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II BBM(A)-0911003

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The present work is an effort to throw some light on ͞ ' (!% '( c
')*. The work would not have been possible to come to the present shape
without the able guidance, supervision and help to me by number of people.

With deep sense of gratitude I acknowledged the encouragement and

guidance received by my organizational guide '"+,)(&and other staff
members

I convey my heartful affection to all those people who helped and

supported me during the course, for completion of my Project Report.

        


        

-#"+c"!!

[
c
        
‰ BACKGROUND
‰ OVERVIEW OF THE SITUATION
[   




 

‰ Technology based
‰ Use based
‰ Markets
‰ Market Share and Size
‰ Peculiar Features of the Tyre Industry
‰ Demand Drivers
[ '!$)(! '(#
‰ Opportunities Lying Ahead
[ ')
‰ Tyre Company Profiles

‰ RESEARCH HYPOTHESIS

‰ RESEARCH OBJECTIVE

‰ BENEFITS OF THE STUDY

‰ SCOPE OF THE STUDY



[  c .


[
/

0

/  c
1 /

c





 ‰ CONCEPTUAL FRAMEWORK

‰ DEFINITION/OPERATIONALIZATION OF TERMS


[  
c 
/ 

‰ RESEARCH SAMPLING AND DESIGN

‰ RESEARCH VARIABLES AND MEASUREMENT

‰ DATA COLLECTION METHODOLOGY

‰ LIMITATIONS OF TRESEARCH


[ 

   






‰ PRESENTATION OF DATA

‰ DATA ANALYSIS

‰ SWOT ANALYSIS

[ 
cc

 c 



‰ CONCLUSION
‰ RECOMMENDATIONS
‰ REFERANCES

c


Ceat Ltd, a part of the RPG Goenka group, is the second largest tyre
manufacturer in the country after MRF. Ceat manufactures truck & bus,
passenger car, scooter and LCV tyres. The company is a dominant player in the
truck & bus and passenger car tyre segments with a market share of 14% and
17% respectively. In FY2000, Ceat did well to posting a 21%yoy sales growth in
the replacement market for truck & bus tyres. It is presently focusing on catering
to the fast growing passenger car and two-wheeler industry. Towards this, it is
commissioning a new radial tyre factory in June 2000.

!$2)'-)()

Tyre industry is capital intensive and as capacities come in spurts, it leads to

constant demand-supply imbalances and consequent cyclicality in prices.
Variable cost is also very high, with raw materials forming nearly 70% of the
costs. Profit margins are therefore thin. Production process is technology
intensive and globally huge sums are invested in R&D. Tyre demand is a derived
demand, dependent on the auto industry, both for OEM and replacement
market. The major segments are Truck & Bus (T&B) tyres and car tyres. Value
share of T&B segment is about 73%. This segment is highly competitive and
margins are typically lower than in the car tyres segment. Replacement market
forms the largest segment (about 58%), followed by OEM (about 22%). Export
accounts for about 15%. With global demand slowing down, there is a


consolidation of capacities through mergers etc. The domestic tyre industry
broadly mirrors the market characteristics of the global industry. However, due
to rough road conditions, the more rugged, suitable and cheaper cross ply tyres
are in vogue. Consumption of natural rubber is, therefore, proportionately
higher. The government has decided to impose 10% safeguard duty on carbon
black and hiking benchmark prices of natural rubber (25-30% of sales) in
February 1999. Its impact was felt only to an extent as prices of these
commodities are ruling at historical lows in the global market.

Ceat is part of the RPG group, which is diversified, with presence in major sectors
like power, fertilizers, pharmaceuticals, tyres, computer, telecom, financial
services etc. The group stumbled trying to grow via diverse platforms and has
many companies that have turned sick. But lately the strategy seems to be one
of restructuring and consolidation. The group is divided into 4 broad areas -
rubber & allied products, power, electronics & telecom and chemicals. Ceat͛s
investments in its subsidiaries have also come down this fiscal which is a sign of
prudence on the management.


  c



Ceat is a manufacturing company, which produces rubber, tire, nylon fabric

products, nylon tire yarn, glass fiber, automotive flaps, filament mats and other
rubber products for the automotive markets in India. The company has a well
established research and development center that evaluates the application and
development of new raw materials, compounds and tire sizes. It produces tires
for two and three wheeled vehicles, passenger cars, LCVs, trucks and buses. Ceat
exports to almost 50 countries, with the US being the largest destination.


The company also provides investment financial services through Meteoric
Industrial Finance and Atlantic Holdings. Automotive tire sales account for
around 90% of revenues, automotive tubes account for about 8% and the
remaining revenues come from other non-core operations.

The company is pursuing a strategic initiative of intensifying outsourcing to

expand its product range and increase production volumes. Ceat has an
agreement with Pirelli of Italy for outsourcing radial tires which are being
marketed under the CEAT Spider Radials brand name.

c





Ceat Limited is a manufacturer of tires in India. Automotive tires comprise the

largest part of the Company's revenue, however it also produces tire flaps,
rubber tubing and nylon thread. The Company also offers financial services
through Ceat Financial Services Limited, including hire purchase, office
equipment finance, container and equipment/infrastructure leasing and money
market operations.

()"'

CEAT stands for Cavi Electrici Affini Torino (Electrical Cables and Allied Products
of Turin).

CEAT International was first established in 1924 at Turino in Italy and

manufactured cables for telephones and railways.

In 1958, CEAT came to India, and CEAT Tyres of India Ltd was established in
collaboration with the TATA Group.


In 1982, the RPG Group took over CEAT Tyres of India, and in 1990, renamed the
company CEAT Ltd.


 
  1
,

Ceat Ltd, a part of the RPG Goenka group, is the second largest tyre
manufacturer in the country after MRF. Ceat manufactures truck & bus,
passenger car, scooter and LCV tyres. The company is a dominant player in the
truck & bus and passenger car tyre segments with a market share of 14% and
17% respectively. In FY2000, Ceat did well to posting a 21%yoy sales growth in
the replacement market for truck & bus tyres. It is presently focusing on catering
to the fast growing passenger car and two-wheeler industry. Towards this, it is
commissioning a new radial tyre factory in June 2000.

