Ceat mulls China foray

Ceat, the country's fourth largest tyre maker, is planning a possible takeover or a partnership with a tyre maker in China.

Arnab Banerjee, vice-president (sales and marketing), said, "We are open to outsourcing for exports...China provides a big opportunity. We may look at options for a possible partnership or even an acquisition."

The company believes that capacity addition along with debottlenecking, improved product mix and focus on exports would help it expand volumes with improved realisations and margins.

China is the world's biggest tyre producer with more than 300 tyre companies. In 2006, the country consumed rubber in excess of 4.5 million tonne, making it the largest consumer of tyres in the world.

According to the Chinese Automobile Association, sales in China increased by 25 per cent to 7.2 million units, while production rose by 27 per cent to 7.28 million units in 2005.

By 2010, 8-9 million vehicle are expected to be produced, with 55 million vehicles expected to be plying on the Chinese roads.

In India, the company, which has a 12 per cent market share, will set up its third manufacturing facility, primarily an export oriented hub, contributing 60-70 per cent of its produce to exports.

The company will invest Rs 700 crore in the venture over three to four years, starting from financial year 2008.