Ceat on a surge

Ceat on a surge

By Sharad Matade:

Many international tyre giants are expanding their presence in India, intensifying the competition in the market. Anant Goenka, Managing Director of Ceat, is confident that the company will remain ahead driven by its brand equity, Total Quality management and automation

Last decade probably has been a turnaround one for Ceat on every front, be it on products quality and offering, technology and manufacturing improvements, market share gains and brand image. Anant Goenka, Managing Director, Ceat, attributes the transformation of the company to the increasing adaptation of rigorous total quality management (TQM) and automation, consumer-centric approach, narrowing focus on 2-wheeler and passenger car tyre markets and aggressive expansion.
As a result, in 2017, Ceat became the first tyre company in the world, outside of Japan, to earn the Deming Prize for achieving business transformation by implementing TQM. “We started the process of TQM in 2010 and it had been a 7- year journey. It is a very high level of a mindset change, rather than doing specific things,” says Goenka.
According to him, the purpose of practicing TQM, apart from achieving business targets, is to make the company more consumer-centric, have strong systems and processes in place to achieve the goals and enhance the involvement of employees across the board. “The award organiser also looks at your thinking, decision making and future goals through facts and data. If you are able to bring that way of thinking or culture in the company, then you are truly practicing TQM,” says Goenka. During this journey of excellence, CEAT has put in place some fundamental approaches such as “Policy Management,” “Daily Management” and “Cross functional Management” which help us to improve performance across business verticals.
The outcome of the new practices has been encouraging. Ceat was ranked the highest in India for Original Equipment (OE) Tyre customer satisfaction, according to the JD Power 2017 India Original Equipment Tyre Customer Satisfaction Index (TCSI) Study, and the company’s profitability has been increasing in recent years. On the human resources side, Goenka says, the people of the company are happy and trust each other like a family, and the entire morale is so high that has improved the health of the organisation.
“Now to solve any problem, we have structural methodologies. The first we go to the root cause of the issue and when you work for the solutions, we work on alternatives. You can’t have one solution for the problem or you will have no innovation,” explains Goenka.
On the manufacturing side, automation and Industry 4.0 are becoming an integral part of the company’s manufacturing plants. Ceat now focuses on making its products easily available to the markets’ requirements by adapting digital technologies. “With big transition that is happening with sensors 3D Printing and many other changes in IoT, we see how we can solve problems that we face, or we make sure that we can solve customers’ problems by using the technology,” says Goenka.
Ceat is also now narrowing its focus on the developed markets. For the European market, Ceat is targeting passenger tyres and off highway tyre segments. Ceat already has a historical brand equity in Europe particularly in Italy and Spain as the company was a part of Pirelli, a European tyre company known for its high performance tyres. “We want to leverage that brand strength in Europe for selling passenger car tyres,” tells Goenka.
The company also opened an it’s European Technical Centre (ETC) in Frankfurt, Germany . With the new centre in Germany, the company will have a better proximity to the European market and monitor the trends and develop products according to the market needs. According to Goenka, the ETC also helps to bring in diversity, and experiences and knowledge of foreign workforce, who had been part of multinational companies which have been developing radial tyres for a longer time. “The ETC has been set up to focus on passenger car tyre markets in Europe as well as provide centre of excellence knowledge to our Indian practices,” says Goenka.
In India, Ceat has its R&D centre in Halol which works on development of breakthrough products, alternate materials, green tyres and smart tyres. “ For intellectual properties, we filed around 30 patents this year itself,” says he.
For the US market, the company is supplying off highway tyres targeting the current and near future technical and commercial requirements of the customers. “We launched our Off highway tyres a year ago and our customers are amazed to see the value they are getting out of these tyres,” says Goenka. The company also targets to have around 300 SKUs in the off highway tyres space in this financial year. “Going forward, we will increase the product range in the off highway tyre segment as it is essential for our dealers,” adds he. The off highway tyres contributes around Rs500 crore in the company’s total revenue However, Ceat does not have plans to introduce its other products in the US market yet.
