A SUMMER TRAINING REPORT

ON

MARKETING TRAIT CEAT TYRES

SUBMITTED IN PARTIAL FULFILLMENT OF THE

REQUIREMENT
OF BACHELOR OF BUSINESS ADMINISTRATION (BBA),
GURU JAMBESHWAR UNIVERSITY, HISAR

TRAINING SUPERVISOR SUBMITTED BY

 Acknowledgement

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.
 Table of Content

 INTRODUCTION
 BACKGROUND
 OVERVIEW OF THE SITUATION
 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

 PROBLEM CONTEXT

 INDUSTRY/ORGANIZATION/PERSPECTIVES/IMPLICATIONS

 CONCEPTUAL FRAMEWORK

 DEFINITION/OPERATIONALIZATION OF TERMS

RESEARCH DESIGN /METHODOLOGY

 RESEARCH SAMPLING AND DESIGN

  RESEARCH VARIABLES AND MEASUREMENT

 DATA COLLECTION METHODOLOGY

 LIMITATIONS OF TRESEARCH

 DATA PRESENTATIONS AND FINDINGS

 PRESENTATION OF DATA

 DATA ANALYSIS

 SWOT ANALYSIS

 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

 CONCLUSION
 RECOMMENDATIONS
REFERANCES
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 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. Ceat’s investments in its subsidiaries have also
come down this fiscal which is a sign of prudence on the
management. BUSINESS DESCRIPTION

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.

CEAT INDIA

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.

History
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.

LITERATURE REVIEW

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 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. Ceat’s investments in its subsidiaries have also
come down this fiscal which is a sign of prudence on the
management.

Indian Tyre Industry

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.

Boards okay Harrisons rubber division merger with Ceat

Our Bureau

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.

MARKETING STRATEGY

Boards okay Harrisons rubber division merger with Ceat

Our Bureau
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.

Ceat Limited

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 company’s 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 Limited’s financial and human resource
structure.

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. 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.

Coverage

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:
Bridgestone Corporation

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

Yokohama Rubber Company, Limited

• 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, 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
Limited’s 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.”
Methodology: Uncovering Gaps

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
countries, and applying a seven-stage methodology:

(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. Mr Paras K. Chowdhary, Managing
Director, Ceat, spoke recently to Business Line on the domestic tyre
industry and challenges before it.

LIMITATION OF THE RESEARCH

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.

DATABASE AND RESEARCH METHODOLOGY

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:

DATA COLLECTION

The present study contemplated an exploratory research.

 Secondary data: secondary data which is already

available and published .it could be internal and external
source of data.
  Internal source: which originates from the specific field or
area where research is carried out e.g. publish brouchers,
official reports etc.

 External source: which originates outside the field of

study like books, periodicals ,journals, newspapers and the
internet.

NATURE OF DATA

 Secondary data has been used which is collected through

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

TOOLS AND TECHNIQES

Analysis of data has been done with help of various statistical

tools like the tables and graphs.
 DATA PRESENTATION AND ANALYSIS

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.
Layout and Content of a Typical Report
Tyre Industry April 2004 update

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.

Production Exports
(In mn) Apr-04 Apr-03 Growth Apr-04 Apr-03 Growth
Truck & 880,275 777,280 13.3 154,695 123,760 25.0
Bus
LCV 291,828 219,895 32.7 62,677 45,475 37.8
Jeep 130,774 100,235 30.5
Passenger 936,853 588,238 59.3 51,573 17,157 200.6
Car
Total 4- 2,239,730 1,685,648 32.9 268,945 186,392 44.3
wheeler

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

(Front)
Tractor 80,309 58,056 38.3 5,326 11,244 (52.6)
(Rear)
Tractor 40,590 30,860 31.5 217 226 (4.0)
(Trailer)
Total 229,655 183,276 25.3 6,647 13,425 (50.5)
Business Description: Ceat Limited. The Group's principal
Tractor
activities are to manufacture and distribute automotive
tyres, tubes
Scooter and flaps.
796,918 The products
611,033 30.4 include nylon3,110
12,225 fabric, 293.1
Motor
nylon tyre1,362,593 1,054,453
yarn, glass 29.2
fibre, automotive2,750 1,975
flaps, filament 39.2
Cycle
mats and other rubber products. The Group also provides
Moped 8,205 18,508 (55.7) 4 646 (99.4)
investment financial services. The Group supplies to over
Total 2- 2,167,716 1,683,994 28.7 14,979 5,731 161.4
50 countries with the major business links in the United
wheeler
States of America, Singapore, the United Arab Emirates,
Animal 9,514
Bangladesh, 18,585
Philippines, (48.8)
Afghanistan, and Nigeria and other
Drawn
Asian, Middle East and African countries.
Vehicle
Industrial 23,068 26,769 (13.8) 50 1,958 (97.4)
Off the 4,613 3,176 45.2 788 1,204 (34.6)
Road
Total 37,195 48,530 (23.4) 838 3,162 (73.5)
Others
Final 4,674,296 3,601,448 29.8 291,409 208,710 39.6
Total

