Vice chairman Harsh Goenka told shareholders at the annual general meeting that the radial facilities will be set up in two stages. In the first stage, the Nashik plant will be upgraded at a cost of Rs 40 crore to make radial tyres.

In the second stage, a greenfield unit will be set up. The details of this unit are currently being finalised. For acquisition of land, the company has zeroed in on Gujarat, Maharashtra, Karnataka, Madhya Pradesh and Tamil Nadu.

It is learnt that Ceat, before it began sourcing its radial requirements from South Asia Tyres, the joint venture with Goodyear, used to make radials at the Nashik plant. As per the severance agreement, Ceat will source its requirement of radial tyres from South Asia Tyres till it sets up its own facilities.

It is currently in talks with several tyre majors for technicalcollaboration for manufacturing radials. Earlier, it had a technical tie-up with Fukuyama of Japan.

Goenka told shareholders that the company has received Rs 87 crore from the sale of its 50 per cent stake in South Asia Tyres. Of this amount, Rs 40 crore will be utilised for funding the Nashik expansion, while the rest will be utilised to retire high cost debt.

Goenka also said that Ceat will raise around Rs 150 crore through private placement of debentures with financial institutions. The modalities are likely to be completed within the next two weeks.

The company would be investing Rs 200 crore in creating new radial manufacturing facilities and in upgrading existing facilities over the next two years. The debentures, which may be placed at around 16.5-17 per cent may also entail a convertible option.

During the first five months of the current financial year, Ceat has achieved a gross turnover of Rs 451.1 crore and a net turnover of Rs 377.55 crore. The company has targetted a two-fold increase innet profits during the year.

The proposed merger of Associated Ceat (P) Ltd, its Sri Lankan affiliate, with another Lankan tyre major, Kelani, would give it a near 100 per cent market share and increase its turnover to Rs 200 crore from the current turnover of Rs 59.52 crore in the country.

During 1997-98, Ceat subsidiaries made substantial investments in Rado Tyres, a Kerala-based two- and three-wheeler manufacturer which has an existing capacity of 25,000 tyres per month.

"A plan has been drawn up to increase capacity to 200,000 tyres per month over three phases in the next two years," Goenka said, adding that this investment would enhance the company's presence in the two- and three-wheeler tyre segment.

Meanwhile, the management has also been working closely with international consultants McKinsey & Co to streamline its supply chain and expand its dealer network, he informed Ceat's shareholders.