PROJECT REPORT

ON

OPERATION MANAGEMENT

IN

CEAT TYRES OF INDIA LTD

Submitted By:

Mr. MAYANK ARVIND

i

CERTIFICATE OF SUPERVISOR (GUIDE)

Certified that the work incorporated in this Project Report “Operation Management in CEAT Tyres of India Ltd” submitted by Mr. is his original work and completed under my supervision.

Material obtained from other sources has been duly acknowledged in the Project Report

Date:

Mr Place:Signature of Guide

ii

ACKNOWLEDGEMENT

I want to acknowledge the help provided by employees of CEAT Tyres of India Ltd. The

precious inputs provided by them have helped me in compiling this report. As well as I

want to thank all my friends and colleagues who helped me in this working.

I express my deep-hearted thanks and gratitude to all of those who helped me in this

Project.

Place: New Delhi & NCR

Mr. Mayank Arvind

iii

TABLE OF CONTENTS

S.No. Topic Pages. No

1. Introduction 1

2. Company Profile 8

3. Objectives and Scope 33

4. Limitations 34

5. Theoretical Perspective 35

6. Methodology Procedure of Work 54

7. Analysis of Data 56

8. Findings Inferences and Recommendations 71

9. Conclusion 73

10. Summary of the Project Report 75

11. Annexure

I. Proposal

II. References

III. Questionnaire

76

76

79

80

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INTRODUCTION

Indian Tyre Industry

Domestic tyre industry has witnessed a remarkable recovery in FY10, after a slowdown

in FY09. This growth was driven by strong revival in automobile demand on the back of

resurgence in economy, rise in employment levels, and easing of interest rate scenario.

Although strong demand growth is an encouraging scenario for the domestic industry,

rising imports has become key concern factor off-late. Conservative estimates of tyre

manufactures on automobile demand scenario for FY10, led to supply constraints in the

industry and in-turn pushing imports. The situation was graver in T&B and passenger car

category tyres as compared to any other category. However, gauging the immense market

potential almost all the major manufacturers have announced aggressive expansion plans

for next 4 – 5 years which is expected to ease out the supply constraint situation in the

industry.

The tyre industry is on a brink of a major structural change. T&B which is a dominant

segment in terms of tonnage is witnessing a gradual rise in the proportion of radial tyres.

Going by the global trend it seems that the radial tyre demand in India is at inflection

point and with almost 97 – 98 per cent of the passenger car tyre production has been

radialised, T&B tyre category is the next major category to witness spurt in the demand

for radial tyres. And with improvement in road infrastructure and better cost economics

the proportion of radial tyres in T&B category is expected to expand by around seven

times from the current levels. Sighting this opportunity, almost all the expansion plans for

T&B category tyres are for radial category tyres.

In FY10, almost all the manufacturers reported healthy rise in their top-line, driven by

growth in both volumes and realisation. Operating margins also observed improvement

owing to sharp drop in raw material prices. Going forward it is expected that, industry’s

top-line will continue to witness healthy growth scenario, however industry would face

challenge of rising raw material prices and increase in interest cost.

It has developed detailed model for forecasting OEMs as well as replacement demand for

all the tyre categories like Truck and Bus (T&B), passenger vehicles, two-wheelers,

three-wheelers, tractors and light commercial vehicles (LCV). Strong understanding of

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automobile as well as tyre sector is percolated down to the auto component sector and

thus the demand for tyres is forecasted as well on the basis of projected automobile sales

and population.

Tyre Industry

Tyre industry is capital intensive and as capacities come in spurts, it leads to constant

demand-supply imbalances and consequent cyclically in prices. Variable cost is very

high, with raw materials forming nearly 70% of the costs. Profit margins are therefore

low. Production process is technology intensive and globally huge sums are invested in

R&D. Tyre demand is a derived demand, dependent on the auto-industry, both for OEM

and replacement market. With global demand slowing down, there is a consolidation of

capacities through mergers etc.

The domestic tyre industry broadly mirrors the market characteristics of the global

industry. However, due to rough road conditions the more rugged, suitable and cheaper

cross ply tyres are in vogue. Consumption of natural rubber is therefore proportionately

high. The government's decision to impose 10% safeguard duty on carbon black and

hiking benchmark prices of natural rubber will have limited impact, as prices of these

commodities are recording at a historical low in the global market.

Factors Affecting Tyre Industry

Growth of automobile industry will increase vehicle population and thereby the demand for

tyres, in OEM as well as replacement market.

Relative importance of road transport and long distance travel by road leading to a need to

replace tyres.

Development of export market, which will also enable higher capacity utilization levels.

Economic scenario and credit availability, which will determine ability to purchase

automobiles and in turn spur demand for tyres.

Retreading, which saves upto 80% on original cost, will have a negative impact on fresh

demand.

