Tyre manufacturer Ceat Limited has dropped plans to rope in a strategic partner for its proposed radial plant in Baroda, and is instead tying up with a US-based consultancy firm for technology know-how. The company had been scouting for a strategic partner for the new radial plant for quite some time, but has now decided to develop expertise with the help of the consultant. The technology tie-up will be for a period of five years.
?We were looking at a strategic partner for the new radial plant in Baroda and wanted to tie up with an international tyre company. But the strategy did not work out,? said Paras K Chowdhary, managing director, Ceat. According to sources close to the development, international tyre companies wanted a separate company to be floated, a separate chief executive officer to be appointed, and a 51% stake in the new entity, which was not acceptable to Ceat. The company wanted to tie-up with an international tyre company to benefit from global developments and updates on new technology in the tyre- making business.
The radial plant is expected to start production in the next two years and is expected to have an initial capacity of 100 tonnes per day. Spread over an area of 130 acres of land, the plant will look into both passenger car and truck radials. An investment of over Rs 600 crore has been earmarked for the new plant. Currently, Ceat has a small passenger car radial facility at Nasik which, once the new radial plant is operational, may be integrated with the new radial plant.
Indicating that India is opening up to radialisation in trucks and buses which currently stands at 10%, Chowdhary said, ?We see demand for truck radials and want to harness it.? He added that while the country has almost achieved full radialisation in passenger cars, it is still in the elementary stage in the commercial segment.
He added that until China entered the Indian tyre market two years back selling tyres at a lower price, selling tyres by foreign players in India and vice-versa was not easy due to nature of the Indian market.
While globally radialisation has been achieved to almost 100%, with countries like US, Europe and Japan at 99%, countries like Africa, India and Middle East are yet to catch up. ?In India still bias or cross ply technology in tyres dominate at 80%. Radialisation makes up to around 15%-17% of the total Rs 19,500 crore turnover of the tyre industry,? added Chowdhary.