CEAT to set up Rs 2.5b tyre plant in Bangladesh

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Monira Munni
CEAT Ltd, India's fourth largest tyre producer, is planning to set up a tyre manufacturing plant in Bangladesh with an investment worth Rs 2.50 billion, officials said.
"The RPG Group company will be investing about Rs 2.50 billion (250 crore) to set up a Greenfield tyre manufacturing facility in Bangladesh. The company announced its plan to set up the plant on February 08," President of India-Bangladesh Chamber of Commerce and Industry (IBCCI) Abdul Matlub Ahmad told the FE Thursday.
This is one of the largest investments in manufacturing sector in Bangladesh by an Indian company. The company has already completed necessary groundwork, and aims to have tyres rolling out of its Bangladesh plant by the end of 2013, he said.
Bangladesh, with a population of around 160 million, imports more than 95 per cent of its tyre requirement, thus providing an interesting investment opportunity for manufacturing bias ply tyres.
The country imports about 1.5 million tyres annually, of which around 60 per cent comes from India, and the rest from China, Indonesia, Japan and Thailand.
CEAT will provide end-to-end domain knowledge and product technology to its Bangladesh subsidiary that will employ over 550 people in the first phase of its operations, he added.
The plant will manufacture truck bias, LCV, last mile and 2/3 wheelers' tyres for Bangladesh market, the IBCCI chief said, adding that the company also has plan to export the products in future.
CEAT plans to replicate its Sri Lanka model here by setting up a small plant with a capacity of 65 tonnes per day. The company aims to capture 40 per cent of the total projected demand of bias tyres in the region by 2015 through local production, Mr Matlub added.
CEAT deputy managing director Anant Goenka in a statement said, "Our aim is to set up a plant that manufactures the best quality products using the best of local skills, while contributing to the development of Bangladesh economy that has been growing at around 6-7 per cent for the last five to six years."
The Bangladesh market is not large enough for a regular-sized tyre plant. However, CEAT has the knowledge to successfully operate plants of smaller capacity, based on its Sri Lanka experience, and the company plans to leverage this in its Bangladesh venture, he added.