Ceat Opens New Factory for Radial Tires

Leading Indian tire manufacturer Ceat, which is part of the RPG Group, has opened a new factory for the manufacture of radial tires. The new factory is located near Chennai, the capital of the state of Tamil Nadu in southern India and Ceat invested an initial amount of USD 196 million in the factory which will specialize in the production of radial tires for passenger cars and two-wheelers.

With the establishment of this factory, Ceat has joined the growing list of tire manufacturers who have production facilities in Tamil Nadu. Other companies which have factories in the state include Apollo Tyres, JK Tyres, Michelin Tyres and Alliance Tire Group as well as MRF and TVS Tyres.

The new factory in Chennai is Ceat’s sixth such factory in India and is expected to help the company to cater to the growing demand for tires in the car and two-wheeler segments. The factory was formally inaugurated in the presence of the Chief Minister of Tamil Nadu, Edappadi K Palaniswamy.

The new factory is located on a site that sprawls over 163 acres and over the next few years, Ceat plans to invest a total amount of USD 559 million in the next few years. Initially, the factory will have a workforce of about 350 people, and when the capacity is increased as part of the expansion of the plant, the number of employees is expected to increase to about 1,000 people.

Currently, Ceat makes 1,000 tons of tires on a daily basis and with the addition of the new factory, it is expected that this will increase to 1,250 tons when the Chennai plant attains its peak capacity of 250 tons a day from about 150 tons now.

According to Anant Goenka, Managing Director of Ceat, the factory will meet the demand for tires from several automakers like Hyundai, Renault-Nissan and two-wheeler manufacturers like Royal Enfield who are based in the region. The factory will specialize in the production of radial tires for passenger cars and tires for premium bikes. The plant has the capacity to produce about 28,500 passenger car radial (PCR) tires and 2,500 motorcycle-radial tires on a radial basis and the contribution of the Chennai plant to Ceat’s production is expected to boost the company’s market share in both segments. Currently, Ceat has a market share of about 10 per cent in the PCR segment and 28 per cent in the two-wheeler tire segment.

Overseas markets

The tires produced at the new factory will also be exported overseas to markets like Europe, the US and South Asia. Ceat exports the tires it makes at its other factories to over 90 countries. Tires for the replacement market account for about 60 percent of Ceat’s revenue while the OEM and export segments account for 30 per cent and 10 per cent of the company’s revenue, respectively.

When it comes to product revenues, while tires for two and three-wheelers contribute about 32 per cent,  truck and bus radial tires contribute to about 30 per cent revenues. PCR, LCV, farm and speciality tires bring in the balance 38 percent of the revenue.

Ceat has OE fitments from about a dozen car manufacturers in India, including the recent Kia and MG Motors pacts. The tire maker also supplies tires to supplies its tires to almost all two-wheeler makers other than TVS Motor, including some electric two-wheeler companies. Leading truck and tractor makers also procure tires from Ceat.