MILAN, Italy (Aug. 30, 2002) — Pirelli S.p.A. is negotiating a tire supply contract with India's Ceat Ltd., including the provision of certain production equipment to the Mumbai-based tire maker, the Italian group has confirmed.
The “Financial Express” of India reported recently that Pirelli had agreed to outsource production of 10,000 radial passenger car tires a month to Ceat, starting this October. This report is “basically correct” but talks over the deal are still in progress, a Pirelli spokesman said.
Pirelli previously has signaled its intention of forming alliances in India as long as it could maintain control over product quality. Until now, however, the group's presence has been limited to a technical tie-up with Birla Tyres of Calcutta.
Ceat, the tire-making arm of the RPG Group of India, is principally a supplier of bias-ply tires, but has been trying to establish a greater presence in the radial tire market. In early 2001, the company launched an $8.6 million project to double radial capacity at its Nashik unit to 60,000 units/month.
Ceat also previously had radial capacity as part of South Asia Tyres Ltd, a 50:50 joint venture with Goodyear Tire & Rubber Co. However, the firm sold its stake in the Aurangabad, India-based venture to the U.S. group in 1998.