SUBMITTED BY Ajay.P. Mathew II BBM(A)-0911003


The present work is an effort to throw some light on Marketing Trait Ceat Tyres . 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 Prof. Shah Washim 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.


SEGMENTATION OF INDIAN TYRE INDUSTRY  Technology based  Use based  Markets  Market Share and Size  Peculiar Features of the Tyre Industry  Demand Drivers  Trends in Raw Material  Opportunities Lying Ahead  Threats  Tyre Company Profiles     RESEARCH HYPOTHESIS RESEARCH OBJECTIVE BENEFITS OF THE STUDY SCOPE OF THE STUDY 








INTRODUCTION 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. Industry basics 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

The group stumbled trying to grow via diverse platforms and has many companies that have turned sick. with the US being the largest destination. telecom. financial services etc. . filament mats and other rubber products for the automotive markets in India. the more rugged. BUSINESS DESCRIPTION Ceat is a manufacturing company. compounds and tire sizes. However. trucks and buses. The domestic tyre industry broadly mirrors the market characteristics of the global industry. nylon fabric products. tyres. But lately the strategy seems to be one of restructuring and consolidation. tire. pharmaceuticals.consolidation of capacities through mergers etc. with presence in major sectors like power. nylon tire yarn. Ceat s investments in its subsidiaries have also come down this fiscal which is a sign of prudence on the management. therefore. Ceat is part of the RPG group. due to rough road conditions. The company has a well established research and development center that evaluates the application and development of new raw materials. suitable and cheaper cross ply tyres are in vogue. which produces rubber. which is diversified. 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. electronics & telecom and chemicals. glass fiber. It produces tires for two and three wheeled vehicles. proportionately higher. fertilizers. Ceat exports to almost 50 countries. automotive flaps. passenger cars. power. Consumption of natural rubber is. Its impact was felt only to an extent as prices of these commodities are ruling at historical lows in the global market. computer. LCVs. The group is divided into 4 broad areas rubber & allied products.

. container and equipment/infrastructure leasing and money market operations. CEAT came to India. History CEAT stands for Cavi Electrici Affini Torino (Electrical Cables and Allied Products of Turin). including hire purchase.The company also provides investment financial services through Meteoric Industrial Finance and Atlantic Holdings. Automotive tires comprise the largest part of the Company's revenue. CEAT INDIA Ceat Limited is a manufacturer of tires in India. rubber tubing and nylon thread. however it also produces tire flaps. Ceat has an agreement with Pirelli of Italy for outsourcing radial tires which are being marketed under the CEAT Spider Radials brand name. office equipment finance. In 1958. Automotive tire sales account for around 90% of revenues. and CEAT Tyres of India Ltd was established in collaboration with the TATA Group. The Company also offers financial services through Ceat Financial Services Limited. CEAT International was first established in 1924 at Turino in Italy and manufactured cables for telephones and railways. The company is pursuing a strategic initiative of intensifying outsourcing to expand its product range and increase production volumes. automotive tubes account for about 8% and the remaining revenues come from other non-core operations.

It is presently focusing on catering to the fast growing passenger car and two-wheeler industry. Replacement market forms the largest segment (about 58%). followed by OEM (about 22%). and in 1990. a part of the RPG Goenka group. is the second largest tyre manufacturer in the country after MRF. Export . both for OEM and replacement market. In FY2000. Profit margins are therefore thin. the RPG Group took over CEAT Tyres of India. Towards this. with raw materials forming nearly 70% of the costs. The major segments are Truck & Bus (T&B) tyres and car tyres. Production process is technology intensive and globally huge sums are invested in R&D. passenger car. Ceat did well to posting a 21%yoy sales growth in the replacement market for truck & bus tyres. LITERATURE REVIEW Ceat Ltd. Ceat manufactures truck & bus. dependent on the auto industry. This segment is highly competitive and margins are typically lower than in the car tyres segment. Value share of T&B segment is about 73%. it leads to constant demand-supply imbalances and consequent cyclicality in prices. Tyre demand is a derived demand. 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. it is commissioning a new radial tyre factory in June 2000. Industry basics Tyre industry is capital intensive and as capacities come in spurts.In 1982. Variable cost is also very high. renamed the company CEAT Ltd.

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. However. . Ceat is part of the RPG group. suitable and cheaper cross ply tyres are in vogue. Though the replacement market has driven the industry growth for long time. Ceat s investments in its subsidiaries have also come down this fiscal which is a sign of prudence on the management. electronics & telecom and chemicals. tyres. the OEM market has seen a robust growth over the last couple of years. The domestic tyre industry broadly mirrors the market characteristics of the global industry. telecom. Its impact was felt only to an extent as prices of these commodities are ruling at historical lows in the global market. The group stumbled trying to grow via diverse platforms and has many companies that have turned sick. power. which is diversified. fertilizers. with presence in major sectors like power. pharmaceuticals. there is a consolidation of capacities through mergers etc. With global demand slowing down. Indian Tyre Industry The tyre industry has witnessed a CAGR of 8. The group is divided into 4 broad areas rubber & allied products. proportionately higher. due to rough road conditions. the more rugged. financial services etc.3% over the last decade mainly fuelled by the strong growth in the domestic auto industry.accounts for about 15%. therefore. Consumption of natural rubber is. But lately the strategy seems to be one of restructuring and consolidation. computer.

