Ajya Ma Thew 0911003 Irp ROugh DRAFT

8/8/2019 Ajya Ma Thew 0911003 Irp ROugh DRAFT

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CEAT TYRES

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT

OF BACHELOR OF BUSINESS MANAGEMENT (BBM),

SUBMITTED BY

Ajay.P. Mathew

II BBM(A)-0911003


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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.


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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


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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


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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


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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. Ceats

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.


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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.


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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


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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. Ceats

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.


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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.


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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.


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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.


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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

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 andSingapore). 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 companys 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 Limiteds financial and human resource structure.

The report has benchmarked Ceat Limited against competing firms in the Tires

and Inner Tubes Manufacturing industry worldwidegoing beyond traditional

methods of company benchmarking. The results are two specialized reports: (1)


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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 LimitedFeng 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


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Yokohama Rubber Company, Limited

y The vertical analysis deals with questions like: How has Ceat Limitedsasset structure varied compared to global benchmarks for the Tires andInner 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 Limitedsreturns on equity been higher or its profit margins greater?

y While the labor productivity analysis answers the following: What hasbeen 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?

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

y Professor Parker notes, "We are intrigued by the wide variations in basicfinancial 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.


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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


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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.


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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 whereresearch 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.


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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.

y Ceat Limited. The Group's principal activities are to manufacture anddistribute 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


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Emirates, Bangladesh, Philippines, Afghanistan, and Nigeria and other

Asian, Middle East and African countries.


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Layout and Content of a Typical Report


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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%.

yThe contribution of the tyre and bus segment to the total production inApril 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.

y If any indication from these figures have to be taken, the growth in thepassenger segment would be more than that in the commercial vehicle

segment in the near future. In the recent past, there has been anostensible 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.

y Exports of tyres grew by a substantial 39.6% in April 2004 to 291,409from 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%


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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 GrowthApr-04 Apr-03 Growth

Truck & Bus 880,275 777,280 13.3 154,695 123,760 25.0

LCV 291,828 219,895 32.7 62,677 45,475 37.8

Jeep 130,774 100,235 30.5

Passenger Car 936,853 588,238 59.3 51,573 17,157 200.6

Total 4-wheeler 2,239,730 1,685,648 32.9 268,945 186,392 44.3

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

Tractor (Rear) 80,309 58,056 38.3 5,326 11,244 (52.6)

Tractor (Trailer) 40,590 30,860 31.5 217 226 (4.0)

Total Tractor 229,655 183,276 25.3 6,647 13,425 (50.5)

Scooter 796,918 611,033 30.4 12,225 3,110 293.1

Motor Cycle 1,362,593 1,054,453 29.2 2,750 1,975 39.2

Moped 8,205 18,508 (55.7) 4 646 (99.4)

Total 2-wheeler 2,167,716 1,683,994 28.7 14,979 5,731 161.4

Animal Drawn 9,514 18,585 (48.8)


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Vehicle

Industrial 23,068 26,769 (13.8) 50 1,958 (97.4)

Off the Road 4,613 3,176 45.2 788 1,204 (34.6)

Total Others 37,195 48,530 (23.4) 838 3,162 (73.5)

Final Total 4,674,296 3,601,448 29.8 291,409 208,710 39.6

STOCK CHART

Recent stock performance

1 Week 2.9%

4 Weeks 2.7%

13 Weeks -8.7%

52 Weeks -26.0%

Vision and Mission

Business Description: 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.


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y C E A T will each time every time provide Total CustomerSatisfaction through products and services of highest quality and

reliability.

y C E A T will nurture an exciting and challenging workingenvironment 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.


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Thus was born the first International Rating SystemCEAT 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 worlds 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 rewardthe

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.


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y Having been in the export business for over forty years, CEAT todayenjoys 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

y From five world-class plants, three in India and one in Sri Lanka, wemanufacture 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

y Our individual market shares include 64% in Singapore, 22% in UAE and22% 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

y 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


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y We are the first Indian tyre company to receive an ISO certificate (ISO/TS16949: 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


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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 inthe first phase and 70,000 in the next phase.

Outlook


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Ceats fortunes are now (post restructuring) entirely linked to the tyre industrys

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 determinant Growth of automobile industry will increase vehicle

population and thereby the demand for tyres in the OEM as well as the

replacement markets.

y Relative importance of road transport and long distance travel by roadleading to increased need to replace tyres.

y Development of export market will also enable higher capacity utilizationlevels.

y Economic scenario and credit availability will determine ability topurchase automobiles and in turn spur demand for tyres.

y Retreading saves up to 80% on original cost and this will have a negativeimpact on fresh demand.


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y Radialisation increases the life of tyres and reduces the need for areplacement, which may inhibit volume growth.

Earning drivers

y Raw material price fluctuations: Prices of natural rubber, an agriculturalcommodity. 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 companys management has set a

growth target of 14 per cent against a projected industry growth of 6 per cent,

he said.


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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.