Radialisation, which increases the life of tyres and thereby reduce need for a replacement will

inhibit volume growth

Indian Tyre Industry, is highly raw material intensive and predominantly a Cross Ply (or

Bias) tyre manufacturing industry. It produces all categories of tyres, except Snow Tyres

2

and Aero Tyre for which there is no demand domestically. Indian tyre industry is highly

concentrated wherein 10 large manufacturers account for over 95% of the total tonnage

production of 11.35 lakh M.T. On an average, 55% of the production is for replacement

market, followed by 29.8% sold to OEMs directly and the remaining is exported.

Over the years, tyre manufacturers have developed a vast marketing network using

dealers and depots and as such all types of tyres are now easily available even in the

remotest corner of the country. No doubt, international auto majors in India now roll out

their vehicles using Indian manufactured tyres.

Slowdown in automotive industry and global economic in general negatively impacted

the Indian tyre industry in 2009. The industry tonnage growth was only 2.19% during

first nine months of FY09, compared to 7.38% growth experienced during the same

period last year. Demand side was also severely affected as almost all auto manufacturers

were forced to adjust their production last year. A major relief for tyre manufacturers was

provided by the government by reducing the excise duty on tyres from 14% to 10% in

December 2008, and further to 8% in February 2009.

Increasing Cost of Raw Materials: Ram materials primarily comprise of natural rubber,

crude and steel based materials which have historically experienced volatility in prices,

especially during the last few months when price of domestic natural rubber increased

almost 40%. Given the fact that raw materials constitute around 70% of the cost of

production, combined with the manufacturers" inability to pass on the increased cost to

their customers due to intense competition, rise in prices of these materials have a huge

impact on profitability.

Increasing Radialization: Unlike in the developed countries, radialization has not yet

reached its dominance in India. Particularly the truck, bus and LCV segments continue to

be largely a cross ply based. Despite offering higher mileage, lower fuel consumption and

improved safety, radial tyres have not yet caught on primarily because of poor road

conditions and high initial cost which is approximately 25% higher than bias tyres.

Moreover, the two important raw materials required for producing radial tyres (Steel Tyre

Cord and Polyester Tyre Cord) are not manufactured domestically. Moving towards

radialization will be vital if tyre producers want to protect their share in international

3

markets. As of 2008, radialization as a percent of total production in passenger car tyres,

LCV and heavy vehicles was 95%, 12% and 3% respectively.

Off the Road Tyres: Last year saw the top manufacturers, including CEAT and JK Tyres

increasing their capacity of OTR (Off the Road) tyre production. OTR tyres are

customized tyres and provide relatively higher margin. Increasing the proportion of OTR

in the product mix is seen as a measure to improve profitability.

Increased Dumping: Besides material price fluctuations and lack of radialization, the

industry is also suffering intense competition from low priced tyres from China and other

South East Asian countries. Despite being of a better quality, Indian manufactured tyres

loose ground when it comes to pricing. Moreover, slowing automotive demand from

developed countries has made India a lucrative market for cheap tyres, thus resulting in

increased dumping of cheap tyres from China.

Retreading: Another area of concern for the tyre manufacturers is the increasing

retreading, where the worn out tread of the old tyre is replaced with a new tread.

Retreading costs approximately 20% of a new tyre and is therefore gaining popularity,

especially in Southern part of the country. Elgi Tyres and Tread Ltd are the two major

retreaders in India. Significance of such retreaders can be gauged by the fact that around

85% of the tyre demand is for replacement.

Unresolved Tax Issue: The issue of inverted tax structure, wherein the import duty on

natural rubber is 20% but import duty on finished tyres is as low as 10% still remains

unaddressed. Operational inefficiency and taxation issues have being denting the

competitiveness of Indian tyres.

Global Expansion: Several manufacturers are now moving global and are setting up

manufacturing bases overseas. After acquiring Dunlop three years ago, Apollo Tyres

recently acquired Vredetein Banden in Europe. JK Tyres acquired Tornel, a Mexican

company last year to penetrate into American tyre market.

Despite these challenges, according to CARE Research, while the industry may register a

tonnage growth of only 4.27% in FY09, the long term prospective seems to be bright.

They expect the industry to experience a CAGR of approximately 8.21% between FY08

4

to FY13. Automotive companies have started experiencing increasing sales and raw

material prices are stabilizing which will boost tyre sales over the coming months.

However, experts suggest there will be some time lag before profitability picks up as tyre

manufacturers are still carrying high cost inventories.

Tyre industry may face shortage of natural rubber

Reports that Tata Motors has scaled down production of commercial vehicles by 5-10 per

cent in January has sent tremors down the commercial vehicle industry in the country.