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. retreading. the demand drivers.5mn tyres and around Rs1. trend in road transportation and spending on road infrastructure.The industry is highly capital intensive. 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 Report provides exhaustive information on the Indian Tyre Sector. JK Industries and Ceat and enjoys more than 70% of the total market share. trends in the industry (with respect to production.5-2bn for a crossply tyre plant of a capacity to manufacture 1. The fortunes of the industry are linked to the trend in the domestic auto industry. The industry is dominated by four players viz MRF.5mn tyres. the industry is expected to go through a consolidation phase. With demand increasing at a steady pace. . as it requires around Rs4bn to setup a radial tyre plant with a capacity of 1. India Infoline Sector Studies : Indian Tyre Industry is available in Acrobat Reader (PDF) format. key characteristics of the Indian market and profile of leading players in India. market share). Apollo Tyres. The companies have lined up further expansion plans to meet the increasing demand. exports.

.13. The appointed date of the Scheme of Arrangement is fixed as October 1.23 crore by reducing the paid-up value of each equity share of Rs 10 each to Rs 5 each. Under this demerger. Under the demerger plan for HML. 2002.03. This scheme will provide reclassification of the unissued equity shares of Rs 10 each of MIFL into equity shares of Re 1 each. Ceat's investment portfolio will be demerged and transferred to Meteoric Industrial Finance Company (MIFL). Besides.900 equity shares of Rs 10 each to HML and 36.45 crore to Rs 9.91. Ceat will issue 95. The existing paid-up capital of HML will be reduced from Rs 18. one of Ceat's non-banking financial subsidiaries. MIFL will issue 3.Boards okay Harrison s rubber division merger with Ceat Our Bureau MUMBAI.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.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. April 19 THE process of consolidating the rubber business of the Rs 6.52.700-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.

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. MIFL will cease to be a subsidiary of Ceat and an application will be made to the Bombay Stock Exchange for listing the company. Harrisons Rubber Products Ltd and Harrisons Malayalam Financial Services Ltd with itself. Chairman. while Ceat's natural rubber consumption was approximately 50. 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 objective of this consolidation is to strengthen the rubber business by creating backward integration for Ceat. The Board of HML also gave its approval for a scheme of amalgamation of its 100 per cent subsidiaries.Post this issue of shares. . RPG Enterprises.'' RPG Enterprises said in the press release. an official press release said quoting Mr Harsh Goenka. Harrisons Agro Products Ltd.000 tonnes per annum. HML's rubber division has a turnover of Rs 50 crore from a crop output of about 10. the demerger of the rubber division will help it to focus on its core business area of tea.000 tonnes worth Rs 260 crore last year. As regards HML. "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.

With the globalization of markets. The goal of the reports is to assist consultants. Khaitan & Co has been appointed as advocates to the scheme for this purpose. and the reduction of barriers to entry. The results are two specialized reports: (1) . Ltd. The scheme is subject to the sanction of the courts and the National Company Law Tribunal. greater foreign competition. World stock markets have recently witnessed a return to fundamental financial analysis. The methodologist for this unique study is Philip Parker. it becomes all the more important to benchmark a company s financial indicators on a worldwide basis. and corporate officers in gauging certain indicators of Ceat Limited s financial and human resource structure. Two of the most comprehensive studies to date on labor productivity and vertical gap analysis benchmarks for Ceat Limited (BOM). Ceat. The report has benchmarked Ceat Limited against competing firms in the Tires and Inner Tubes Manufacturing industry worldwide going beyond traditional methods of company benchmarking. strategic planners. France and Singapore). MIFL and HML and its subsidiaries will apply to the High Courts for approval. MARKETING STRATEGY AVAILABLE NOW! LABOR PRODUCTIVITY BENCHMARKS AND VERTICAL GAP ANALYSIS ON Ceat Limited Published today by ICON Group International.The valuers to the Scheme are SBI Capital Markets & KPMG and the advisors are Lodha & Co. According to Professor Parker. Eli Lilly Chair Professor of Innovation. Business and Society at INSEAD (Fontainebleau. financial managers.

.A. Compagnie Financiere Michelin.p. Coverage Two reports. Vredestein NV . Each report reveals productivity and industry ranks for Ceat Limited in the Tires and Inner Tubes Manufacturing industry. Ltd. Kumho Industrial Company Limited Marangoni S.global financial benchmarks using common-size statement ratios (vertical analysis). and (2) labor productivity and utilization measures collected across borders. Nexen Tire Pirelli S. 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. Heung Ah Corp Kenda Rubber Industrial Co. Sumitomo Rubber Industries Ltd. are available for Ceat Limited. The Goodyear Tire & Rubber Co Toyo Tire & Rubber Co.p. Ltd. Hankook Tire Co. Ltd..A. financial ratios and labor productivity ratios. Reports for the following and many other Tires and Inner Tubes Manufacturing companies are available now: Bridgestone Corporation Brisa Bridgestone Sabanci Lastik Sanayi ve Ticaret AS Ceat Limited.T.

