In Good Position To Be World's Alternative To China For Tyres, Says Ceat
The company, which gets 20% of its total revenue from exports, plans to enter the U.S. market in the later part of the current year.
With the world looking for an alternative to China for sourcing tyres, Ceat Ltd. is planning to cash in on the opportunity based on its "value brand" positioning despite slowdown in many economies, according to Chief Financial Officer Kumar Subbiah.
The company, which gets 20% of its total revenue from exports, plans to enter the US market in the later part of the current year, following up on its entry into the European market for truck and bus radial tires last year.
In the current fiscal, the company's exports have been flattish as it "took some kind of beating, largely on account of current conditions in Europe and some other countries finding it difficult to get currency to import tyres", Subbiah told PTI.
However, he said: "Exports, we expect it to come back to growth path in the coming year, subject to global macroeconomic conditions permitting that kind of growth. We set ourselves ready to take advantage of any requirements."
"The world is looking for a good manufacturing source for tyres as an alternative to China and Indian tyre industry, and in particular Ceat, is in a good position to take advantage of that going into the next year."
Asked if the slowdown in Europe and other global markets could hamper export growth, Subbiah said: "Our belief is that during a recessionary period, generally companies or buyers of tyres, or buyers of any products would look for a value brand."
Ceat being a value brand in the international market, he said it could help the company "in terms of taking advantage of that kind of behavior during recessionary period".
"During the last year, we entered the European market for truck and bus radial tyres. We also have plans to enter the US market in the later part of the current year. So these things should help," he added.
Subbiah, however, said while there is clarity in the local market about the demand pattern, in the international market it is not the case due to global events like the Russia-Ukraine war and its impact, specially on energy prices in Europe.
"In the next year, we look forward to exporting more, because it is a little more profitable and a little less competitive compared to the local market but it is not in our hands entirely in terms of how that international market would shape up," he said.
When asked if the company is aiming for exports to contribute more than 20% of overall revenue, he said Ceat does not have any specific target but exports will play a role in its overall growth.
"We have moved (up) from 12-13% of revenue share to 20%. So, from here onwards, we may not be able to see that kind of a jump. However, we are investing in capacities that are meant for exports, so therefore, we expect the share to go up without any target in mind," he added.
In the nine months period ended Dec. 31, 2022, Ceat had clocked a consolidated revenue from operations of Rs 8,440.1 crore and in the fiscal ended March 31, 2022, its consolidated revenue from operations was at Rs 9,363.4 crore.