overall volumes increased by just 7 per cent year-on-year.

In addition to tyres imported under an agreement signed with Pirelli, Ceat has outsourced production for a number of low-margin items such as tubes, slabs, and tyres for two and three wheeled vehicles. Due to production restraints the manufacturer also currently imports a number of PCR and TBR tyres. In future, said Rao, China will take on an important role as an outsourcing location for the Indian company. Currently a number of products are undergoing testing, and over the next two months volumes from China could rise.

8th November 2007/by Tyrepress Editors

Tubeless Radials the Hot Ticket in India

(Akron/Tire Review – Hindustan Times) The flurry of new car launches in India is bringing in a quiet revolution: tubeless radial tyres have become standard fitment. Most of India’s tyremakers including MRF, JK Tyres and Ceat have started manufacturing tubeless radial tyres.

It is a quiet change on behalf of carmakers, says Tom Thomas, chief of manufacturing and technical for Ceat Tyres. Previously, most carmakers stuck to regulation tyres with tubes. These are cheaper, but they are also prone to punctures and excessive wear and tear. “Tubeless tyres give better long-term value for money for a buyer, and it is easy to repair too,” said a Mumbai-based sales manager for Tata Motors who declined to be named. “Tubeless radials can carry on with a nail in them for many kilometers, and you will probably notice the flat tyre at home, rather than on the road,” added Thomas.

16th October 2007/by Tyrepress Editors

Michelin Runs Training Seminar in Bahrain

A total of 33 employees from Bahrain tyre specialist Ebrahim Khalil Kanoo (E K Kanoo) have been trained at a workshop organised by Michelin. The training was conducted by the Michelin’s Bahrain representative and technical sales officer Mahmoud Madi; and was the first workshop of its kind to be led by Michelin in Bahrain, according to local news sources. Ebrahim K. Kanoo B.S.C. serves customers ranging from on-road to off-road for passenger vehicles; and heavy duty truck tyres and specialised tyres for industrial and construction equipment. The division offers brands such as Michelin, BF Goodrich, Cooper, Sime, Amine and Ceat.

10th October 2007/by Tyrepress Editors

Tyrexpo Asia 2007 ‘Comes of Age’

Increased visitor numbers representing a wider variety of countries and greater numbers of exhibitors taking extra floor space, were the top-line highlights that contributed to a record-breaking sixth Tyrexpo Asia exhibition at the Singapore Expo Centre recently (11-13 September 2007). Figures released by show organiser ECI International confirm that visitor numbers increased by 9 per cent compared to the last event in 2005, with a total of 3,219 people visiting the show from 88 countries. The growing international importance of the exhibition was emphasised by the fact in 2005 only 73 countries were represented by visitors.

Substantial increases were also recorded in terms of the support and commitment from exhibitors. 125 exhibitor stands were booked at the 2007 event compared with 95 in 2005. Meanwhile, the number of exhibitor passes registered rose by as much as 38 per cent, from 535 to 739, while the total exhibition area booked was up by a quarter at 6,500 sq. m, compared to 5,200 sq.m last time.

26th September 2007/by Tyrepress Editors

Indian Tyremakers at Odds with Rubber Board

Tensions between India’s tyre industry and the government run Rubber Board have recently been under strain and appear to be getting worse. Representatives from the tyre industry claim that a drop in natural rubber production of close to 50,000 tonnes since May stands to cost the industry Rs 20 billion (£242.6 million) annually, yet these concerns have been dismissed by the Rubber Board, who argue such dire predictions are no more than a ploy by the tyre companies in order to secure a reduction of import duties on rubber.

Chairman of the Rubber Board, Sajen Peter, states there are no grounds for the tyre manufacturers’ claims. “This year we had projected production to be 8.74 lakh (874,000) tonnes (and domestic consumption to be 8.53 lakh (853,000) tonnes,” he told India’s The Economic Times. “Availability is not a problem at all, even though the chickengunia disease has affected our tappers. Tyre companies have been pushing to reduce the import duty on rubber for a long time now and we are going to fight them till the very end.”

3rd September 2007/by Tyrepress Editors

Ceat Reiterates China Outsourcing Plans

Not wanting to miss out on a sizable chunk of India’s TBR sector, Ceat Ltd has decided upon plans that will see its sales increase from their current 600-700 tyres a month to 4,000-5,000 by June 2008. However to achieve this sixfold increase the Indian tyre manufacturer will need to outsource tyres from arch-rival producer China. India’s Hindu Business Line reported further news about the company’s plans on August 13.

“We have shortlisted a few Chinese producers and are currently evaluating the performance of these tyres. The evaluation process will be over shortly to make way for regular outsourcing,” a company official told the business daily. The tyres, unlike those sourced from Pirelli, will be marketed under brand names other than Ceat.