often published by government agencies or commercial sources. "We are intrigued by the wide variations in basic financial and productivity measures between Ceat Limited and other Tires and Inner Tubes Manufacturing companies. varied from -2.21. or income taxes compared to global benchmarks? Have Ceat Limited s returns on equity been higher or its profit margins greater? y 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? y Professor Parker notes. or does it hold a higher concentration of long-term debt? Does Ceat Limited have a relatively higher cost of goods sold. Methodology: Uncovering Gaps Most vertical analyses merely focus on benchmarking against domestic ratios.1 to 64. The Earnings Before Interest And Taxes (EBIT). operating costs. does Ceat Limited typically have a higher percent of payables compared to the benchmarks. the report calculates thousands of industry norms by looking at firms at the global . or does it tend to concentrate its assets in physical plant and equipment? On the liability side. We see this type of variation in the hundreds of ratios that we estimate.Yokohama Rubber Company. for example. Limited y The vertical analysis deals with questions like: How has Ceat Limited s 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. In contrast.

the larger structural differences and gaps between Ceat Limited. (4) filtering outliers. (2) firm-level data collection and aggregation. Mr Paras K. TYRE manufacturer Ceat Ltd is on the road to recovery.level. legal or taxation advice. For each part of the financial statement. and applying a seven-stage methodology: (1) identification of industry classifications. (6) projection of deviations and gaps. Ceat. associates will not be liable in any manner for the consequences of . and (7) projection of ranks and percentiles. spoke recently to Business Line on the domestic tyre industry and challenges before it. there are sectoral issues it must confront. and the global benchmarks are provided with summary tables of ranks and percentiles. It is not intended as an offer or solicitation for the purchase and sale of any financial instrument. Yet even as it leaves its losses behind. LIMITATION OF THE RESEARCH This report is for information purposes only and does not construe to be any investment. (3) standardization of raw statistics. Managing Director. 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. refuses to borrow and enhances sales. pooling statistics on tens of thousands of companies across over 40 countries. (5) calculation of global norms. Chowdhary.

the appropriate research design formulated is detailed below. it studies the main area where the problem lies and also tries to evaluate some appropriate courses of action. how to measure progress and what constitute success with respect to the objectives determined for carrying out the research study. employees or associates may have interests or positions. We have exercised due diligence in checking the correctness and authenticity of the information contained herein.such action taken by you. but do not represent that it is accurate or complete. The recipients of this report should rely on their own investigations. financial or otherwise. DATABASE AND RESEARCH METHODOLOGY The research Methodology defines the is the purpose of the research. how it proceeds. IIL and/or its subsidiaries and/or directors. 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. Exploratory research: this kind of research has the primary objective of development of insights into the problem. 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. .

journals.  Secondary data: secondary data which is already available and published . method of data collection. tools for processing of the data and reporting format of the study.  External source: which originates outside the field of study like books. publish brouchers.The important component of research methodology such as.g.it could be internal and external source of data. official reports etc. newspapers and the internet.  Internal source: which originates from the specific field or area where research is carried out e. are enumerated as follows: DATA COLLECTION The present study contemplated an exploratory research. . periodicals .

The Group supplies to over 50 countries with the major business links in the United States of America. Low and Closing price for the quarter.NATURE OF DATA  Secondary data has been used which is collected through articles. The products include nylon fabric. DATA PRESENTATION AND ANALYSIS This Report features up to a ten-year record of the equity Price history for Ceat Limited. TOOLS AND TECHNIQES Analysis of data has been done with help of various statistical tools like the tables and graphs. reports. universities and internet. Singapore. The Group's principal activities are to manufacture and distribute automotive tyres. journals. nylon tyre yarn. glass fibre. Price values are adjusted for stock splits and dividends. automotive flaps. y Ceat Limited. magazines. filament mats and other rubber products. the United Arab . newspapers reports prepared by research scholars. tubes and flaps. There is also a calculation of percentage change in price for both Quarterly and Annual periods. Tabular results include the High. The Group also provides investment financial services.

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

Layout and Content of a Typical Report .

there has been an ostensible shift in the demand of two wheelers from scooters to motorcycles. The major contributors to this growth were the passenger car and the scooter segments by registering a growth of 200% and 293%. y The contribution of the tyre and bus segment to the total production in April 2004 reduced to 18.409 from 208. exports contributed to the tune of 20.710 in April 2003. Above average pre-monsoon showers are expected to give positive triggers to the demand of tractors. The most significant growth was seen in the production of the passenger car segment. y If any indication from these figures have to be taken.Tyre Industry April 2004 update The tyre production in India witnessed a growth of 29. During FY04.8% from 21. The motorcycle segment witnessed a growth of more than 29% and the tractor segment (Front.3% in April 2003. In the recent past. Increasing production of tractor tyres is an indicator for the same. Rear and Trailer) registered a growth of more than 25%.238 in April 2003. the growth in the passenger segment would be more than that in the commercial vehicle segment in the near future. increased its share in total production to 20%.6% . The passenger car segment.9% for the same period. which contributed 16. which saw a jump of 59% to 936.6% in April 2003. Other significant segments were the motorcycle segment and the tractor segment.6% in April 2004 to 291. The share of the tractor segment decreased from 5.8% on a yoy basis in the month of April 04.1% to 4. The figures for the production of tyres in the respective segment envisage the scenario to continue in the near term.853 in April 2004 as against 588. y Exports of tyres grew by a substantial 39.