!$2)'-)()

Tyre industry is capital intensive and as capacities come in spurts, it leads to

constant demand-supply imbalances and consequent cyclicality in prices.
Variable cost is also very high, with raw materials forming nearly 70% of the
costs. Profit margins are therefore thin. Production process is technology
intensive and globally huge sums are invested in R&D. Tyre demand is a derived
demand, dependent on the auto industry, both for OEM and replacement
market. The major segments are Truck & Bus (T&B) tyres and car tyres. Value
share of T&B segment is about 73%. This segment is highly competitive and
margins are typically lower than in the car tyres segment. Replacement market
forms the largest segment (about 58%), followed by OEM (about 22%). Export


accounts for about 15%. With global demand slowing down, there is a
consolidation of capacities through mergers etc. The domestic tyre industry
broadly mirrors the market characteristics of the global industry. However, due
to rough road conditions, the more rugged, suitable and cheaper cross ply tyres
are in vogue. Consumption of natural rubber is, therefore, proportionately
higher. The government has decided to impose 10% safeguard duty on carbon
black and hiking benchmark prices of natural rubber (25-30% of sales) in
February 1999. Its impact was felt only to an extent as prices of these
commodities are ruling at historical lows in the global market.

Ceat is part of the RPG group, which is diversified, with presence in major sectors
like power, fertilizers, pharmaceuticals, tyres, computer, telecom, financial
services etc. The group stumbled trying to grow via diverse platforms and has
many companies that have turned sick. But lately the strategy seems to be one
of restructuring and consolidation. The group is divided into 4 broad areas -
rubber & allied products, power, electronics & telecom and chemicals. Ceat͛s
investments in its subsidiaries have also come down this fiscal which is a sign of
prudence on the management.

!$(!'
!$2)'

The tyre industry has witnessed a CAGR of 8.3% over the last decade mainly
fuelled by the strong growth in the domestic auto industry. Though the
replacement market has driven the industry growth for long time, the OEM
market has seen a robust growth over the last couple of years.


The industry is highly capital intensive, as it requires around Rs4bn to setup a
radial tyre plant with a capacity of 1.5mn tyres and around Rs1.5-2bn for a
crossply tyre plant of a capacity to manufacture 1.5mn tyres.

The profitability of the industry has high correlation with the prices of key raw
materials such as rubber and crude oil as they account for more than 70% of the
total costs. The raw material to sales ratio in the industry is around 65%.

The industry has high entry barriers because of its capital intensive nature and
low operating margins. With demand increasing at a steady pace, the industry is
expected to go through a consolidation phase.

The industry is dominated by four players viz MRF, Apollo Tyres, JK Industries
and Ceat and enjoys more than 70% of the total market share.

The fortunes of the industry are linked to the trend in the domestic auto
industry, retreading, trend in road transportation and spending on road
infrastructure.

The companies have lined up further expansion plans to meet the increasing
demand.

India Infoline Sector Studies : Indian Tyre Industry is available in Acrobat Reader
(PDF) format. The Report provides exhaustive information on the Indian Tyre
Sector, the demand drivers, trends in the industry (with respect to production,
exports, market share), key characteristics of the Indian market and profile of
leading players in India.







"'$)" ''()"!3)'2--'$(4()("!&'%'(c

2'2'2

MUMBAI, April 19

THE process of consolidating the rubber business of the Rs 6,700-crore RPG

Enterprises got under way with the boards of Ceat Ltd and Harrisons Malayalam
Ltd (HML) approving the scheme of arrangement involving the demerger of the
rubber division of HML and its transfer to Ceat.

The appointed date of the Scheme of Arrangement is fixed as October 1, 2002.

Under the demerger plan for HML, Ceat will issue 95,03,900 equity shares of Rs
10 each to HML and 36,91,081 equity shares of Rs 10 each to the shareholders of
HML in the ratio of one share for five equity shares held by these shareholders.

The existing paid-up capital of HML will be reduced from Rs 18.45 crore to Rs
9.23 crore by reducing the paid-up value of each equity share of Rs 10 each to Rs
5 each. Besides, Ceat's investment portfolio will be demerged and transferred to
Meteoric Industrial Finance Company (MIFL), one of Ceat's non-banking financial
subsidiaries.

Under this demerger, MIFL will issue 3,52,13,320 equity shares to shareholders
of Ceat in the ratio of one equity share of MIFL of Re 1 each for every one equity
share of Ceat of Rs 10 each held by such shareholders in Ceat. This scheme will
provide reclassification of the unissued equity shares of Rs 10 each of MIFL into
equity shares of Re 1 each.


Post this issue of shares, MIFL will cease to be a subsidiary of Ceat and an
application will be made to the Bombay Stock Exchange for listing the company.

The objective of this consolidation is to strengthen the rubber business by

creating backward integration for Ceat, an official press release said quoting Mr
Harsh Goenka, Chairman, RPG Enterprises.

"With the merger of HML's rubber division and the divestment of all its non-tyre
assets Ceat will be able to focus on its tyre business and also improve its option
for sourcing this important raw material for its tyre manufacturing activities and
bring about synergistic effects,'' RPG Enterprises said in the press release.

Ceat had earlier said that the merger of the rubber division of HML with itself
would improve the company's options for sourcing this important raw material
for its tyre manufacturing activities and bring about synergic effects.

HML's rubber division has a turnover of Rs 50 crore from a crop output of about
10,000 tonnes per annum, while Ceat's natural rubber consumption was
approximately 50,000 tonnes worth Rs 260 crore last year.

As regards HML, the demerger of the rubber division will help it to focus on its
core business area of tea. The financial restructuring would enable the business
to grow not only its tea business but also consider expansion into new
agriculture related food products.

The Board of HML also gave its approval for a scheme of amalgamation of its 100
per cent subsidiaries, Harrisons Agro Products Ltd, Harrisons Rubber Products
Ltd and Harrisons Malayalam Financial Services Ltd with itself.


The valuers to the Scheme are SBI Capital Markets & KPMG and the advisors are
Lodha & Co.

The scheme is subject to the sanction of the courts and the National Company
Law Tribunal. Ceat, MIFL and HML and its subsidiaries will apply to the High
Courts for approval. Khaitan & Co has been appointed as advocates to the
scheme for this purpose.

5 

 

AVAILABLE NOW! LABOR PRODUCTIVITY BENCHMARKS AND VERTICAL GAP

ANALYSIS ON Ceat Limited

Published today by ICON Group International, Ltd. Two of the most

comprehensive studies to date on labor productivity and vertical gap analysis
benchmarks for Ceat Limited (BOM).

The methodologist for this unique study is Philip Parker, Eli Lilly Chair Professor
of Innovation, Business and Society at INSEAD (Fontainebleau, France and
Singapore). According to Professor Parker, ͞With the globalization of markets,
greater foreign competition, and the reduction of barriers to entry, it becomes
all the more important to benchmark a company͛s financial indicators on a
worldwide basis. World stock markets have recently witnessed a return to
fundamental financial analysis. ͟ The goal of the reports is to assist consultants,
financial managers, strategic planners, and corporate officers in gauging certain
indicators of Ceat Limited͛s financial and human resource structure.