STOCK CHART

Recent stock performance

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

• “CEAT will each time every time provide Total Customer

Satisfaction through products and services of highest
quality and reliability.
• CEAT will nurture an exciting and challenging working
environment embedded with fairness and free, frank
exchange of views.”

Current Scenario

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.

CEAT & Cricket

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 System—CEAT

Cricket Rating (CCR)—a system to reward outstanding
performances across every sphere of cricket—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 world’s 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 reward—the ‘CEAT International Cricketer of the
Year’. And of course, the most enduring team is rewarded too. It
wins the ‘CEAT International Team of the Year’.

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.

The experts’ decision is final

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.

Exporting technologically advanced products

• 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.

Enjoying large market shares

• 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.

Meeting global standards

• 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.

Honoured with Quality certificates

• 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.

RESULTS AND DISCUSSIONS

Business

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.

Tyres
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 Master’, ‘Turbo Lug’ and ‘Elevata’.

Tubes and flaps

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.

Exports

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.

Expansion plans

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.

Outlook

Ceat’s fortunes are now (post restructuring) entirely linked to the

tyre industry’s 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 ‘other’ 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.

Demand determinants

• 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.
Earning drivers

• 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.

Ceat Tyres targets 14 per cent growth

MUMBAI, 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.

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 company’s

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.

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.

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.

RESULTS AND DISCUSSION

Results (FY2001)

May 08, 2001

• 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.

Financial Highlights
Period to 03/01 03/00 Growth
Rs in mn (12) (12) %
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 -

Company Results

• Scrip Code : 500878 Company Name : 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

Description

• 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 389.81222.2 275.4234

• Total Income 15669.7 15230.5 12407.6 11373

• Expenditure -14884.4 -13817 -11417.3 -10576.7

• Operating Profit 785.31413.5 990.3796.3

• Interest -641.9 -764.1 -478.8 -572.7

• Gross Profit 143.4649.4511.5223.6

• Depreciation -220.6 -221 -218.4 -188.4

• Profit before Tax -77.2 428.4293.135.2

• Tax 10 -81.6 -109 -11.2

• Profit after Tax -67.2 346.8184.124

• Extraordinary Items 48.5 -206.2 - -

• Net Profit -18.7 140.6184.124

• Equity Capital 351 350.9350.9-

• 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 58.1458.1458.14-

• Result Type A A A A

• Notes
ln a significant move, the Rs.1,500-crore Ceat Ltd has tied up
with leading portal Yahoo India as part of its online marketing
strategy. With this tie-up the company plans to roll out a host of
online promotions and Internet ads in a bid to connect with the
youth segment. In fact shedding its fuddy buddy image, Ceat
Ltd. id now exploring new mediums to create a contact point with
its consumers.

As for Ceat's tie-ups with other portals, says Ceat Ltd vice-
president (marketing) Kalyan Paul: "We are in talks with other
portals but it's too early to talk about it now. Incidently, the
company has an online presence with a Website for its sports
property Ceat Cricket Ratings. Adds Mr. Paul: “This property is
now being made more accessible to cricket fans by promotion
through tie-ups with portals such as Yahoo India.” Clearly, the
company is now stepping up its online marketing plans to woo
the youth segment.

Cashing in on the growing popularity of Short Messaging Service

(SMS) also plans to enter this alternative medium to touch base
with its target audience. “In addition to the Net, we are
evaluating all formats which will help us connect with the youth-
SMS included”, informs Mr. Paul.