275 291.157 200.104 5.235 588.225 2.695 62.593 8.716 611.918 1.853 2.683.280 219.655 94. the exports contributed 4.750 3.760 25.514 18.647 1.453 29.8) .2 18.7 30. This further indicates that the domestic auto industry is all set to witness a substantial growth.3 38.5 25.276 15.5) Scooter Motor Cycle Moped Total 2-wheeler 796.244 226 13.685.3 32.3 1.731 293.774 936.6% of the total tractor tyres production.2 (99.056 30.955 11.and 6% to total production of tyres in truck & bus and passenger car segments respectively.7) 4 14.994 28.860 183.979 1. which decreased to 2.4) 161.3 31.6) (4.0) (50.054.033 30.945 17.585 (48.110 1.508 (55. In FY04.6 154. The same figures for the respective segments were 17.756 80.3 51.4 1.362.9% in April 2004.648 32.1 39.8 1.7% and 5.975 646 5.238 Exports Growth Apr-04 13.0 45.7 Animal Drawn 9.4 12.573 268.730 Apr-03 777.360 58.239.392 44.5 59.828 130.677 Apr-03 Growth 123.895 100.425 (43.475 37.3 Tractor (Front) Tractor (Rear) Tractor (Trailer) Total Tractor 108.5) (52. Production (In mn) Truck & Bus LCV Jeep Passenger Car Total 4-wheeler Apr-04 880.167.205 2.590 229.5% in April 2004.326 217 6.9 186.309 40.

195 4. The Group's principal activities are to manufacture and distribute automotive tyres. nylon tyre yarn. Vehicle Industrial Off the Road Total Others Final Total 23. Afghanistan.204 3.4) (34.769 3. The Group also provides investment financial services. Philippines.8 208.7% -8.958 1. the United Arab Emirates. tubes and flaps.162 (97.068 4.601.5) (23. automotive flaps.Business Description: Ceat Limited.9% 2.674.6 STOCK CHART Recent stock performance 1 Week 4 Weeks 13 Weeks 52 Weeks 2.176 48.2 788 1. Middle East and African countries.448 29. filament mats and other rubber products.530 (13.6) (73. Singapore. Bangladesh. The products include nylon fabric.296 26.409 3. and Nigeria and other Asian.4) 838 291.8) 50 45.7% -26.0% Vision and Mission .710 39.613 37. glass fibre. The Group supplies to over 50 countries with the major business links in the United States of America.

Has a dedicated Customer Service department. Has a robust network consisting of 36 regional offices. the Professional Management Group (PMG) and CEAT decided to transform cricket into an experience. . assisted by 50 Service Engineers. bigger and more exciting than anything players and fans had ever witnessed. Africa and other parts of Asia. They decided to reward the performances of players at the international level.y C E A T will each time every time provide Total Customer Satisfaction through products and services of highest quality and reliability. Enjoys 55% of the local market for light truck and truck tyres. frank exchange of views. Operates from plants in Mumbai and Nasik. CEAT & Cricket The first international rating system In 1995. Exports to USA. comprising Customer Service Managers in all four divisional offices. over 3.500 dealers and more than 100 C&F agents. y C E A T will nurture an exciting and challenging working environment embedded with fairness and free. Current Scenario Manufactures over 6 million tyres every year.

CEAT instituted the 'CEAT International Cricketer of the World Cup' award. It rewards both. Brian Lara won the first 'CEAT International Cricketer' award. and it went to Rahul Dravid for his phenomenal performance. In 1996. . A year later. and is indeed the world s most credible cricket rating. fielding and even wicket-keeping! A comprehensive award system CCR encompasses all international matches (Test matches and One-day Internationals) played over twelve months. It wins the CEAT International Team of the Year . the best cricketer receives his most fulfilling reward the CEAT International Cricketer of the Year . During the World Cup in 1999. bowling. Pakistan won the first 'CEAT International Team' award. between May 1 and April 30. The experts decision is final CCR is adeptly managed by a Governing Council comprising cricket legends Sunil Gavaskar. sending stumps flying and taking impossible catches. Clive Lloyd and Ian Chappell. And of course. the Executive Director of the Council. The day-to-day affairs are overseen by Sanjay Manjerekar.Thus was born the first International Rating System CEAT Cricket Rating (CCR) a system to reward outstanding performances across every sphere of cricket batting. the most enduring team is rewarded too. individual players as well as teams. A lifelong title After twelve months of scoring centuries.

Exporting technologically advanced products y From five world-class plants. Pakistan. CEAT today enjoys 14% of the Indian market share of global exports. industrial. Meeting global standards y With our manufacturing processes being globally approved by DOT (Department of Transportation) and IN-METRO. Egypt and other African. scooter. auto-rickshaw. Vietnam. Honoured with Quality certificates . clients in over seventy countries. Iran. OTR. motorcycle and passenger car radials. car. Nigeria. We also send our products into USA. Bangladesh.y Having been in the export business for over forty years. Middle-East and Far-East Asian countries. grader. and a turnover of US $47 million. 22% in UAE and 22% in Philippines. buses. Enjoying large market shares y Our individual market shares include 64% in Singapore. we manufacture a wide range of tyres for all user segments including trucks. We also export farm. and LCVs. three in India and one in Sri Lanka. our products have direct entry into the US and Latin American markets.