The report has benchmarked Ceat Limited against competing firms in the Tires
and Inner Tubes Manufacturing industry worldwideͶgoing beyond traditional
methods of company benchmarking. The results are two specialized reports: (1)


global financial benchmarks using common-size statement ratios (vertical
analysis), and (2) labor productivity and utilization measures collected across
borders.

c"4'%

Two reports, financial ratios and labor productivity ratios, are available for Ceat
Limited. Each report reveals productivity and industry ranks for Ceat Limited in
the Tires and Inner Tubes Manufacturing industry. Reports for the following and
many other Tires and Inner Tubes Manufacturing companies are available now:

'($%)"!c"'6"'("!

Brisa Bridgestone Sabanci Lastik Sanayi ve Ticaret AS

Ceat Limited, Compagnie Financiere Michelin, Compagnie Generale des
Etablissements Michelin
Continental AG
Cooper Tire & Rubber Co
DMIB Berhad (Malaysia)
Dunlop Africa Limited
Feng Tay Enterprise Co Ltd
Goodyear (Thailand) Public Company Limited
Goodyear Indonesia P.T.
Hankook Tire Co. Ltd.
Heung Ah Corp
Kenda Rubber Industrial Co., Ltd.
Kumho Industrial Company Limited
Marangoni S.p.A.
Nexen Tire
Pirelli S.p.A.
Sumitomo Rubber Industries Ltd.
The Goodyear Tire & Rubber Co
Toyo Tire & Rubber Co., Ltd.
Vredestein NV


" "&2--'c"&6!(&($

— The vertical analysis deals with questions like: How has Ceat Limited͛s
asset structure varied compared to global benchmarks for the Tires and
Inner Tubes Manufacturing industry? Does it generally hold more cash
and other short-term assets, or does it tend to concentrate its assets in
physical plant and equipment? On the liability side, does Ceat Limited
typically have a higher percent of payables compared to the benchmarks,
or does it hold a higher concentration of long-term debt? Does Ceat
Limited have a relatively higher cost of goods sold, operating costs, or
income taxes compared to global benchmarks? Have Ceat Limited͛s
returns on equity been higher or its profit margins greater?
— While the labor productivity analysis answers the following: What has
been the ratio of short-term and long-term assets to employee? What
are typical capital-labor ratios? What are the average sales and net
profits per employee compared to global benchmarks?

— Professor Parker notes, "We are intrigued by the wide variations in basic
financial and productivity measures between Ceat Limited and other
Tires and Inner Tubes Manufacturing companies. The Earnings Before
Interest And Taxes (EBIT), for example, varied from -2.1 to 64.21. We see
this type of variation in the hundreds of ratios that we estimate.͟

"$"#"%7!"4'(!%6)

Most vertical analyses merely focus on benchmarking against domestic ratios,

often published by government agencies or commercial sources. In contrast, the
report calculates thousands of industry norms by looking at firms at the global


level, pooling statistics on tens of thousands of companies across over 40
"2!'()!$66#(!%)4!8)%&"$"#"%7

(1) identification of industry classifications,

(2) firm-level data collection and aggregation,
(3) standardization of raw statistics,
(4) filtering outliers,
(5) calculation of global norms,
(6) projection of deviations and gaps, and
(7) projection of ranks and percentiles. For each part of the financial
statement, the larger structural differences and gaps between Ceat
Limited. and the global benchmarks are provided with summary tables of
ranks and percentiles.
TYRE manufacturer Ceat Ltd is on the road to recovery. Yet even as it leaves its
losses behind, refuses to borrow and enhances sales, there are sectoral issues it
must confront. ' ') 5 c"$' !%(!% ('"' c spoke
recently to m


 on the domestic tyre industry and challenges before it.





  
c

This report is for information purposes only and does not construe to be any
investment, legal or taxation advice. It is not intended as an offer or solicitation
for the purchase and sale of any financial instrument. Any action taken by you on
the basis of the information contained herein is your responsibility alone and
India Infoline Ltd (hereinafter referred as IIL) and its subsidiaries or its employees
or directors, associates will not be liable in any manner for the consequences of


such action taken by you. We have exercised due diligence in checking the
correctness and authenticity of the information contained herein, but do not
represent that it is accurate or complete. IIL or any of its subsidiaries or
associates or employees shall not be in any way responsible for any loss or
damage that may arise to any person from any inadvertent error in the
information contained in this publication. The recipients of this report should
rely on their own investigations. IIL and/or its subsidiaries and/or directors,
employees or associates may have interests or positions, financial or otherwise.




 
 
c 

The research Methodology defines the is the purpose of the research,

how it proceeds, how to measure progress and what constitute success with
respect to the objectives determined for carrying out the research study, the
appropriate research design formulated is detailed below.

Exploratory research: this kind of research has the primary objective of

development of insights into the problem. it studies the main area where the
problem lies and also tries to evaluate some appropriate courses of action.

The research methodology for the present study has been adopted to reflect
these realties and help reach the logical conclusion in an objective and scientific
manner.


 The important component of research methodology such as, method of
data collection, tools for processing of the data and reporting format of the
study, are enumerated as follows:



c c


The present study contemplated an exploratory research.

ö "!$'$7 secondary data which is already available and published

.it could be internal and external source of data.
ö
!'!# )"2'7 which originates from the specific field or area where
research is carried out e.g. publish brouchers, official reports etc.

ö 9'!# )"2'7 which originates outside the field of study like books,
periodicals ,journals, newspapers and the internet.



 



ö Secondary data has been used which is collected through articles,

reports, journals, magazines, newspapers reports prepared by research
scholars, universities and internet.


 c
 

Analysis of data has been done with help of various statistical tools like the
tables and graphs.



   







This Report features up to a ten-year record of the equity Price history for Ceat
Limited. Tabular results include the High, Low and Closing price for the quarter.
There is also a calculation of percentage change in price for both Quarterly and
Annual periods. Price values are adjusted for stock splits and dividends.

— Ceat Limited. The Group's principal activities are to manufacture and

distribute automotive tyres, tubes and flaps. The products include nylon
fabric, nylon tyre yarn, glass fibre, automotive flaps, filament mats and
other rubber products. The Group also provides investment financial
services. The Group supplies to over 50 countries with the major business
links in the United States of America, Singapore, the United Arab


 Emirates, Bangladesh, Philippines, Afghanistan, and Nigeria and other
Asian, Middle East and African countries.


