CEAT Believes To Have Better Export Opportunities In Europe

The uncertainty that everyone is experiencing, created by the COVID-19 pandemic has led to the decrease in sales and services in the European markets especially in the replacement tyre sector. However, Anant Goenka, Managing Director at CEAT Ltd, has stated that it is important for the Indian tyre manufacturing companies to capitalise in the current situation despite the exporting of products has become challenging for the company due to the pandemic crisis.

He added that the tyre manufacturing sectors in other countries are looking forward to shift the supply chains to India since they do not want to risk themselves by doing their services and sales in China.

Leading tyre manufacturer CEAT plans to grow about 50 percent more annually in Spain, UK and Italy amid the dumping duty which has been imposed on Chinese tyres by Europe and the United States. This move by the manufacturer would not happen this year due to the COVID-19 crisis. However, there is a huge opportunity as per Goenka.

Anant Goenka, Managing Director at CEAT Ltd,

Also See:CEAT Tyre Introduces Contactless Service For Their Customers

Recently, the government has placed imported tyres under the restricted list which can only be imported by applying for a license which is not an easy process.

He added that the number of tyre imports has come down which will have a positive impact on demand which will increase the market size and demand for domestic goods. He believes that this has been a good decision taken by the government which will benefit the domestic players.

He further mentioned, CEAT's revenue of around 60 percent comes from the replacement segment and around 30 to 35 percent profit comes from Original Equipment Manufacturer. 15 percent of revenue also comes from tyre exports. The rural markets are showing great demand for tractor and two-wheeler tyres which is a positive sign and the replacement market has been showing signs of growth too.

"We are also starting to see some positive growth on the OEM side, which was weak all the way until June. Now, things have started returning to relatively decent levels - (about) 75 per cent kind of normal demand - except commercial vehicles. CVs continue to be weak," said Goenka. 

He stated that exporting tyres is a challenging task since the ports are getting congested as the countries open their ports. However, CEAT is said to be operating with more than 90 percent of capacity. The company had planned a capital expenditure of Rs. 800 to 900 crore for the fiscal year but due to the lockdown and economic slowdown, it has been reduced to Rs.500 to 600 crore.

As per the expectations of the government, Labour reforms can be expected at a macro perspective. The tyre industry is also expecting a reduction of duty on the natural rubber which is said to be high at about 25 percent.

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