Ceat to spend Rs 1,000 cr on expansion

Ceat, India's fourth largest tyre maker by revenue, will invest Rs 1,000 crore in the next two to three years on expanding capacity, increasing focus on R&D, market expansion, and improving customer interface.

As of today, the domestic tyre industry stands at $4 billion.

The company also unveiled its new branding strategy, which involves a new logo. This is the first ever change of its kind undertaken by Ceat, since its inception in 1958. The rebranding has resulted in the company's logo, the 'galloping rhino', and catch phrase, 'born tough', being withdrawn.

Paras Chowdhary, CEO, Ceat, said: "The shift to a new look symbolises the strategic transformation at Ceat. The overall design more accurately represents the company's vision: Of delivering best-in-class products, innovation and services."

The company will spend Rs 25 crore on brand building, which will involve promotion of the brand through advertising in the media.

The total investment includes setting up two green field facilities worth Rs 900 crore. One of the plants will be a dedicated radial truck and car facility. The other will make speciality and off-the-road tyres. The new facilities and increase in production will result in an overall hike to 15 million units a year.

The company has made an application to the government for allotment of land to set up the facility in Ambernath, where its R&D facility will also be based.

For the second green field facility, the company is in the final round of talks to set up a plant in either Gujarat, Tamil Nadu or Karnataka.

Ceat is also in talks with international tyre majors for sourcing technology used in manufacturing radial tyres. However, company officials refused to divulge any names. An announcement is expected in the three months.

The trye maker sees a sustained demand from the after-market segment, and hopes to achieve a growth of 20 per cent year-on-year, starting this year. It is also targetting a turnover of Rs 6,000 crore by 2013.

Today, Ceat also announced a turnover of Rs 2,600 crore during the financial year 2007-08, a growth of 8.78 per cent over the previous financial year's turnover of Rs 2,390 crore.

The company intends to raise funds through a mix of internal accruals, borrowings and sale of land assets which it holds in Bhandup, a suburb of Mumbai.

Collectively the company holds 23 acres of land, after selling seven acres for Rs 130 crore earlier this year.