 "2!$c"!!"+6(#6"'


'
!$2)'
6'(#:;;<26$

The tyre production in India witnessed a growth of 29.8% on a yoy basis in the
month of April 04. The most significant growth was seen in the production of the
passenger car segment, which saw a jump of 59% to 936,853 in April 2004 as
against 588,238 in April 2003. Other significant segments were the motorcycle
segment and the tractor segment. The motorcycle segment witnessed a growth
of more than 29% and the tractor segment (Front, Rear and Trailer) registered a
growth of more than 25%.

— The contribution of the tyre and bus segment to the total production in
April 2004 reduced to 18.8% from 21.6% in April 2003. The passenger car
segment, which contributed 16.3% in April 2003, increased its share in
total production to 20%. The share of the tractor segment decreased
from 5.1% to 4.9% for the same period.
— If any indication from these figures have to be taken, the growth in the
passenger segment would be more than that in the commercial vehicle
segment in the near future. In the recent past, there has been an
ostensible shift in the demand of two wheelers from scooters to
motorcycles. The figures for the production of tyres in the respective
segment envisage the scenario to continue in the near term. Above
average pre-monsoon showers are expected to give positive triggers to
the demand of tractors. Increasing production of tractor tyres is an
indicator for the same.
— Exports of tyres grew by a substantial 39.6% in April 2004 to 291,409
from 208,710 in April 2003. The major contributors to this growth were
the passenger car and the scooter segments by registering a growth of
200% and 293%. During FY04, exports contributed to the tune of 20.6%


 and 6% to total production of tyres in truck & bus and passenger car
segments respectively. The same figures for the respective segments
were 17.7% and 5.5% in April 2004. In FY04, the exports contributed 4.6%
of the total tractor tyres production, which decreased to 2.9% in April
2004. This further indicates that the domestic auto industry is all set to
witness a substantial growth.

'"$2("! 96"')


!&!
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6'8;= '"
6'8;<
6'8;= '"

Truck & Bus 880,275 777,280 13.3 154,695 123,760 25.0

LCV 291,828 219,895 32.7 62,677 45,475 37.8

Jeep 130,774 100,235 30.5

Passenger Car 936,853 588,238 59.3 51,573 17,157 200.6

"#<8#' ::=>?=; @ABCA<B =:> :AB><C @BA=>: <<=

Tractor (Front) 108,756 94,360 15.3 1,104 1,955 (43.5)

Tractor (Rear) 80,309 58,056 38.3 5,326 11,244 (52.6)

Tractor (Trailer) 40,590 30,860 31.5 217 226 (4.0)

"#'"' ::>ACC @B=:?A :C= AA<? @=<:C C;C

Scooter 796,918 611,033 30.4 12,225 3,110 293.1

Motor Cycle 1,362,593 1,054,453 29.2 2,750 1,975 39.2

Moped 8,205 18,508 (55.7) 4 646 (99.4)

"#:8#' :@A??@A @AB=>>< :B? @<>?> C?=@ @A@<

Animal Drawn 9,514 18,585 (48.8)


2)(!)) )'(6("!7 Ceat Limited. The Group's principal activities are to
manufacture and distribute automotive tyres, tubes and flaps. The products
include nylon fabric, nylon tyre yarn, glass fibre, automotive flaps, filament mats
and other rubber products. The Group also provides investment financial
services. The Group supplies to over 50 countries with the major business links in
the United States of America, Singapore, the United Arab Emirates, Bangladesh,
Philippines, Afghanistan, and Nigeria and other Asian, Middle East and African
countries.

Vehicle

Industrial 23,068 26,769 (13.8) 50 1,958 (97.4)

Off the Road 4,613 3,176 45.2 788 1,204 (34.6)

"#') =?@>C <BC=; :=< B=B =@A: ?=C

(!#"# <A?<:>A =A;@<<B :>B :>@<;> :;B?@; =>A

c5c


!)" 6'+"'&!

1 Week 2.9%
4 Weeks 2.7%
13 Weeks -8.7%
52 Weeks -26.0%

1()("!!$ ())("!


 — ͞c
 will each time every time provide Total Customer
Satisfaction through products and services of highest quality and
reliability.
— c
 will nurture an exciting and challenging working
environment embedded with fairness and free, frank exchange of views.͟

c2''!!'("

Manufactures over 6 million tyres every year.

Enjoys 55% of the local market for light truck and truck tyres.

Operates from plants in Mumbai and Nasik.

Exports to USA, Africa and other parts of Asia.

Has a robust network consisting of 36 regional offices, over 3,500 dealers

and more than 100 C&F agents.

Has a dedicated Customer Service department, comprising Customer

Service Managers in all four divisional offices, assisted by 50 Service
Engineers.

c
Dc'( 

The first international rating system

In 1995, the Professional Management Group (PMG) and CEAT decided to

transform cricket into an experience, bigger and more exciting than anything
players and fans had ever witnessed. They decided to reward the performances
of players at the international level.


Thus was born the first International Rating SystemͶCEAT Cricket Rating (CCR)Ͷ
a system to reward outstanding performances across every sphere of cricketͶ
batting, bowling, fielding and even wicket-keeping!

A comprehensive award system

CCR encompasses all international matches (Test matches and One-day

Internationals) played over twelve months, between May 1 and April 30. It
rewards both, individual players as well as teams, and is indeed the world͛s most
credible cricket rating.

A lifelong title

After twelve months of scoring centuries, sending stumps flying and taking
impossible catches, the best cricketer receives his most fulfilling rewardͶthe
͚CEAT International Cricketer of the Year͛. And of course, the most enduring
team is rewarded too. It wins the ͚CEAT International Team of the Year͛.

In 1996, Brian Lara won the first 'CEAT International Cricketer' award. A year
later, Pakistan won the first 'CEAT International Team' award. During the World
Cup in 1999, CEAT instituted the 'CEAT International Cricketer of the World Cup'
award, and it went to Rahul Dravid for his phenomenal performance.

96')3$()("!()+(!#

CCR is adeptly managed by a Governing Council comprising cricket legends Sunil

Gavaskar, Clive Lloyd and Ian Chappell. The day-to-day affairs are overseen by
Sanjay Manjerekar, the Executive Director of the Council.


 — Having been in the export business for over forty years, CEAT today
enjoys 14% of the Indian market share of global exports, clients in over
seventy countries, and a turnover of US $47 million.

96"'(!%!"#"%(##$4!$6'"$2)

— From five world-class plants, three in India and one in Sri Lanka, we
manufacture a wide range of tyres for all user segments including trucks,
buses, and LCVs. We also export farm, industrial, grader, OTR, car,
scooter, auto-rickshaw, motorcycle and passenger car radials.