As Indian corporates are increasingly opting for new media tools

to connect with the youth segment, why has Ceat Ltd. opted for
this mode of marketing now? Mr. Paul explains that as part of its
new marketing plan to develop a younger image for the brand,
Ceat is now exploring new mediums to create a contact point
with its consumers. "Since, there is a lot of synergy between
two-wheeler owners and the Net audience, the company is
planning to use Internet as a medium. A plan is being put into
place to use this interactive medium to build the Ceat brand
among the youth, who are today’s consumers for two-wheeler
tyres and future ones for car tyres”, he adds.

To meet the objective, the company is now using tools such as e-

mail newsletters which give tyre users an opportunity to
understand the brand better.

So with these new online initiatives, is the company going for a

totally new brand image? According to Mr. Paul, the Ceat brand is
strong among the target audience and the company is not
looking at changing the brand equity or positioning. The existing
brand plank ‘Born Tough’ has universal and timeless appeal, with
a young and with-it audience.

"We intend to create a relationship with new users (youth) to

create a market for the future by catching consumers at the
beginning of their purchase life-cycle and maintaining a
relationship based on the delivery of superior value”, he reasons.

As for the future of online marketing in India, Mr. Paul observes

that in today's dynamic media environment, online tools are
enabling marketers to target their messages more effectively to
the relevant audience.

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. But the
NHDP project has increased the demand for these tyres. During
the next few years the demand for OTRs should grow at the rate
of around 20 per cent every year."
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.

RESULTS AND DISCUSSIONS

Industry Overview:

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.

3. CEAT'S Performance:

• 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.

4. Exports:

• 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.

5. Manufacturing:

• 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.

6. Joint Venture in Srilanka:

• 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 –
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.
FY03 has seen a recovery in tyre Industry, due to up
swing seen in automobile industry? Do you expect the
trend to further intensify?
Overall the year was better in terms of tyre consumption.
Buoyancy has been observed in production and sales of all
categories of vehicles during the year. Truck & Bus production
grew by 23.6%, LCV by 31.9%, Car by 11.5%, MUV and Jeep by
8.2%. Tractor vehicle production, which declined during the year,
however is showing some signs of improvement, due to good
monsoon this year.
We expect the growth trend to further intensify. Truck & Bus
segment will continue to grow along with Passenger Car & MUV
segment in double digits. Also we are expecting tractor segment
to emerge out of red.

What are the major threats for the Indian tyre industry?

• Opening of Indian economy, reduction in import duties and

concessional import tariffs for countries like China and
South Korea (under Region Trade Agreements) shall lead
to high volume of imported tyres.
• Particularly in light of the fact our country’s infrastructure
continues to remain inadequate and incompetent. e.g.

• Power rates are very high apart from

inadequate availability.
• Cost of money very high
• Manpower productivity is poor
• Some progress in road and ports sector

• Ever rising raw material costs, petroleum prices have a

direct bearing on the health of tyre industry
• Being the core sector, tyre industry performance is directly
linked with the performance of the overall economy and
the automobile sector.
• Tyre industry performance also is impacted by the
performance of agricultural sector.
• As the future unfolds, the tyre industry may be impacted
by competition form railway sector.
 • The sizes of the Indian tyre manufacturing plants are not of
global scale and hence some of them may find the going
difficult.

We are hopeful of improvements in these areas of infrastructure

development.

The raw materials cost are rising.

• The rising raw material costs will certainly impact the
operating margins. We will make efforts to reduce the impact
by improving the productivity and efficiency. However, if
impact is substantial we will have no other option, but to
increase the selling price of the tyre.
• We do have long-term contract with suppliers. However,
prices are fixed for a quarter or six-month. There after it
varies depending upon crude prices as most of the raw
material, except natural rubber, are petroleum based.
What is the USP of the Company?
• Continuous innovation and state of the art technology backed
by quality is the mantra of success at JK Tyre and this has
given us a clear competitive edge over our competitors.
• JK Tyre, Pioneered the Radial revolution in India two decades
ago and ever since then we have been riding the technology
ladder. We offer the entire range of 4 wheeler radials i.e.
Truck & Bus, LCV, Car, Jeep and Farm. We launched India’s
first eco-friendly range of colored radials and are set to drive
the second green revolution with the launch of the tractor
radial.
• Globally radialization in the truck and bus segment is over
60%. Envisioning the need for products to cater to changing
freight & passenger movement patters on superior vehicles
running on the fast improving road infrastructure, JK Tyre
pioneered the introduction of truck and bus all steel Radial
tyres in India for the first time. The company has deployed
significant resources in the developing the market and
educating the customer on the value proposition of truck and
bus radial tyres. Backed by an all India service network along
the national highways, JK Tyre is all set to drive yet another
radial revolution in the country.
• Hari Shankar Singhania Elastomer and Tyre Research Institute
(HASETRI) is our in-house R&D center and is one of its kind in
Asia. Today HASETRI act as a nerve center -
understand/determine consumer needs, develop and provide
suitable products of world-class quality to the Indian
consumer as well as continuously gauge their performance.
This facility is involved in various collaboration projects with
leading research agencies both in India and abroad. HASETRI
is presently engaged in FEA and NDT studies with IIT Chennai,
Elastomer studies with IIT Kharagpur and partnering IIT Delhi
in the study of textiles. The internationally acclaimed
Smithers’ in USA is also working with HASETRI in the field of
VDD and Tyre Mechanics.

