Mid-Year Report: CEAT nears completion of capacity upgrade

It's been a difficult few weeks in India, where COVID-19 cases have spiked. Industrial units have continued to operate, including specialty tire maker CEAT Ltd.

Amit Tolani, the new chief executive of CEAT Specialty, said the company is on track to complete the first phase of capacity expansion of its ag radial plant in Ambernath, India. That, coupled with more upcoming capital improvements, will decrease lead times, Mr. Tolani said.

How would you describe business thus far in 2021?

We have continued the momentum witnessed in 2020, into 2021. Our products have received good reviews. This, coupled with enhanced agriculture activity in the major geographies of North America, Europe, Australia/New Zealand and South America, has resulted in good demand.

Though the second wave has led to a lockdown, the government of Maharashtra (the state where all the plants of CEAT Specialty are located) has given special exemption to industrial units, like us, to continue operations. This has given us an opportunity to service our customers' orders in a timely manner.

Further, we are expanding our capacity, to cater to the increased demand from our customers.

What would you like customers to know about how your company has tackled the pandemic?

First and foremost, we have been enacting strict safety measures in our plants, and our employees have done an excellent job of following protocols.

Therefore, we have had no plant shutdowns and continue to do everything possible to keep tires rolling out of our plants. In addition, our supply chain team worked tirelessly to ensure that the tires reach our customers in the shortest possible time.

Do you expect any supply difficulties in the second half of the year?

The pandemic has not deterred us from servicing our customers' needs. Not only have we run our plants at optimal capacity, we are also in the process of ramping up our capacity to cater to the increased demand.

We have been experiencing issues in container availability, but our supply chain team has been handling this deftly.

What are some of the pleasant surprises in the industry?

Ag is an important sector for all economies and, despite lockdowns, the sector has grown. This has resulted in strong demand for agri ancillaries. Further, the demand for essentials will continue to remain strong. This will further fuel the growth in the ag tire segment.

COVID has ravaged your home country. How have you been able to navigate the latest difficulties?

We faced a hard second wave. However, the curve has started flattening. Further, with increased vaccine availability in the coming months, the pace of inoculation has picked up.

We have been operating our factories at optimum capacity by following all laid-out protocols.

Additionally, we have initiated a vaccination drive to inoculate all our employees. Further, we are also taking this opportunity to inoculate our customers in India.

What kind of trends are you seeing in the market?

There is a clear movement toward higher HP tractors and sprayers with larger capacities. Both of these have led to the need for increased loadability from tires. Considering this, we have further proliferated our VF range of radial tires in the tractor and sprayer space. These tires offer 40% more load-carrying capability than standard radials.

Do you expect any major investments in the next six months?

We are delighted to share that we are on track to complete the first phase of capacity expansion of our ag radial plant in Ambernath. Further, we have committed capital expenditure to increase the capacity to three times of current over the next 18 months. This will further reduce our lead times.

Do you expect to roll out any
additional products in 2021?

We are expanding our lineup of VF technology tires in the tractors and sprayer space. In addition, we will be launching our steel-belted range in the latter part of this year.

What has been the overriding factor in recent industry price increases?

There has been a steep increase in the input cost over the last six months. We have tried to absorb the costs, and we have kept the price increase to the minimum possible.