As previously reported by Tyres & Accessories, Ceat still hopes to enter into a technology sharing arrangement with an overseas tyre major, and while the Global top five manufacturers have not shown much interest in such a deal, a number of large tyremakers are still considered to be potential partners in a greenfield radial facility. However the company confirms it will proceed with this plant even without an overseas partner.

14th August 2007/by Tyrepress Editors

Indian Tyremakers Thinking Globally

With India’s vehicle industry experiencing a slowdown of late, the country’s tyremakers have needed to consider how to best maintain their profits. According to a report published in India’s Business Standard newspaper, a number of manufacturers including Apollo, Ceat, JK Tyre and MRF are increasingly thinking internationally in the face of this new challenge. Not only are Indian tyremakers looking at establishing overseas manufacturing plants – at least one is also casting its gaze at established manufacturers in other countries with a view to acquiring one of these firms.

The nation’s second largest tyre manufacturer, Delhi based Apollo Tyres is reportedly actively pursuing the acquisition of an overseas tyremaker. It seems most likely that Apollo will seek the purchase of a company based in Europe, although an acquisition in the Americas is by no means out of the question. “Margins are better in Europe with good product acceptability and confidence in technology,” commented Neeraj Kanwar, joint managing director and COO, Apollo Tyres. The company has seen European market demand for radials increase substantially in recent times, and on the back of this Apollo aims to become a major player in Europe in the next half decade or so.

13th August 2007/by Tyrepress Editors

Ceat to Cut Costs Through Plant Relocation

Ceat Ltd. intends to move its factory located in the Mumbai suburb of Bhandup to Patalganga, near the city of Thane and around 30km northeast of Mumbai. According to a report published in India’s Economic Times on August 8, the main motivation behind the proposed shift is to reduce costs and bring down the amount spent on local ‘octroi’ taxes.

The almost half-century old factory will be dismantled and relocated in phases, and CEAT has already decided upon the sale of 6.5 acres of surplus land at the plant site. At current real estate prices the site’s entire 31 acres may well fetch up to Rs 5 billion (£61 million) when disposed of.

“It is the reality of life. The company has to shift out tomorrow if not today,” said Ceat managing director Paras Chowdhary. Ceat, a company achieving a net profit of Rs 390 million (£4.7 million) in the year to March 2007, reportedly hand over about Rs130 million (£1.6 million) in local taxes on materials entering Mumbai city limits for use, consumption or sale.

9th August 2007/by Tyrepress Editors

Indian Tyremakers to Spend £670 million

According to India’s Economic Times, tyre companies in the subcontinent plant to invest around £670 million in their operations over the next two or three years. The financial daily reports that this sizable sum will be spent by a number of players including MRF, JK Tyre, Apollo, BKT, Ceat, Birla and Bridgestone. Birla alone is reportedly spending £120 million, while Ceat is said to be making investments worth £97 million and JK Tyre £45 million.

Such a large investment is expected to increase industry turnover from its current £2.3 billion up to £3.9 billion, and much of the increase may come from the production of TBR tyres. While radialisation in the passenger car sector has reached over 95 per cent in India, TBR market penetration remains a paltry 2 to 3 per cent.

30th July 2007/by Tyrepress Editors

Ceat shareholders Give OK to Demerger

Shareholder’s in India’s Ceat Ltd have approved the demerger of the company’s investment arm CHI Investment into a standalone entity. The demerger had previously been approved by the Bombay High Court.

Ceat said the demerger would enable it to optimise performance and enhance value for the shareholders by concentrating on its core business. Post demerger, the company’s shareholder would get 25 shares in CHI and 75 shares in Ceat for every 100 shares held on the date of recording.

30th July 2007/by Tyrepress Editors

Hangzhou Tyres OE in India

Tyres produced by Hanzhou Zhongce, the Chinese manufacturer at the centre of a half a million-unit recall in the US, are supplied OE clients such as Tata Motors in India. “Tata Motors is satisfied with the quality of tyres from China, and has not faced any issues,” a Tata Motors was quoted as saying. The tyres involved in the US were radials, while Tata Motors imports only bias tyres, one Indian news source reported.

Indian tyre manufacturers told dnaindia.com that while Hangzhou Zhongce Rubber has the technology to manufacture quality products – it contract manufacturers for other global brands like Goodyear and Cooper – many smaller Chinese companies dump substandard products in the Indian aftermarket.

“It’s a little scary, given our lack of safety regulations or data on fatality rates due to tyre failure. Chinese imports between April and December 2006 were over 500,000 units compared to 300,000 in the entire 2005-06,” said a senior official of a local tyre manufacturer.

9th July 2007/by Tyrepress Editors