Who are other major players in the tyre Industry, apart

from JK Tyres? What is the share of your company in the
total market share?
Apart from JK Tyre, MRF, Bridgestone, Apollo & Ceat can be
categorized as other dominant players in Indian Tyre industry,
others being Goodyear and Birla. Put together they represent
around 75-80% of the Indian tyre industry.
JK Tyre V/s Competition Shares of Total 4 Wheeler Tyres

Company Share Company Share

JK Tyre 20.9% Ceat 15.9
MRF 22.3% Goodyear 9.5%
Apollo 17.4% Birla 5.6%
Bridgestone 8.5%
Source: ATMA (All 4 Wheeler Tyres) 2002-03 April - March
Who are the major user-segments and what is Company’s
market share in each user –segment. (CVs, Car &Utility
Vehicles and Farm & 2-3 wheelers)?
One can categorize the major user segments in 4 wheeler tyres
as Commercial Segment i.e Truck, Bus and LCV, Passenger
Car Segment i.e Cars, MUVs, Jeep and Farm Segment i.e.
Tractor and ADV.
JK Tyre V/s First Top 3 Players Share – Truck & Bus Segment
JK Tyre Apollo MRF
25.2% 24.8% 18.8%
Source: ATMA (All 4 Wheeler Tyres) 2002-03 April - March
JK Tyre V/s First Top 3 Players Share – Passenger Line Segment
JK Tyre Bridgestone MRF
18.2% 15.4% 24.7%
Source: ATMA (All 4 Wheeler Tyres) 2002-03 April - March
In terms of revenues, which segment is performing
better? Which segment is likely to drive the growth of
Tyre Industry?
In term of revenue Truck and Bus segment contributes the
maximum around 70%.
Further according to me, growth in commercial vehicle &
passenger car segment, production and sales, will boost up the
demand and thereby continue to drive the growth of tyre
industry.
The infrastructure initiatives like Golden Quadrilateral and NE-SW
corridor, expressways will further drive the Radial revolution in
India, be it Truck & Bus Radial or Passenger car radials.

For JK Tyre the world is the stage, accordingly, it has forged long
term business partnerships with overseas players. We have
established a significant presence in China by way of outsourcing
arrangements as well as participation on manufacturing as
technology partners. Today heavy-duty bias tyres are
manufactured with our Technology and JK Tyre Branding and are
being successfully marketed in the Chinese and other global
markets.
Today, we export tyres to 60 countries across 6 continents and
enjoy premium brand status in highly competitive markets like
the US. For being the largest exporter of tyres from the country,
JK Tyre has been awarded with Top Export Award CAPEXIL in
year FY03. We have generated revenue of Rs3.1bn (FY03) from
our export operations.
The turnover from Chinese operations will be of significant
contribution in the years to come. We expect to have an
estimated turnover of around Rs4bn in next few years.
What top line and bottom line growth figures are you
expecting for the coming years?
• We at JK Tyre are looking for a turnover in excess of Rs50bn
by FY06 and expected to improve our bottom-line
substantially in the years to come. We aim, to be leaders in
the entire range of radial tyres (Truck & Bus, LCV, Passenger
Car, Jeep & Tractor), we operate in.