A rare honour. This was made possible by the 22%yoy increase in the production of truck tyres. During the year. In FY2000. Tyres Ceat manufactures truck & bus.3% to the total turnover.72mn number of tyres as compared to 5. Ceat has an extensive distribution network of more than 3. In FY2000. scooter and LCV tyres. it produced 5. sales of tyres contributed to 90. During the year. we have consistently been receiving export awards from AIRAI and CAPEXIL.y We are the first Indian tyre company to receive an ISO certificate (ISO/TS 16949: 2002. the company has launched new products under the brand names Fleet Master . Though known for its quality and successful brands such as Formula I. Over the last ten years.000 dealers. passenger car. Samrat. in the year 2003-2004). Turbo Lug and Elevata . a rise of 9%yoy. Endura. RESULTS AND DISCUSSIONS Business Ceat is the second largest tyre manufacturer in the country. Secura. Ceat posted a rise of 21%yoy in truck tyre sales in the replacement market in value terms. indeed. Maestro. market aggressiveness has been much lower than competitors like MRF or Apollo. Stamina etc.24mn units in FY99. Tubes and flaps .

The company does not have any production facility for manufacturing of tubes and flaps. Rs600mn will be utilized for a new radial facility at its Nashik plant.000 in the first phase and 70.36bn in FY2000.000 in the next phase. the company tied up with a local firm. In FY2000.15mn in FY99. The turnover of the JV grew from Sri Lanka Rs1.03mn tubes as compared to 4.29bn in FY99 to SL Rs1. It sold 5. The company had taken over Rado Tyres in Kerala in FY98 and plans to increase its manufacturing capacity from 15. A greenfield project is likely to be set up in the second phase.34mn flaps as compared to 1. Export sales on a FOB basis has fallen by 9. Profit before tax rose 28%yoy to SL Rs75mn. Expansion plans The company has planned a capex of Rs1bn spread over the FY2000 and FY01. It sources the products from other manufacturing units. In November 1998.5%yoy from Rs1. Outlook . Its Sri Lankan venture Associated Ceat Pvt Ltd has a 55% share of the Sri Lankan market.2bn in FY99 to Rs1. Kelani Tyres Ltd.6% of total turnover. which as part of the first phase will start commercial production in June 2000. While Rs400mn will be spent on capacity upgradations. sales of tubes and flaps contributed to 9. This merger would have combined production capacity of 34 metric tons.47mn in FY99 and 1.08bn in FY2000.000 to 40. Exports Ceat is the second largest tyre exporter after J K Industries. Export sales were hampered by a demand decline in the US market.

it is expected that the company would take advantage of the continuing growth in these segments. Moreover. As a leading player in the commercial vehicle. passenger car market and two-wheeler tyre segments. Ceat can no longer prop its operational income with other income. This has brought down interest costs as has been witnessed in FY2000. The new radial tyre plant coming up in Nashik would help the company find a foothold in the fast growing segment. with sale of investments in its many subsidiaries. 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. y Relative importance of road transport and long distance travel by road leading to increased need to replace tyres. y Development of export market will also enable higher capacity utilization levels.Ceat s fortunes are now (post restructuring) entirely linked to the tyre industry s fortunes. Ceat is expected to do reasonably well for the rest of the fiscal. y Economic scenario and credit availability will determine ability to purchase automobiles and in turn spur demand for tyres. . However. Even in the export market. y Retreading saves up to 80% on original cost and this will have a negative impact on fresh demand. The company has done well by rationalizing its debt portfolio by replacing short-term loans with long term financing from FIs. the company is reducing its dependence on standard bias-ply products and concentrating on niches. Demand determinant Growth of automobile industry will increase vehicle population and thereby the demand for tyres in the OEM as well as the replacement markets.

Sept 15 (PTI) R 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.y Radialisation increases the life of tyres and reduces the need for a replacement. an agricultural commodity. Other raw materials are mainly petrochemical based and movements are cyclical. the company has recorded sales of Rs 533 crore which is 19 per cent more than the corresponding period last year. Earning drivers y Raw material price fluctuations: Prices of natural rubber. Ceat Tyres targets 14 per cent growth MUMBAI. Freeing imports of radial tyres will affect margins in that segment. he said. the company s management has set a growth target of 14 per cent against a projected industry growth of 6 per cent. . In order to emerge as a market leader. In the first five months of the current fiscal. which may inhibit volume growth. Vice-Chairman Harsh Goenka told shareholders at its 40th AGM here today.

with the production increasing by mere 1% compared with the same period last year. Ceat s exports last year dipped to Rs 128 crore from the previous year s Rs 153 crore chiefly due to the South Asian crisis and lack of demand from the US and Latin American countries. has been a period of nearstagnant growth for the domestic tyre industry. Africa and South America. At present.665mn (Rs 12. . Essel Packaging: The Board of Directors of Essel Packaging Limited yesterday announced payment of a special millennium dividend of 150 per cent to its equity shareholders. Export turnover is expected to be around Rs 140 crore this fiscal. Operating profit dipped 38% to Rs 564mn (Rs 910mn). Goenka said.477mn in the previous year.904mn as compared to Rs 13. 2001 y Sales of tyre major Ceat limited declined 11. y Total expenditure came down by 9. in scooter tyres it has a market share of 21 per cent.2% to Rs 11. to February 2000. It mainly exports to the United States.The company intends at least a one per cent growth in market shares in all the segments it operates in. The 11 months from April 2000.7% on the back of sluggishness in truck and passenger car tyre sales. West Asia. motorcycles 11 per cent and car tyres 19 per cent. Sales in this fiscal were Rs 11. Goenka said.844mn). RESULTS AND DISCUSSION Results (FY2001) May 08.