!"(!%#'%&' )')

— Our individual market shares include 64% in Singapore, 22% in UAE and
22% in Philippines. We also send our products into USA, Bangladesh,
Pakistan, Vietnam, Iran, Nigeria, Egypt and other African, Middle-East and
Far-East Asian countries.

(!%%#"-#)!$'$)

— With our manufacturing processes being globally approved by DOT

(Department of Transportation) and IN-METRO, our products have direct
entry into the US and Latin American markets.

"!"2'$(2#('(+()


 — We are the first Indian tyre company to receive an ISO certificate (ISO/TS
16949: 2002, in the year 2003-2004). Over the last ten years, we have
consistently been receiving export awards from AIRAI and CAPEXIL. A rare
honour, indeed.

 

c


2)(!))

Ceat is the second largest tyre manufacturer in the country. In FY2000, it

produced 5.72mn number of tyres as compared to 5.24mn units in FY99, a rise of
9%yoy.

')

Ceat manufactures truck & bus, passenger car, scooter and LCV tyres. Ceat has
an extensive distribution network of more than 3,000 dealers. Though known for
its quality and successful brands such as Formula I, Endura, Secura, Samrat,
Maestro, Stamina etc, market aggressiveness has been much lower than
competitors like MRF or Apollo. During the year, Ceat posted a rise of 21%yoy in
truck tyre sales in the replacement market in value terms. This was made
possible by the 22%yoy increase in the production of truck tyres. In FY2000,
sales of tyres contributed to 90.3% to the total turnover. During the year, the
company has launched new products under the brand names ͚Fleet Master͛,
͚Turbo Lug͛ and ͚Elevata͛.

2-)!$+#6)


The company does not have any production facility for manufacturing of tubes
and flaps. It sources the products from other manufacturing units. In FY2000,
sales of tubes and flaps contributed to 9.6% of total turnover. It sold 5.03mn
tubes as compared to 4.47mn in FY99 and 1.34mn flaps as compared to 1.15mn
in FY99.

96"')

Ceat is the second largest tyre exporter after J K Industries. Export sales on a FOB
basis has fallen by 9.5%yoy from Rs1.2bn in FY99 to Rs1.08bn in FY2000. Export
sales were hampered by a demand decline in the US market.

Its Sri Lankan venture Associated Ceat Pvt Ltd has a 55% share of the Sri Lankan
market. In November 1998, the company tied up with a local firm, Kelani Tyres
Ltd. This merger would have combined production capacity of 34 metric tons.
The turnover of the JV grew from Sri Lanka Rs1.29bn in FY99 to SL Rs1.36bn in
FY2000. Profit before tax rose 28%yoy to SL Rs75mn.

96!)("!6#!)

The company has planned a capex of Rs1bn spread over the FY2000 and FY01.
While Rs400mn will be spent on capacity upgradations, Rs600mn will be utilized
for a new radial facility at its Nashik plant, which as part of the first phase will
start commercial production in June 2000. A greenfield project is likely to be set
up in the second phase. The company had taken over Rado Tyres in Kerala in
FY98 and plans to increase its manufacturing capacity from 15,000 to 40,000 in
the first phase and 70,000 in the next phase.

2#""


Ceat͛s fortunes are now (post restructuring) entirely linked to the tyre industry͛s
fortunes. As a leading player in the commercial vehicle, passenger car market
and two-wheeler tyre segments, it is expected that the company would take
advantage of the continuing growth in these segments. The new radial tyre plant
coming up in Nashik would help the company find a foothold in the fast growing
segment. Even in the export market, the company is reducing its dependence on
standard bias-ply products and concentrating on niches. The company has done
well by rationalizing its debt portfolio by replacing short-term loans with long
term financing from FIs. This has brought down interest costs as has been
witnessed in FY2000. However, with sale of investments in its many subsidiaries,
Ceat can no longer prop its operational income with ͚other͛ income. Moreover,
operating margin will be affected by the rise in prices of raw material inputs.
With augmented capacities for car radial tyres and two/three wheeler tyres and
initiatives in the field of supply chain management and controlling costs, Ceat is
expected to do reasonably well for the rest of the fiscal.

&!$ $'&(!! Growth of automobile industry will increase vehicle

population and thereby the demand for tyres in the OEM as well as the
replacement markets. 

— Relative importance of road transport and long distance travel by road

leading to increased need to replace tyres.
— Development of export market will also enable higher capacity utilization
levels.
— Economic scenario and credit availability will determine ability to
purchase automobiles and in turn spur demand for tyres.
— Retreading saves up to 80% on original cost and this will have a negative
impact on fresh demand.


 — Radialisation increases the life of tyres and reduces the need for a
replacement, which may inhibit volume growth.

'!(!%$'(4')

— Raw material price fluctuations: Prices of natural rubber, an agricultural

commodity. Other raw materials are mainly petrochemical based and
movements are cyclical.

Freeing imports of radial tyres will affect margins in that segment.

c')'%)@<6'!%'"

MUMBAI, Sept 15 (PTI) ͶR P Goenka controlled Ceat Ltd has set a sales target of
around Rs 1400 crore for the current year while the profits of the company are
expected to increase by 14 per cent over last year.

In the first five months of the current fiscal, the company has recorded sales of
Rs 533 crore which is 19 per cent more than the corresponding period last year,
Vice-Chairman Harsh Goenka told shareholders at its 40th AGM here today.

͞In order to emerge as a market leader, the company͛s management has set a
growth target ͞of 14 per cent against a projected industry growth of 6 per cent,͟
he said.


The company intends at least a one per cent growth in market shares in all the
segments it operates in, Goenka said. At present, in scooter tyres it has a market
share of 21 per cent, motorcycles 11 per cent and car tyres 19 per cent.

Export turnover is expected to be around Rs 140 crore this fiscal, Goenka said. It
mainly exports to the United States, West Asia, Africa and South America.

Ceat͛s exports last year dipped to Rs 128 crore from the previous year͛s Rs 153
crore chiefly due to the South Asian crisis and lack of demand from the US and
Latin American countries.

))#  %(!%7 The Board of Directors of Essel Packaging Limited yesterday

announced payment of a special ͞millennium͟ dividend of 150 per cent to its
equity shareholders.

 

c


)2#):;;@

;B:;;@

— Sales of tyre major Ceat limited declined 11.7% on the back of

sluggishness in truck and passenger car tyre sales. Sales in this fiscal were
Rs 11,904mn as compared to Rs 13,477mn in the previous year. The 11
months from April 2000, to February 2000, has been a period of near-
stagnant growth for the domestic tyre industry, with the production
increasing by mere 1% compared with the same period last year.