As online tyre selling gaining momentum in the developed markets, many tyre companies have been busy in acquiring tyre dedicated online portals to increase the market share in the segment. Ceat has already been on e-commerce sites, such as Amazon and Flipkart to sell its products for online consumers. However, Goenka feels dedicated online portals to sell tyres will take some time to be popular in India. “Looking at customers’ behavior in India, Online buyers need multiple choices. Buyers evaluate products according to their needs, preference and budget. Therefore, being on Amazon or Flipkart or multi brand portals was important. Having own online portal for tyre selling will be an additional opportunity,” says Goenka.
Being a consumer centric company, Ceat manufactures a wide range of products across the segment as per the requirements. For instances, Ceat introduced India’s 1st self sealing tyres, branded ‘Puncture Safe’, tyre for two wheelers. To fuel conscious consumers, It offers FuelSmarrt Tyres for Passenger Cars, which reduces rolling resistance and fuel consumption.
The company earns its around one third revenues from OE segment and two third from the replacement markets. The company has long partnerships with national and international OEs across the segments. For the replacement market segment, the company is working to strengthen its own distribution model. Ceat like other tyre manufacturers used to focus more on truck tyres, which is the higher volume segment among all tyres. In recent years, the company has shifted its focus on 2-w tyres and passenger car tyres and adopted FMCG model for distribution. Apart from cities, the FMGC-model helps the company to tap small retailers in small towns. “We are using the FMCG kind of model that will cater to every single puncture shop, mechanic shops. It helps to us to go deeper and deeper in distribution network in to areas where we were not able to serve the market,” says Goenka. According to the company, it has increased its district coverage from 212 in FY 2012 to 600+ in FY 2018, whereas Ceat Shoppes have gone to around 350 from 102 in the same period. Today the company has distribution network of over 4500+ dealers and 500+ exclusive CEAT franchisees across the country.
Ceat has strengthened its presence in the two-wheeler tyre segment in India in the last six years. With the current brand equity of 2-wheeler tyre and distribution network, Ceat plans to increase share in the passenger car tyres segment. “There are two factors that we are targeting to increase our passenger car tyre sell in India. First, buying passenger tyres is related to more of emotions, safety and aesthetics, unlike commercial tyres buyers who think of ROI only, so we will target the elements related to buyers’ emotions. Secondly, we want to leverage our brand equity and distribution network of 2-W tyres for gaining market share in passenger car tyre segment,” explains Goenka.
Ceat is expanding production of radial truck tyres owing to India’s thrust on radialisation in commercial tyres. Currently, Ceat is producing more bias tyres than radial tyres. The company has recently tripled its radial truck tyres capacity. “Currently we are producing 45000 radial truck tyres and we will be taking production capacity to 120000 in early this year from our Halol plant. So, going forward, our radial truck tyre will be a larger segment,” tells Goenka. Out its six plants, Ceat’s three plants-Halol, Nagpur and Ambernath are under expansion. “ Our Nagpur plant is under expansion. We are adding another a million per month capacity for 2-W tyres there,” he added.
Ceat is setting up a greenfield plant in Chennai with an estimated investment of approximately INR 20 billion over next three to five years. The already acquired 160 acres of land for the project and will produce passenger car radial tyres, with an initial capacity of around 250 tonnes per day. The plant will provide an opportunity to the company to set up a state-of the art plant which will produce passenger tyres for the local and international markets.
India has set an ambitious plan of having electrification of vehicles by 2030. Though the target seems tough to achieve, tyre companies are gearing up for the big disruption. EVs will be heavier and have faster torque, which will be quite hard on tyres. Goenka sees bigger challenges for tyre companies to meet EVs’ requirements of lower noise emission and sustainable ecofriendly raw materials to make tyres. Ceat has already started working on tyres for electric vehicles and will be ready with its offering when the Indian automotive industry requires electric vehicle tyres.
As many international tyre giants are expanding their presence in India, the competition is intensifying, but the Ceat boss feels that the company will remain ahead due to its brand equity, larger distribution network, technology advancements and understanding of the consumers and markets. “I would say our products are no way inferior to the international companies’ products. Our investment in capabilities and technology have increased. We understand the Indian context very well and top of all, we have been here for over five decades with strong brand image, which is not easy to replace,” says Goenka.

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