6 325.4) (145. Financial Highlights Period to Rs in mn Sales Other income Total income Expenditure Operating profit Interest Depreciation PBT Tax PAT Adjusted OPM (%) Equity 03/01 (12) 11.4) 201.3 13.1 (12.6 350.9 03/00 (12) 13.5 (11.5 (26.9 Growth % (11.844.1) (2. The rise was due to new plant that has been commissioned in Nasik. OPM as a percentage of total income came down to 1.8) (135. This may be attributed to drop in demand and higher input costs on one hand and slowdown in exports on the other.7 12.1) (9.754.6%).5 - .2) (164.5% to Rs 165mn (Rs 145mn).4) 563.8 277.9 (534.0) (137. y The company will have to face competition through effective cost control.3 (11. 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.6) 13.9% (4.7) 17.y Continuing non-tariff barriers in the newly emerging markets.229.665.0) 910.2) 227. y Depreciation increased 13.476. higher operating efficiency and new marketing strategies.2) (38. y Ceat reported a net loss of Rs 137mn as compared to a profit of Rs 201mn in the previous fiscal.0) (0.1 4.1 (537.9 350.903.1) 1.

7 Gross Profit Depreciation 143.5 990.7 -2750.7 -2474.9 16479.6 -221 -218.3 Interest -641.7 -14884.7 - Company Results y Scrip Code : 500878 Company Name : CEAT LTD Type Audited Audited UnAudited Audited 01 Apr 01 31 Mar 02 y y Date Begin Date End 01 Apr 04 31 Mar 05 01 Apr 03 31 Mar 04 01 Apr 02 31 Mar 03 y Description y Gross Sales Excise Duty Net Sales Other Income Total Income Expenditure 17803.4 234 15669.4 y y y .2 14008.2 15279.1 -2523.2 275.7 y Operating Profit 785.3 -10576.8 1222.EPS (Rs) - 5.5 12407.4 649.4 511.3 1413.6 11373 y y -13817 -11417.6 -220.7 11139 y y y 389.1 -478.8 -572.2 13613.5 -2471.5 223.3 796.3 14882.4 15230.5 12132.9 -764.4 -188.

2 -11.2 346.7 140. of Shares .2 - y y -18.4 293.Non Promoters 20473318 - y Percent of Shares . OTR tyres account for 11 per cent of .14 58. Balkrishna Tyres.1 24 351 350.1 24 Extraordinary Items Net Profit Equity Capital 48.2 y -81.5 -206.9 - y y Reserves 2618.1 2993.2 428.14 58.24 0.6 -109 y Profit after Tax -67.1 35.14 - y Result Type A A A A COMPETITORS India is a manufacturer.53 4.6 184. expor-ter and importer of Off-The-Road (OTR) tyres.8 184.01 5. Goodyear. CEAT.y Profit before Tax Tax 10 -77.4 2932.3 EPS -0.Non Promoters 58. Vikrant Tyres and TVS are the major manufacturers of OTR tyres in the country.9 350.68 20473118 20473118 y y Nos. MRF.

the industry's production was almost stagnant at around 36. Once the domestic . Also. the government's Golden Quadrilateral project has given a new lease of life to this otherwise sinking industry. Till 2000-01. have gained the limelight because of the government's massive expenditure programme in infrastructure building. Michellin and Pirelli are the MNCs supplying bigger OTR tyres in this country. as their demand volume is low and it makes more economic sense to import. And this year its performance is expected to be even better. the production of tyres crossed 50. Chief Manager (R&D). a growth of 44 per cent. Bridgestone. Large-sized OTR tyres are imported. Ceat Ltd.000 tyres. In the foreseeable future the mining sector is expected to remain a major customer for OTR tyres. Ganesh. One of the main reasons for the industry's over dependence on exports for its survival is the low domestic demand. India also exports OTR tyres to other countries including Europe and America. in India. 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. Yokohama. In fact. Industry sources claim that production of OTR tyres should touch 72. During the first 9 months of the current year. Says Tom K.000-37. An important feature of the OTR tyres industry is that majority of the production (nearly 67 per cent) is exported.the country's total tyre market which is estimated at Rs 12. Last year exports saw a substantial jump of 56 per cent. BEML and Caterpillar are the other major customers of the industry.468 in the previous year. Thomas. The industry exported 33. OTR tyres. Similarly." says N. OTR radials are not manufactured here and they are also imported. Ceat Ltd. in 2002-03.500 crore.000 during 2003-04.000 numbers. Vice President (Technical). especially in road construction. the industry has achieved a growth of 48 per cent. "Growth in OTR tyres was insignificant a few years ago.530 tyres during 2002-03 as against 21.