Could you brief us about merger with Vikrant Tyres and

synergy seen in terms of change in capital structure,
production capacity, sales and realizations per unit?
JK Industries Ltd has metamorphosed into a mega tyre entity
with the merger of Vikrant Tyres Ltd and crossed the magic
turnover figure of Rs20bn in FY03. We are on the threshold of a
new era with JK Tyre consolidating leadership status as well
embarking on the path of enhancing our global presence.
Derived Benefits

• Benefits of synergy of over Rs220mn/annum accruing to

one entity, JK Industries, earlier it was shared by
shareholders of respective companies. The benefits have
been realized in the areas of bulk raw material purchases,
logistics and rationalization of network & sales force.
• Combined capacity of tyre stands increased from 3.5mn
tyres/annum to 5.6mn tyres/annum.
• The capital of the company stands revised from Rs345.6mn
to Rs374.6mn as on September30, 2003.
 • Earning Per Share of the restructured entity has
substantially increased and the market price of the share,
which was Rs20-25 per share before the restructuring, is
now being traded at significantly higher prices of over
Rs75/share.
• Technology & R&D
• Full Range of products
• Focused and targeted marketed segmentation
• Common strengths of both the brands to be leveraged

Can you brief us about your regional presence? What are

the Company’s plans in order to expand and maximize its
geographical reach?
• Today we are exporting to 60 countries across 6
continents. We have a significant presence in Middle East
and a strong presence is South-East Asia, including China,
where in we have strategic alliances for both outsourcing
as well as sale of JK Branded tyres in Chinese markets.
• W.r.t. expanding and maximizing our geographical reach,
though, we are the largest exporter from India into
Americas & Australia, we are in the process of further
developing these markets to cater to the still untapped
potential.
Anything which you like to share with us?

• JK Tyre is the first to introduce Truck & Bus Radials in India

• is 6 years ahead of the next likely entrant

• Selling 0.2mn tyres per annum
• Exporting Truck Radial Tyres worth Rs1bn

• It has always been the endeavor of your company to make

JK Tyre as India’s most preferred brand. It is a matter of
great pride that JK Tyre is India’s first & only tyre brand
to get the coveted "Super Brand" status and to feature in
the prestigious Super Brands Publication. This is yet
another first ever for any Indian Tyre manufacturer and is
a unique recognition of JK Tyre’s unassailable position as
India’s top tyre brand in quality and image perception.
• Further recognition accorded by the world’s top customer
satisfaction survey agency – JD Power, which has
recognized JK Tyre as the "Most Improved Tyre Brand"
in India.

FUTURE SCOPE OF CEAT TYRES

Demand for tyres is derived from demand for automobiles.
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. 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 – 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 – 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.

NEW LAUNCHES OF CEAT TYRES

CEAT slashes prices of truck, bus tyres

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.

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, 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.
f) Arrangement of training of personnel in collaborator's place
 SWOT ANALYSIS

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 satisfaction. • Management cover insufficient.
•

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.
 QUESTIONNAIRE

Excerpts from the interview:

How do you see 2002-03 shaping up?

• The year so far has been good for the industry. All the tyre
companies had good results in Q1, we too. In Q2 also, that
trend continued - Apollo was the most impressive and
compared to the previous similar period Ceat was also
impressive. Now at end-Q3, I am noticing a mild depression in
demand. I don't know the reason - December demand is
always a little low, but then this year even October-November
demand saw a mild fall.
• It could be due to some after-effect of poor rains. But Q3 is a
period of high tyre production. Therefore, there is a little
extra-supply in the market at present. Companies are now
trying to export more to take care of this problem.

But is not the global automobile market sluggish?

• I am talking of trucks and LCVs. I won't say the market

worldwide is down. In fact, January-December last year most
tyre companies posted good results. But yes, the kind of
growth that was expected did not happen. However due to the
9/11 attack in the US, crude oil prices fell and when that
happens everything else falls - synthetic rubbers, caprolactum
- all went down by 20, 30 or 40 per cent.
• The result was that even if the demand was low, it did not
matter due to bigger gains on raw material costs. If good
things happen for bad reasons, nobody talks of it! Until June
this year, the situation was good because crude recovered but
did not go above $23-24. Later, owing to issues like tension in
the Middle East, crude flared up, touching $30-31. I have not
seen a scenario, where within nine months you see crude at
$17 and $31. Almost 80 per cent up! If your main raw
material swings by 80 per cent, its derivatives also swing. At
this point in time, raw material cost is another issue facing the
industry. It is a substantial increase.

So, Q4 and into next year, it is a dicey market one is

looking at...