— Total expenditure came down by 9.2% to Rs 11,665mn (Rs 12,844mn).

Operating profit dipped 38% to Rs 564mn (Rs 910mn).


 — Continuing non-tariff barriers in the newly emerging markets, allowing
direct import of natural rubber only through STC and sharp rise in price of
petro products have all combined to severely dent the profitability of the
company. OPM as a percentage of total income came down to 1.9%
(4.6%).

— Depreciation increased 13.5% to Rs 165mn (Rs 145mn). The rise was due
to new plant that has been commissioned in Nasik.

— Ceat reported a net loss of Rs 137mn as compared to a profit of Rs

201mn in the previous fiscal. This may be attributed to drop in demand
and higher input costs on one hand and slowdown in exports on the
other.

— The company will have to face competition through effective cost

control, higher operating efficiency and new marketing strategies.

(!!(#(%#(%)

'("$" ;=/;@ ;=/;; '"

)(!&! @: @: E
Sales 11,903.6 13,476.8 (11.7)
Other income 325.7 277.3 17.5
Total income 12,229.3 13,754.1 (11.1)
Expenditure (11,665.4) (12,844.0) (9.2)
Operating profit 563.9 910.1 (38.0)
Interest (534.2) (537.4) (0.6)
Depreciation (164.8) (145.2) 13.5
PBT (135.1) 227.5 -
Tax (2.0) (26.4) -
PAT (137.1) 201.1 -
Adjusted OPM (%) 1.9 4.6 -
Equity 350.9 350.9 -


EPS (Rs) - 5.7 -


c"&6!)2#)

— '(6c"$7 500878 c"&6!&7 CEAT LTD

— Type Audited Audited UnAudited Audited

— Date Begin 01 Apr 04 01 Apr 03 01 Apr 02 01 Apr 01

— Date End 31 Mar 05 31 Mar 04 31 Mar 03 31 Mar 02

)'(6("!

— Gross Sales 17803.1 16479.5 14882.7 13613.7

— Excise Duty -2523.2 -2471.2 -2750.5 -2474.7

— Net Sales 15279.9 14008.3 12132.2 11139

— Other Income 389.8 1222.2 275.4 234

— Total Income 15669.7 15230.5 12407.6 11373

— Expenditure -14884.4 -13817 -11417.3 -10576.7

— Operating Profit 785.3 1413.5 990.3 796.3

— Interest -641.9 -764.1 -478.8 -572.7

— Gross Profit 143.4 649.4 511.5 223.6

— Depreciation -220.6 -221 -218.4 -188.4


 — Profit before Tax -77.2 428.4 293.1 35.2

— Tax 10 -81.6 -109 -11.2

— Profit after Tax -67.2 346.8 184.1 24

— Extraordinary Items 48.5 -206.2 - -

— Net Profit -18.7 140.6 184.1 24

— Equity Capital 351 350.9 350.9 -

— Reserves 2618.1 2993.4 2932.3 -

— EPS -0.53 4.01 5.24 0.68

— Nos. of Shares - Non Promoters 20473118 20473118

20473318 -

— Percent of Shares - Non Promoters 58.14 58.14 58.14 -

— Result Type A A A A

COMPETITORS

India is a manufacturer, expor-ter and importer of Off-The-Road (OTR) tyres.

CEAT, MRF, Goodyear, Balkrishna Tyres, Vikrant Tyres and TVS are the major
manufacturers of OTR tyres in the country. OTR tyres account for 11 per cent of


the country's total tyre market which is estimated at Rs 12,500 crore. Large-sized
OTR tyres are imported, as their demand volume is low and it makes more
economic sense to import. Also, OTR radials are not manufactured here and they
are also imported. Bridgestone, Yokohama, Michellin and Pirelli are the MNCs
supplying bigger OTR tyres in this country. Similarly, India also exports OTR tyres
to other countries including Europe and America.
OTR tyres, in India, have gained the limelight because of the government's
massive expenditure programme in infrastructure building, especially in road
construction. In fact, the government's Golden Quadrilateral project has given a
new lease of life to this otherwise sinking industry. Till 2000-01, the industry's
production was almost stagnant at around 36,000-37,000 tyres; in 2002-03, the
production of tyres crossed 50,000 numbers. And this year its performance is
expected to be even better. Industry sources claim that production of OTR tyres
should touch 72,000 during 2003-04, a growth of 44 per cent. During the first 9
months of the current year, the industry has achieved a growth of 48 per cent.

Says Tom K. Thomas, Vice President (Technical), Ceat Ltd, "Growth in OTR tyres
was insignificant a few years ago.
Despite this the mining industry remains the main customer of OTR tyres in the
country. "Nearly 65 per cent of the demand for OTRs comes from Coal India Ltd,"
says N. Ganesh, Chief Manager (R&D), Ceat Ltd. BEML and Caterpillar are the
other major customers of the industry. In the foreseeable future the mining
sector is expected to remain a major customer for OTR tyres.
An important feature of the OTR tyres industry is that majority of the production
(nearly 67 per cent) is exported. Last year exports saw a substantial jump of 56
per cent. The industry exported 33,530 tyres during 2002-03 as against 21,468 in
the previous year. One of the main reasons for the industry's over dependence
on exports for its survival is the low domestic demand. Once the domestic


demand picks up growth in exports is expected to come down. And this year the
industry is expected to export 36,200 tyres, which is 50 per cent of the domestic
production. However, the OTR tyres industry is facing some serious problems.
The main cause of worry is rising raw material prices, mainly natural rubber and
petrochemical based raw materials. India is the third largest producer and fourth
largest consumer of natural rubber, and fifth largest consumer of natural rubber
and synthetic rubber together in the world. Natural rubber accounts for nearly
26 per cent of the raw material cost of the industry. Says Tom K. Thomas, "Rising
price of natural rubber has affected our margins badly. Whatever China
consumes, the price of the same goes up, and whatever China produces the
price of the same goes down. Banning exports is not a solution. We may have to
increase the price of OTRs, as we are planning to do in the near future."