Ceats exports last year dipped to Rs 128 crore from the previous years 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

y Sales of tyre major Ceat limited declined 11.7% on the back ofsluggishness 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.

y Total expenditure came down by 9.2% to Rs 11,665mn (Rs 12,844mn).Operating profit dipped 38% to Rs 564mn (Rs 910mn).


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y Continuing non-tariff barriers in the newly emerging markets, allowingdirect 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%).

y Depreciation increased 13.5% to Rs 165mn (Rs 145mn). The rise was dueto new plant that has been commissioned in Nasik.

y Ceat reported a net loss of Rs 137mn as compared to a profit of Rs201mn in the previous fiscal. This may be attributed to drop in demandand higher input costs on one hand and slowdown in exports on the

other.

y The company will have to face competition through effective costcontrol, 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 -


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EPS (Rs) - 5.7 -

Company Results

y Scrip Code : 500878 Company Name : CEAT LTD

y Type Audited Audited UnAudited Audited

y Date Begin 01 Apr 04 01 Apr 03 01 Apr 02 01 Apr 01

y Date End 31 Mar 05 31 Mar 04 31 Mar 03 31 Mar 02

Description

y Gross Sales 17803.1 16479.5 14882.7 13613.7

y Excise Duty -2523.2 -2471.2 -2750.5 -2474.7

y Net Sales 15279.9 14008.3 12132.2 11139y Other Income 389.8 1222.2 275.4 234

y Total Income 15669.7 15230.5 12407.6 11373y Expenditure -14884.4 -13817 -11417.3 -10576.7

y Operating Profit 785.3 1413.5 990.3 796.3

y Interest -641.9 -764.1 -478.8 -572.7

y Gross Profit 143.4 649.4 511.5 223.6y Depreciation -220.6 -221 -218.4 -188.4


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y Profit before Tax -77.2 428.4 293.1 35.2

y Tax 10 -81.6 -109 -11.2

y Profit after Tax -67.2 346.8 184.1 24

y Extraordinary Items 48.5 -206.2 - -

y Net Profit -18.7 140.6 184.1 24

y Equity Capital 351 350.9 350.9 -

yReserves 2618.1 2993.4 2932.3 -

y EPS -0.53 4.01 5.24 0.68

y Nos. of Shares - Non Promoters 20473118 2047311820473318 -

y Percent of Shares - Non Promoters 58.14 58.14 58.14 -

y Result Type A A A A

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


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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.

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


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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,"


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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.

y The Tyre Industry continues to bear the brunt of increasing raw materialcosts. 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.

y 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:

y The year 1999-2000 saw CEAT move out of the consolidation phase andsurge ahead with increased visibility in the market place.


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y Significant product quality improvements, innovative marketing strategies, aunique 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.

y CEAT's growth rate of 15%, which was twice the industry growth, was amatter 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.

y Other contributing factors to this improved performance have been theinculcation 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.

y A lot of new initiatives in marketing were undertaken. A new advertisingcampaign 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.

y The consistently high quality of after sales service was maintained with theimplementation of an ongoing training programme for all staff associated

with this service, including technical service personnel at the dealer outlets.


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y The integrated logistics system - which links 126 stocking points with the twofactories continued to work well and ensured availability of the right product

at the right time, hereby keeping inventory levels low.

4. Exports:

y The decline in demand from the US market, which was flooded with cheapbrands 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:

y The capacity optimisation projects at the Mumbai and Nasik Plants areprogressing 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.

y The Off-take Agreement for radials and two and three wheeler tyres witherstwhile joint venture partner, Goodyear, expires in August 2000. This may

be extended for a further period.

y The expansion plan at CEAT's associated company, Rado Tyres Ltd, located inKerala, 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:

y 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.


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y The turnover of this joint venture, under CEAT-Kelani Associated Holdings PteLtd, 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.

y The Indian Tyre Industry is a vibrant segment of the Indian economy and isthe 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 steadygrowth 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.

y OEMy Replacementy STUy Defencey 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


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tyres/annum by FY08. In addition, the tyre industry exports Rs13bn of tyres

across 6 continents and over 60 countries.

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


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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, eventechnology 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.


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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


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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 worldover 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


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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


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c) Detailed engineering and design of special equipment and supply of

materials

d) Procurement and supply of special equipment

e) Commissioning and Supervisory services.


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SWOT ANALYSIS


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Strengths

y Right products, quality andreliability.

y Superior product performance vs.competitors.

y Brand Imagey Products have required

accreditations.

y High degree of customersatisfaction.

y

Weaknesses

y Not very popular in the internationalmarket

y Delivery-staff need training.y Customer service staff need training.y Processes and systems, etcy Management cover insufficient.

Opportunities

y Profit margins will be good.y Could extend to overseas.y Could seek better supplier deals.y An applied research centre to create

opportunities for developing

techniques to provide added-value

services

Threats

y Vulnerable to reactive attack bymajor competitors.

y Lack of infrastructure in rural areascould constrain investment.

y High volume/low cost market isintensely competitive.


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Ajya Ma Thew 0911003 Irp ROugh DRAFT

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Transcript of Ajya Ma Thew 0911003 Irp ROugh DRAFT