Ceat Inks Agreement With Stallion Tyres

The R P Goenka-controlled Ceat Ltd has entered into a memorandum of understanding with Stallion Tyres for outsourcing the manufacture of two and three wheeler tyres.

A BIFR company with a manufacturing unit in Hyderabad, Stallion Tyres has been revived by Apollo Tyres, which has a token stake in the company. The company's outsourcing agreement with Stallion Tyres is likely to commence in the near future.

Meanhwile, Ceat Ltd has embarked on an expansion programme through a spate of acquisitions, outsourcing, strategic alliances as well as through enhancement of the installed capacity of its existing manufacturing units.

The company is planning to enhance the installed capacity of its Nasik and Bhandup plants from the existing 280 tonnes per day to 300 tonnes per day next year. It also proposes to expand it further to 340 tonnes per day in the following three years through the installation of new balancing equipments.

 

"Orders for requisite equipments for modernisation have already been placed and necessary financing agreements have been concluded", sources told Business Standard. The total investment for capacity enhancement is estimated at Rs 15 crore.

"At present, our emphasis is on quality improvement and quality consistency, which will enable the company to improve its export earnings in the long run", added the source. Exports, in the first nine months of 1997-98, have already grown by 35 per cent to Rs 113.75 crore from Rs 118 crore in the previous fiscal 1996-97.

The current fiscal's net turnover expected to be only marginally higher compared to Rs 1317.14 crore the previous fiscal.

The RPG group flagship is also planning to acquire Kerala-based two-three wheeler tyre manufacturer Rado Tyres. Ceat has a conversion agreement with Rado, whereby it supplies raw materials and technology to Rado which makes tyres for Ceat. Though talks are at a final stage, a final decision on the issue is yet to be taken, the source added. The acquisition will be funded partly by Ceat's internal accruals and partly by institutional finance. If the deal comes through, the company proposes to the enhance the plant's capacity to 24,00,000 tyres per annum. The company's Sri Lankan affiliate, Associated Ceat Private Ltd (ACPL) has signed a strategic alliance with Sri Lankan tyre major Kelani. ACPL and Kelani together will control more than 65 per cent of the local market.

"The agreement with Kelani", the company official claims, "will help Ceat to further consolidate its presence in the market".