OTR radials result in saving in consumption of fuels. OTR radials are not yet manufactured in India. "Import of tyres from China has just started. But OTR radials have certain advantages over traditional tyres." .demand picks up growth in exports is expected to come down. This gives India good scope to expand its market abroad. mainly natural rubber and petrochemical based raw materials. Thomas. nearly 30 per cent more than the cost of ordinary OTRs. as we are planning to do in the near future. Says Tom K. OTR radials are costlier. "Rising price of natural rubber has affected our margins badly. there is expected to be more demand for Grader and Compactor tyres because of enhanced road construction activity in the country. Natural rubber accounts for nearly 26 per cent of the raw material cost of the industry. However. in the domestic market. OTR radials also provide comfort to the driver thereby reducing fatigue. and fifth largest consumer of natural rubber and synthetic rubber together in the world. And this year the industry is expected to export 36. Also. the price of the same goes up. Whatever China consumes.200 tyres. the Indian OTR tyres industry is a step behind the developed nations. India is the third largest producer and fourth largest consumer of natural rubber. and whatever China produces the price of the same goes down. both in the domestic market and export market. It may pose a threat in the coming days. Industry experts foresee good growth potential for the industry in the coming years. We may have to increase the price of OTRs. The main cause of worry is rising raw material prices. The life of OTR radials is longer than that of traditional tyres by more than 60 per cent. Quality of the tyres is suspect but they are cheaper." Technologically. Nor do the major players have any plans to manufacture the same in the near future. which is 50 per cent of the domestic production. Also. Banning exports is not a solution. the OTR tyres industry is facing some serious problems. OTR tyre manufacturing is a labour intensive operation and as a result its production abroad is on the decline.

Besides. Manufacturers may employ higher productivity building machines like orbitread technology for quality enhancement. therefore. There has also been 2% increase in excise duty. This clearly reflects the prevailing excess capacity situation. the prices of synthetic rubber and rubber chemicals have risen steeply in international markets. Rubber imports are still controlled. RESULTS AND DISCUSSIONS Industry Overview: During the year under review. resulting in high prices. y The Tyre Industry continues to bear the brunt of increasing raw material costs. effected by the Union Budget announced in February. Additionally. while there are valid reasons for a commensurate increase in prices. Thomas of Ceat avers. Margins. are under pressure. 2000 on all tyres. the Tyre Industry grew by 7% in value and approximately 9% in volume. CEAT'S Performance: y The year 1999-2000 saw CEAT move out of the consolidation phase and surge ahead with increased visibility in the market place.Tom K. At present. Considering its potential many players may take the plunge in the retreading business. . except two wheeler and farm rear types. the intense competition has prevented this from happening. it is dominated by a handful of players in the country. In the coming days retreading of OTR tyres could become big business. 3. y Thus. the country may start producing bigger size tyres which were hitherto imported.

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

Exports: y The decline in demand from the US market.y The integrated logistics system . 1998. has been implemented. . Rado Tyres Ltd. Manufacturing: y The capacity optimisation projects at the Mumbai and Nasik Plants are progressing on schedule. expires in August 2000. Strategies have been drawn up to reverse this situation and steps to penetrate other markets have already been taken. led to CEAT's exports declining by 7.which links 126 stocking points with the two factories continued to work well and ensured availability of the right product at the right time. located in Kerala. y The expansion plan at CEAT's associated company. The new radial tyre facility coming up at Nasik is expected to be completed on time with manufacturing commencing in MayJune 2000. hereby keeping inventory levels low. 4. These initiatives will see exports on the growth path once again. effective 1st November. has been completed. y The Off-take Agreement for radials and two and three wheeler tyres with erstwhile joint venture partner.5%. Joint Venture in Srilanka: y The Joint Venture structure of the Strategic Alliance in Sri Lanka which CEAT. This may be extended for a further period. which was flooded with cheap brands from all over the world. This will enhance the conversion capacity of two and three wheeler tyres to 70000 tyres per month. jointly with Associated Motorways Ltd. entered into with Kelani Tyres Ltd. Goodyear. 5. 6.

comes from Heavy Commercial (Truck /Bus) and Light Commercial tyres. producing over 23. In addition.65mn to SL Rs75mn during this period. y The Indian Tyre Industry is a vibrant segment of the Indian economy and is the wheels of the entire road transport sector of India. Profit before tax rose 28% from SL Rs58.y The turnover of this joint venture. Approximately 80 % of the Industry production.e. grew from SL Rs1293 mn in 1998-1999 to SL Rs1357mn in 1999-2000. in terms of value. The steady growth of the industry can be gauged from the fact that the industry is growing at an annual growth rate of 6%. under CEAT-Kelani Associated Holdings Pte Ltd. The Indian tyre industry caters to all segments of the market i.7mn tyres (4 Wheeler Tyres Organized Sector) in FY03.4mn tyres/annum for the FY03 and is expected to go up to 28. y y y y y OEM Replacement STU Defence Exports The total size of domestic market (4 wheeler tyres) can be estimated around 19. there is a production of 25. however there is an excess supply over demand in certain categories. The total industry turnover in FY03 was Rs128.7mn tyres in 2/3-wheeler tyre segment.4bn and is a significant contributor to the Indian exchequer to the extent of Rs44bn by way of excise and other taxes.4mn .

steel and nylon. There are three major consumer segments for tyres namely replacement segment. Tyre varieties can be divided into two categories cross ply and radial. FUTURE SCOPE OF CEAT TYRES Demand for tyres is derived from demand for automobiles.tyres/annum by FY08. Therefore it is a derived demand 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. The domestic industry is dominated by cross-ply tyres. Though . radial tyres dominate western markets. 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. Worldwide. Radial tyres can be differentiated on the type of belt used fiberglass. In addition. On the other hand. in value terms. steel belted radials are more popular due to their performance advantage. CVs gain significance. Original Equipment Manufacturers (OEMs) and exports. the tyre industry exports Rs13bn of tyres across 6 continents and over 60 countries. Though scooters and motorcycle tyre demand also plays a vital role. due to the poor conditions of roads in the country and overloading of CVs.