Technologically, the Indian OTR tyres industry is a step behind the developed
nations. OTR radials are not yet manufactured in India. Nor do the major players
have any plans to manufacture the same in the near future. But OTR radials have
certain advantages over traditional tyres. OTR radials are costlier; nearly 30 per
cent more than the cost of ordinary OTRs. The life of OTR radials is longer than
that of traditional tyres by more than 60 per cent. Also, OTR radials result in
saving in consumption of fuels. OTR radials also provide comfort to the driver
thereby reducing fatigue. Industry experts foresee good growth potential for the
industry in the coming years, both in the domestic market and export market.
OTR tyre manufacturing is a labour intensive operation and as a result its
production abroad is on the decline. This gives India good scope to expand its
market abroad. Also, in the domestic market, there is expected to be more
demand for Grader and Compactor tyres because of enhanced road construction
activity in the country. "Import of tyres from China has just started. It may pose a
threat in the coming days. Quality of the tyres is suspect but they are cheaper,"


Tom K. Thomas of Ceat avers. In the coming days retreading of OTR tyres could
become big business. At present, it is dominated by a handful of players in the
country. Considering its potential many players may take the plunge in the
retreading business. Manufacturers may employ higher productivity building
machines like orbitread technology for quality enhancement. Besides, the
country may start producing bigger size tyres which were hitherto imported.

 

c


!$2)'4'4(7

During the year under review, the Tyre Industry grew by 7% in value and
approximately 9% in volume. This clearly reflects the prevailing excess capacity
situation.

— The Tyre Industry continues to bear the brunt of increasing raw material
costs. Rubber imports are still controlled, resulting in high prices.
Additionally, the prices of synthetic rubber and rubber chemicals have risen
steeply in international markets. There has also been 2% increase in excise
duty, effected by the Union Budget announced in February, 2000 on all tyres,
except two wheeler and farm rear types.
— Thus, while there are valid reasons for a commensurate increase in prices,
the intense competition has prevented this from happening. Margins,
therefore, are under pressure.

=c
F '+"'&!7

— The year 1999-2000 saw CEAT move out of the consolidation phase and
surge ahead with increased visibility in the market place.


— Significant product quality improvements, innovative marketing strategies, a
unique supply chain management model, cost optimisation measures, and a
committed work force, all saw the Company emerge stronger inspite of
increased competition. In doing so, CEAT further reinforced its "Born Tough"
image and emerged as a preferred brands.
— CEAT's growth rate of 15%, which was twice the industry growth, was a
matter of great satisfaction. Particularly heartening was the 21% increase in
the high value truck tyre category in the replacement market which was
made possible by a 22% increase in truck tyre production the highest in the
country. CEAT gained market share in other replacement segments as well,
further reiterating its superior product quality, borne out of improved
technical design and manufacturing processes.
— Other contributing factors to this improved performance have been the
inculcation of the "Total Quality Management" culture, intensified training,
exposure and involvement of employees at all levels, which have enabled a
flexible market led manufacturing system to evolve. Constant initiatives were
taken for more effective utilisation of resources and reduction of costs.
These will be intensified even further in the future.
— A lot of new initiatives in marketing were undertaken. A new advertising
campaign and innovative communication during the Cricket World Cup which
promoted the CEAT Cricket Ratings, helped improve brand visibility. The new
look CEAT Shoppes were launched in phases across the country and have
already set new standards in tyre retailing. A unique dealer loyalty
programme to further reinforce CEAT's long standing relations with dealers
elicited excellent response.
— The consistently high quality of after sales service was maintained with the
implementation of an ongoing training programme for all staff associated
with this service, including technical service personnel at the dealer outlets.


— The integrated logistics system - which links 126 stocking points with the two
factories continued to work well and ensured availability of the right product
at the right time, hereby keeping inventory levels low.

< 96"')7

— The decline in demand from the US market, which was flooded with cheap
brands from all over the world, led to CEAT's exports declining by 7.5%.
Strategies have been drawn up to reverse this situation and steps to
penetrate other markets have already been taken. These initiatives will see
exports on the growth path once again.

C !2+2'(!%7

— The capacity optimisation projects at the Mumbai and Nasik Plants are
progressing on schedule. The new radial tyre facility coming up at Nasik is
expected to be completed on time with manufacturing commencing in May-
June 2000.
— The Off-take Agreement for radials and two and three wheeler tyres with
erstwhile joint venture partner, Goodyear, expires in August 2000. This may
be extended for a further period.
— The expansion plan at CEAT's associated company, Rado Tyres Ltd, located in
Kerala, has been implemented. This will enhance the conversion capacity of
two and three wheeler tyres to 70000 tyres per month.

AG"(!1!2'(!'(#! 7

— The Joint Venture structure of the Strategic Alliance in Sri Lanka which CEAT,
jointly with Associated Motorways Ltd, entered into with Kelani Tyres Ltd,
effective 1st November, 1998, has been completed.


— The turnover of this joint venture, under CEAT-Kelani Associated Holdings Pte
Ltd, grew from SL Rs1293 mn in 1998-1999 to SL Rs1357mn in 1999-2000.
Profit before tax rose 28% from SL Rs58.65mn to SL Rs75mn during this
period.

— The Indian Tyre Industry is a vibrant segment of the Indian economy and is
the wheels of the entire road transport sector of India, producing over
23.7mn tyres (4 Wheeler Tyres ʹ Organized Sector) in FY03. In addition, there
is a production of 25.7mn tyres in 2/3-wheeler tyre segment. The steady
growth of the industry can be gauged from the fact that the industry is
growing at an annual growth rate of 6%, however there is an excess supply
over demand in certain categories. The total industry turnover in FY03 was
Rs128.4bn and is a significant contributor to the Indian exchequer to the
extent of Rs44bn by way of excise and other taxes. Approximately 80 % of
the Industry production, in terms of value, comes from Heavy Commercial
(Truck /Bus) and Light Commercial tyres.

The Indian tyre industry caters to all segments of the market i.e.

— OEM
— Replacement
— STU
— Defence
— Exports

The total size of domestic market (4 wheeler tyres) can be estimated around
19.4mn tyres/annum for the FY03 and is expected to go up to 28.4mn


tyres/annum by FY08. In addition, the tyre industry exports Rs13bn of tyres
across 6 continents and over 60 countries.

 c c
 

Demand for tyres is derived from demand for automobiles. Therefore it is a

͚derived demand͛ product and its fortunes are very closely linked to those of the
auto segment. Within the tyre industry the trucks and buses (T&B) segment
accounts for more than 70% of sales. Though scooters and motorcycle tyre
demand also plays a vital role, in value terms, CVs gain significance.

Tyre varieties can be divided into two categories ʹ cross ply and radial. The
domestic industry is dominated by cross-ply tyres, due to the poor conditions of
roads in the country and overloading of CVs. This is also the reason why
penetration of radial tyres in the CV segment is negligible and finds presence
only in the passenger car segment. On the other hand, radial tyres dominate
western markets. Radial tyres can be differentiated on the type of belt used ʹ
fiberglass, steel and nylon. Worldwide, steel belted radials are more popular due
to their performance advantage.