• Q3 demand is more or less the same as Q2. It is seasonally a

little weaker than Q2. But in this particular quarter, I think
there will be some pressure on margins. In Q4, at least for the
first two months, the pressure will be even more due to all the
increases that started coming in from July/September - their
real effect comes a few months later.
• Two or three situations are likely. The tyre industry may be
able to pass on the price increase. Can't say whether it will
happen or not because there are now four major players and
there is quite a fight going on in the market place. There is
the possibility that in the Budget, the import duty on raw
materials will come down again - could be a five per cent
decline.
• There is also a feeling that by February/March the tension in
the Middle East may settle down a bit, so you could see crude
prices stabilising at $22-24. If so, raw material prices will fall.
Besides, the rupee has not depreciated against the dollar; it
has somewhat appreciated. Thereafter the industry may be on
a stronger footing.

What could be the impact on the domestic tyre industry, of

the rounds of consolidation beginning to happen?

• The market in India is worth about Rs 10,000 crore. It is in

the hands of four big players, two medium players and few
small players. The big four - and here I am assuming Vikrant
and JK are merged - are likely to have a 2002-03 turnover of
Rs 8,000 crore. The two medium players - Goodyear and Birla
- should account for Rs 1,000-1,200 crore. The rest should
notch up another Rs 1,000 crore. About 15 years ago, we
were 12 big players. But in my opinion, we will see further
consolidation and nobody should be under the illusion that he
is big enough to be not gobbled up. I would expect in the next
two years, the number of players from four plus two, to be
reduced by at least one. One more player should get out of
business in the next two years and every two years you
should see a player getting out. Ultimately, it will be a
business of just four players.
• I am not necessarily saying that the medium ones will go,
because Goodyear will not - they have taken a decision to
remain in the business. They may lose money, but they will
stick around, they have deep pockets. Out of the other five,
 one or two will be gobbled up over the next five years. The
strategy has to be - first you take adequate steps to ensure
you are not gobbled up. Second, you must have a topline
whereby you get 20 per cent of the business. So, if you have
a market size of Rs 10,000 crore, the minimum critical mass is
Rs 2,000 crore. If you don't reach that, the chances of your
going out of business are high.
• Worldwide the industry is highly consolidated. It is a $70-
billion market and ours is $2 billion. All Indian players rank
between 10 and 20 globally. The top three worldwide are in
the range of $12-13 billion, the biggest among us is MRF,
about half a billion dollars. If you go to the middle level - like
Continental, Pirelli or Yokohama - they are about $2-2.5
billion. So, we are still one-fifth the size of medium players
globally. But on the other hand, if you reach $1 billion, you
will be in the top 10.

So what is Ceat's strategy here?

• Strategy won't be any different for Ceat. For all, it hinges on

three factors - topline, then technology - it changes every 4-5
years and most Indian players are not prepared for
technology changes. They will have to look for outside help in
the form of collaboration or partnership.
• Modernisation and minimum critical mass is the other factor.
If you try to do some of these things early - like we tried to
set up a radial plant in league with Goodyear long time back
but were doing it ahead of time - we lost heavily as a result
and had to pull out of the joint venture.
• Likewise, everyone is thinking when to get into radials; but
when India will radialise is a million dollar question.
• JK is attempting it, they have a radial facility in Vikrant; but
they are unable to utilise that capacity. They have I think
20,000 plus capacity, but are able to sell around 3,000 in
India. Apollo has announced they will put up a pilot radial
facility in Vadodara and they will come up with production
early next year.
• All this is very nice to hear. If you go deep, you won't find
clear answers from any company because it depends a lot on
Government policy, how infrastructure comes up. If roads are
not good, radials won't come.

Are you looking for a technology partner?

• I think everybody is! I won't say we are looking for a partner;

we are looking for an association. It is clear for JK, Modi and
Apollo because they have a collaborator.
• But in the case of MRF and Ceat, there is no clear signal
because we don't have a technology partner today. I am sure
over time both of us will figure out who can be our technology
partner.

Does a technology partner imply an equity partnership?