who allot 2-3% of sales to advertising. Natural rubber and Nylon cord fabrics are the most critical raw materials as it accounts for 50% of total raw material cost. a rise in prices has a negative impact on margins. Brand building is given a lot of importance by manufacturers. All foreign cars introduced in the country are on radial tyres. 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. Hyundai and Toyota have an international sourcing agreement with Bridgestone. An extensive distribution network and strong brand recall are factors critical to tyre sales. Since Honda. 50:50. Replacement demand accounts for as high as 57% of industry volumes. Goodyear is believed to be the preferred supplier for Ford India.e. it is also the preferred supplier in India. for the passenger car segment. . the contribution from OEM and replacement segments varies across sub-segments in the auto sector. replacement demand continues to remain the key growth driver. demand is balanced from replacement and OEM categories i. Since most of the raw materials are crude derivatives. Another key transition that is taking place in the industry is the entry of multinationals like Good Year. However. For instance. even technology has assumed significance.fortunes of the sector are closely tied with the automobile industry. Bridgestone and Michelin in the domestic market. With the introduction of radial tyres. Raw materials constitute 60%-70% of production cost of tyres.

the leading tyre manufacturer in Sri Lanka has announced a major reduction in the retail prices of lighttruck. Tyre exports have grown at an annual compounded rate of 27% over the past 10 years. 2001 this reduction would make CEAT the most affordable tyre when compared to all international brands sold in the local market. truck and bus tyres. which seriously jeopardises the safety of the customers and their vehicles. "Effective December 10. NEW LAUNCHES OF CEAT TYRES CEAT slashes prices of truck. Padukone said . the company's General Manager (Sales & Marketing) Ashwin Padukone said. bus tyres CEAT-Kelani Associated Holdings (Pvt) Ltd." Mr.. Indian tyres are exported to 56 countries.The export market holds tremendous potential for domestic manufacturers. 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 are primarily developing countries."Using new tyres on the front . "In a market battered by the economic downturn.

The use of end products i. The fibre glass produced in India is Eglass only. drying of glass cakes. (now known as Glass Fibre Division. This has become standard the world over as it performs well in practice and is used widely. has been established as the safest and the recommended option for safety reasons. conversion to saleable products. COLLABORATIONS 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. furniture. The holding company has two manufacturing arms. winding. Mr. of India. crash helmets etc The formulation chosen for continuous fibre glass production is generally known as E-glass. In late seventies. NDB and CEAT Ltd. fibre glass reinforced plastics are mostly in pipes and tanks.. Rovings. 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." he said. one in Kalutara and the other at Kelaniya. At that time only one unit Fibre Glass RlWngton (FGP) was working at Thane-Bombay with a licensed capacity of 1290 tonnes per annum. has been factored into the price reduction and has been passed onto the consumers.g. The anticipated benefit of the increase in offtake and the consequent capacity utilization.e. The process of manufacture of fibre glass consists of several steps e. batch preparation. a joint venture company established in 1999. Woven Rovings. only 2 units i.wheel. boats transport sector.. AMW Group. represents the strategic alliance between Kelani Tyres Ltd. CEAT-Kelani Associated Holdings (Pvt) Ltd. production of glass melt.e. We anticipate that this price reduction will encourage consumers to replace with new tyres at the right time. Yarns etc. glass filament conditioning. CEAT Tyres) and UP Twiga . Padukone added. Out of 6 letters of intent issued. Deccan Fibre Glass Ltd.

The unit.7. had to close down in December 1982 and has not restarted as yet Deccan Fibre Glass Ltd. UP TWIGA Fibre Glass Ltd.1. AW the three fibre glass units were put up with foreign collaboration. CEAT Tyres Ltd. The capacity of the plant is 2000 tonnes per annum with electric Pochet Furnace. since the installed capacity in the country is around 5000 tonnes per annum against the present demand of 2400 tonnes per annum. 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. came into being in 1981 at Ntehboobnagar in Andhra Pradesh. In 1983 the unit was merged with CEAT Tyres Ltd. The main reason for dismal capacity utilization is inadequate market demand. The per formance of the unit is not satisfactory and the production varies between 40 to 50 per cent of licensed capacity. and is presently known as Glass Fibre Division. was started in 1980 at Sikandrabad in Ottar Pradesh. started production in mid sixties with remelt technology based on imported E-glass marbles. The company is functioning with about 70 to 80 per cent of their licensed capacity. The installed capacity is 1770 tonnes per annum with electric Pochet Furnace. The collaboration agreements were more or less similar. The unit could not develop proper market for its products. 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. FGP Ltd. irrespective of the country of collaboration. The major scope of collaboration was: a) Provision of technology b) Basic engineering of the plant . 1.Fibre Glass Limited (now closed since December 1982) were installed in early eighties.

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


Could seek better supplier deals.Strengths y Right products. High degree of customer satisfaction. competitors. Processes and systems. High volume/low cost market is intensely competitive. Could extend to overseas. Brand Image Products have required accreditations. Profit margins will be good. y y y y y y y y Opportunities y y y y Threats Vulnerable to reactive attack by major competitors. An applied research centre to create opportunities for developing techniques to provide added-value services y y y . quality and reliability. Superior product performance vs. Lack of infrastructure in rural areas could constrain investment. etc Management cover insufficient. Customer service staff need training. Weaknesses y y Not very popular in the international market Delivery-staff need training.

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