Ceat Tyres rolls out Rs 700 crore facility

The company intends to fund the project with a mix of debt and equity.

Ceat Tyres, the Mumbai-based RPG group-promoted company, will cough up Rs 600-700 crore to set up the third greenfield plant in the country.

Arnab Banerjee, vice-president (sales and marketing), said, "We want to increase our output to cater to the export market. For this, the company will set up a greenfield unit in the country. About 60-70 per cent of the output will be shipped abroad."

Global demand for commercial vehicle such as trucks and buses will prompt the company to churn out more products in these categories compared with radials for passenger vehicles which will also be produced at the same facility.

The company also has a facility in Sri Lanka where it produces radials for trucks, buses and passenger vehicles.

The investment will be spread over three to four years, starting from financial year 2008 when the project is expected to get under way.

The company intends to fund the project with a mix of debt and equity. However, no details of the ratio is declared.

Besides, the company has decided to use the proceeds from the real estate sale of 6.5 acre in Bhandup, in Mumbai. The company expects to garner around Rs 125-150 crore from the realty sale.

The Ceat group is scouting for land in Maharashtra, Gujarat and the excise-free zones of Uttarakhand. The new capacity will hike the current overall capacity of the company by 100 tonne per day to 400 tonne per day.

About 25 per cent of the total revenues of the company is derived from exports to over 110 countries worldwide. Currently, the company earns Rs 400-500 crore as revenue from exports.

The company expects to double it to Rs 1,000 crore in the next three years. The focus will be to attain significant market share in South America, Europe and North America, adds Banerjee.