• Most of the tyre companies abroad are not well placed for
equity participation. Bridgestone lost a lot of money in the US
after which they are not keen to set up plants.
• Michelin does not operate in partnerships, they like 100 per
cent ownership or majority ownership with the rest held by
the public. They don't like to have a big local partner
anywhere. The European economy has not done well, so the
earnings of European tyre companies are down and they are
not keen to invest.
• The weakness with Indian companies is technology. But they
are wary of joint ventures or partnerships.
• On the other hand, retained earnings at our tyre companies is
poor, Rs 10-20 crore a year. You can't get technology for that
price! So, it is not a simple jigsaw puzzle to be fixed.

Ceat plans to set up Rs 250-cr truck radial unit

Our Bureau

CHENNAI, June 9

CEAT Ltd plans to invest Rs 250 crore to set up a unit to

manufacture radial tyres for trucks, according to Mr Kalyan K.
Paul, Vice-President, Sales and Marketing, Ceat Ltd. He said that
the unit would have the capacity to manufacture 50,000 to
60,000 tyres per month.

• Mr Paul said that internationally the market was moving

towards radials and the company expected the Indian market
would also grow in that direction, especially with the proposed
investment into the road sector, which was expected to bring
in better roads. The company has imported radial truck tyres
from China to test the market, with the first consignment of
 300 to 350 tyres coming in two months ago. The company
manufactures radials for passenger cars and this capacity is
expected to be ramped up from 35,000 to one lakh tyres per
month. The investment in the expansion is around Rs 75 crore
to Rs 80 crore in the current year, Mr Paul said.
• In the two and three-wheeler segment, the company, which
has followed a policy of outsourcing, has increased production
capacity from 60,000 to five lakh tyres per month, he said.
The company has chalked out an aggressive sales strategy to
increase market share and planned to tie up with leading
original equipment manufacturers. It also plans to increase its
imports from the Sri Lankan unit. At present, the imports from
Sri Lanka account for almost 5 per cent of the turnover.
• Ceat plans to spend Rs 15 crore on advertising this year, Mr
Paul said. He said that the company is also actively getting
into building relationships with the transporters and is
spending Rs 1 crore on AIDS awareness and other lifestyle
issues which are centric to this sector. This campaign is
expected to cover almost all the transport hubs in the country,
Mr Paul said.

CEAT Limited continued on its turnaround plan by registering a

PBT of Rs. 9 crore and Operating Profit (PBIDT) of Rs.27.3 crore
(up 58 percent) during the First Quarter ended 30th June 2002.
The sales of the company’s products grew by 9.7% to Rs. 352
crore as against Rs. 321 crore for the corresponding quarter last
year
Announcing the Q1 Results, Mr. Paras K. Chowdhary,
Managing Director, CEAT Limited said, "These results are a
confirmation of the turnaround of our company, which has
been brought about by the CEAT team through greater
customer focus and increased operational efficiencies.

CEAT is targeting to become a Rs. 1500 crore business

this year. We will achieve this

Improves Market Share in Truck & LCV (Light Commercial

Vehicles) Tyres

Truck tyres constitute the largest segment in the Indian tyre

market. Maximum growth has been recorded by the company in
this segment, where several new products were launched to
increase the market share to 17%, up from 13% last year. In the
LCV tyre segment, CEAT’s market share increased to 18%, up
from 13% last year.

To meet the growing demand, the company has also started

outsourcing Truck tyres from its subsidiary company in Srilanka,
CEAT Kelani and from TCIL (Tyre Corporation of India Limited),
Kolkatta. Combined with CEAT’s own capacities, this would help
in further improvement in the market share in the large Truck
Tyre segment.
To strengthen in Two - Three Wheeler Tyres

• CEAT is aiming at doubling its market share in the rapidly

growing two wheeler segment, over the next twelve months.
To achieve this, CEAT has started outsourcing its products in
this segment from two new modern manufacturing facilities at
Hyderabad and Vadodara. The product range is also being
geared up to meet the rapidly growing demand for motor-
cycle tyres. The Hyderabad facility has already started
manufacturing motor-cycle tyres, while the Vadodara facility is
expected to be operational by the last quarter of the current
financial year.
• Ceat Limited is a major player in the Indian Tyre market. It is
present in all segments of the tyre market. It has ISO 9000
approved manufacturing facilities at Mumbai and Nashik. It
employs nearly 4800 employees. Ceat is a part of the Rs.6700
crore RPG Enterprises, amongst the leading industrial groups
in India.
 Bibliography

SL. NO. BOOKS AUTHOR

1. Marketing Management PHILIP

KOTLER

2. Marketing Management Dr.PANDAY

RASTOGI