There are three major consumer segments for tyres namely replacement
segment, Original Equipment Manufacturers (OEMs) and exports. Though


fortunes of the sector are closely tied with the automobile industry, replacement
demand continues to remain the key growth driver. Replacement demand
accounts for as high as 57% of industry volumes. However, the contribution from
OEM and replacement segments varies across sub-segments in the auto sector.
For instance, for the passenger car segment, demand is balanced from
replacement and OEM categories i.e. 50:50.

Another key transition that is taking place in the industry is the entry of
multinationals like Good Year, Bridgestone and Michelin in the domestic market.
MNC tyre makers have cornered a higher market share in India in the last three
years due to their international relationships apart from superior technology.
Since Honda, Hyundai and Toyota have an international sourcing agreement with
Bridgestone, it is also the preferred supplier in India. Goodyear is believed to be
the preferred supplier for Ford India.

An extensive distribution network and strong brand recall are factors critical to
tyre sales. Brand building is given a lot of importance by manufacturers, who
allot 2-3% of sales to advertising. With the introduction of radial tyres, even
technology has assumed significance. All foreign cars introduced in the country
are on radial tyres.

Raw materials constitute 60%-70% of production cost of tyres. Natural rubber

and Nylon cord fabrics are the most critical raw materials as it accounts for 50%
of total raw material cost. Since most of the raw materials are crude derivatives,
a rise in prices has a negative impact on margins.


The export market holds tremendous potential for domestic manufacturers. Tyre
exports have grown at an annual compounded rate of 27% over the past 10
years. Indian tyres are exported to 56 countries, which are primarily developing
countries.

 ,
c c
 

c
)#))6'()"+'2 -2)')

CEAT-Kelani Associated Holdings (Pvt) Ltd., the leading tyre manufacturer in Sri
Lanka has announced a major reduction in the retail prices of lighttruck, truck
and bus tyres.
"Effective December 10, 2001 this reduction would make CEAT the most
affordable tyre when compared to all international brands sold in the local
market, the company's General Manager (Sales & Marketing) Ashwin Padukone
said.

"In a market battered by the economic downturn, the ability of the customer to
buy new tyres at the correct time has dwindled. As a result many vehicles are
seen on the road with bald tyres, which seriously jeopardises the safety of the
customers and their vehicles." Mr. Padukone said - "Using new tyres on the front


wheel, has been established as the safest and the recommended option for
safety reasons. We anticipate that this price reduction will encourage consumers
to replace with new tyres at the right time," he said.

The anticipated benefit of the increase in offtake and the consequent capacity
utilization, has been factored into the price reduction and has been passed onto
the consumers, Mr. Padukone added. CEAT-Kelani Associated Holdings (Pvt) Ltd.,
a joint venture company established in 1999, represents the strategic alliance
between Kelani Tyres Ltd., AMW Group, NDB and CEAT Ltd. of India. The holding
company has two manufacturing arms, one in Kalutara and the other at Kelaniya.

c



A high percentage of fibre glass produced in the world is used for re inforcement
of plastics The main products maiketed by the fibre glass plants are Mats,
Rovings, Woven Rovings, Yarns etc. The use of end products i.e. fibre glass
reinforced plastics are mostly in pipes and tanks, boats transport sector,
furniture, crash helmets etc The formulation chosen for continuous fibre glass
production is generally known as E-glass. This has become standard the world
over as it performs well in practice and is used widely. The fibre glass produced
in India is Eglass only. The process of manufacture of fibre glass consists of
several steps e.g. batch preparation, production of glass melt, glass filament
conditioning, winding, drying of glass cakes, conversion to saleable products.
In late seventies, the background of the licensing policy was to issue a large
number of letters of intent with a capacity of 2000 Tonnes per annum
expandable to 4000 tonnes per annum capacity. At that time only one unit Fibre
Glass RlWngton (FGP) was working at Thane-Bombay with a licensed capacity of
1290 tonnes per annum. Out of 6 letters of intent issued, only 2 units i.e. Deccan
Fibre Glass Ltd, (now known as Glass Fibre Division, CEAT Tyres) and UP Twiga


Fibre Glass Limited (now closed since December 1982) were installed in early
eighties. The other units did not materialise mainly due to inadequate market
demand The present guideline of licensing is that no new licence is to be issued
till 1990, since the installed capacity in the country is around 5000 tonnes per
annum against the present demand of 2400 tonnes per annum.
FGP Ltd, started production in mid sixties with remelt technology based on
imported E-glass marbles. In 1974 they started their own unit melter for
manufacture of E-glass with a licensed melting capacity of 1290 tonnes per
annum #»nd the installed finishing equipment capacity of 2650 tonnes per
annum. The company is functioning with about 70 to 80 per cent of their
licensed capacity.
UP TWIGA Fibre Glass Ltd, was started in 1980 at Sikandrabad in Ottar Pradesh.
The capacity of the plant is 2000 tonnes per annum with electric Pochet Furnace.
The unit could not develop proper market for its products.
The unit, had to close down in December 1982 and has not restarted as yet
Deccan Fibre Glass Ltd, came into being in 1981 at Ntehboobnagar in Andhra
Pradesh. In 1983 the unit was merged with CEAT Tyres Ltd, and is presently
known as Glass Fibre Division, CEAT Tyres Ltd, The installed capacity is 1770
tonnes per annum with electric Pochet Furnace. The per formance of the unit is
not satisfactory and the production varies between 40 to 50 per cent of licensed
capacity. The main reason for dismal capacity utilization is inadequate market
demand.

1.1.7. AW the three fibre glass units were put up with foreign collaboration. The
collaboration agreements were more or less similar, irrespective of the
country of collaboration. The major scope of collaboration was:
a) Provision of technology
b) Basic engineering of the plant


c) Detailed engineering and design of special equipment and supply of
materials
d) Procurement and supply of special equipment
e) Commissioning and Supervisory services.

,





Strengths
Weaknesses
— Right products, quality and
reliability.
— Superior product performance vs. — Not very popular in the international
competitors. market
— Brand Image — Delivery-staff need training.
— Products have required — Customer service staff need training.
accreditations.
— Processes and systems, etc
— High degree of customer
— Management cover insufficient.
satisfaction.
—

Opportunities Threats
— Profit margins will be good.
— Could extend to overseas. — Vulnerable to reactive attack by
— Could seek better supplier deals. major competitors.

— An applied research centre to create — Lack of infrastructure in rural areas

opportunities for developing could constrain investment.
techniques to provide added-value — High volume/low cost market is
services intensely competitive.