Ceat tyres to manufacture less, outsource more

Mumbai: RPG Group's tyre company Ceat has decided to change its product mix in favour of cutting back its own manufacture, and increase its outsourcing.

Presently, outsourced or contract manufacturing as it is better known, contributes almost 22 per cent of Ceat's tyre sales by tonnage.

Ceat is one of the few tyre makers in India who markets a comprehensive automotive range, with tyres for two and three-wheelers, passenger cars, commercial vehicles, and even off-road vehicles.

According to Ceat CFO KJ Rao, of the 44,000 tonnes of tyres sold during the quarter, almost 10,000 tonnes were sourced from contract manufacturers that included imports.

For the same quarter last year, of the 41,000 tonnes, 8,000 tonnes had come from contract manufacturing. Displaying Ceat's focus towards contract manufacturing, while overall sales grew 7 per cent year-on-year, outsourced manufacturing grew 25 per cent during the same period.

Contract manufacturing at Ceat covers low-margin tubes, slabs, and two and three-wheeler tyres, while it imports passenger car radials, and truck and bus radials chiefly because of production constraints. International tyre maker Pirelli is Ceat's technology partner, and one of its key suppliers.