Leading tyre maker Ceat, which is part of the RPG Group, has set up a new radial tyre factory near Chennai at an initial investment of ₹1,400 crore to supply passenger car radial and two-wheeler radial tyres.
Ceat has joined the list of leading tyre makers that have set up shop in Tamil Nadu. The State houses factories of Apollo Tyres, JK Tyres, Michelin Tyres and Alliance Tire Group in addition to State-headquartered MRF and TVS Tyres.
The Chennai unit of Ceat, which will be its sixth factory in India, is expected to help the company serve incremental orders in the car and two-wheeler segments. The factory was inaugurated by the Tamil Nadu Chief Minister Edappadi K Palaniswamy on Wednesday.
The new production complex, which has come up on a 163-acre site, will see the total investments touching ₹4,000 crore in the next few years. The plant will initially employ about 350 people, but with the next levels of capacity ramp up, it is expected to create jobs for about 1,000 people.
Ceat’s overall capacity is about 1,000 tonnes a day now and with Chennai unit, the total capacity of the company will touch 1,250 tonnes a day when the Chennai unit reaches its peak of 250 tonnes a day from about 150 tonnes now.
“The factory will serve the automotive companies in this region such as Hyundai, Renault-Nissan and two-wheeler makers such as Royal Enfield. The factory will produce car radial tyres and premium bike tyres,” Anant Goenka, Managing Director of Ceat, said after the inauguration of the plant.
The plant will have a manufacturing capacity to produce 28,500 passenger car radial (PCR) tyres and 2,500 motorcycle-radial tyres per day. This unit is expected to add about ₹2,000 crore to its topline.
The Chennai factory is also expected to help the company boost market share in both segments. Ceat’s market share in PCR segment is about 10 per cent, while it has about 28 per cent share in the two-wheeler tyre segment.
Overseas markets
The new factory will also supply to markets such as Europe, the US and South Asia. Ceat has been exporting to more than 90 countries from its other units.
The ₹6,985-crore Ceat garners about 60 per cent of its revenue from the replacement market, while OEM and export segments account for 30 per cent and 10 per cent, respectively.
In terms of product revenues, two- and three-wheeler tyres contribute about 32 per cent, while truck and bus radial tyre segment brings in about 30 per cent revenues. The remaining portion is accounted by PCR, LCV, farm and speciality segments.
Including the recent Kia and MG Motors pacts, Ceat has OEM tie-ups with about a dozen car makers in India. Barring TVS Motor, the company supplies its tyres to almost all two-wheeler makers, including some electric two-wheeler companies. Leading truck and tractor makers also procure tyres from the company.