One of the main reasons stated is the shortage of key components such as bus/truck radial

tyres. This scaling down of vehicle output was despite bus/truck tyre production in India

growing by 39 per cent in December 2009 over last year. Bus/truck tyre output for the

first nine months of the fiscal was up 11 per cent. Going by the accelerated pace of

economic activity, the demand for heavy vehicles and thereby bus/truck tyres is poised to

grow in the coming months.

Gearing up to meet the burgeoning demand, the industry announced a flurry of projects

with investments totalling Rs 18,411 crore to be executed in the next couple of years.

Most of these projects are to address the current shortages in the bus/tyre radial segment.

Bus/truck radial tyre projects have been announced by industry majors such as Apollo

Tyres, Birla, Bridgestone, JK Tyres, MRF, Dunlop and Michelin. Once these projects are

executed, the industry should be in a position to meet the short to medium-term demands

of the commercial vehicle sector.

Source of rubber

But the bigger question is where will the tyre industry source natural rubber from? With

rubber demand poised to overtake supply in the short to medium-term, the tyre industry

does not see very encouraging times in the immediate future, Mr Rajiv Buddhraja,

Director-General of the Automotive Tyre Manufacturers Association of India (ATMA),

said. Data provided by ATMA reveal that the existing installed capacity to manufacture

11 lakh bus/truck radial tyres would more than double to 26.2 lakh in 2010-11. Then it is

poised to more than double to 62.4 lakh in 2011-12.

Fluctuations in output

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Meanwhile, statistics available from the Association of Natural Rubber Producing

Countries reveal that there have been severe fluctuations in Indian rubber production in

recent years. After producing 8.53 lakh tonnes of natural rubber in 2006, there were

several fluctuations with production in 2009 projected to dip to 8.17 lakh tonnes. The

projection for 2010 is production could rise to 2006 levels, at 8.53 lakh tonnes.

In 2006, India was rubber surplus country with demand pegged at 8.15 lakh tonnes. With

consumption in 2009 estimated at 9.04 lakh tonnes, India would become a rubber deficit

country. The consumption for 2010 is projected to be 9.82 lakh tonnes. While there is

little doubt that the consumption figures would be met, question marks linger on the

production possibilities. However, the future holds some promise for the natural rubber

sector.

New area coverage

There has been some growth in new areas coming under rubber plantations. From 14,800

hectares in 2005, the area under new rubber saplings shot up to 27,500 hectares in 2008.

Despite the lag effect of seven years for rubber trees to yield, this augurs well for the

industry. Question marks also remain over large areas with old and low yielding trees.

The pace of re-planting has been dismal: most often at less than 10,000 hectares a year.

This compares very poorly with countries such as Indonesia which replanted 55,000

hectares last year and Thailand with 64,000 hectares.

On a comparative basis, other rubber growing countries are racing far ahead of India in

bringing new area under rubber plantation. Thailand added 2.21 lakh hectares under

rubber trees in 2008, Vietnam 75,000 hectares and China 49,000 hectares against 27,000

hectares by India.

India has a tough task ahead to bridge the gap between demand and supply of rubber in

the coming years.

Article: Indian tyre industry report: the Indian Automotive Tyre Manufacturer's

Association (ATMA) collects data on the Indian tyre industry. Here we summarise a

recent ATMA report. (Indian tyre industry).

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India's tyre industry supplies role of the largest markets in the world. However, harsh

import tariffs close the market to most external competition. Basic import duty on tyres is

30 percent, with a further 30 percent in excise duty, making imported tyres up to 60

percent more expensive than locally-produced ones.

Due in part to this lack of international competition, and part to the strength of the Indian

economy, the Indian tyre industry continues to boom, with at least 33 local companies

making tyres in around 50 factories. Most of these make a range of different tyre types,

putting the industry structure a decade or more behind the European and North American

sectors, which saw considerable specialisation during the 1990s and before.

According to official statistics front the Indian Automotive Tyre Manufacturers'

Association (ATMA), overall tyre production in the six months to April 2002 was up 14

percent on a year earlier, with strong growth in all categories except tyres for animal

drawn vehicles.

India made a total of 43.5 million tyres in the 12 months to March 2002. ATMA says this

represents a capacity utilisation of 72 percent when compared with a total installed

capacity for 60.5 million units annually.

Exports are also growing. In simple numeric terms, truck and bus tyres dominate the

export market, comprising 62 percent of the 2.9 million units exported in the 12 months

to March 2002. This amounts to 1.8 million units or 21 percent of the total truck and bus

tyre production volume of 7 million units.

How accurate the numbers are, however, is anyone's guess. According to insiders, many

companies in India mis-report their production figures in order to save on taxes and other

government payments. Overall, said ATMA, the industry was worth Rs97000 million

($2000 million) and paid Rs40 000 million in tax and excise duty.

However, even if these reported numbers are lower than they should be, there can be no

doubt that business was healthy for Indian tyre makers in the 12 months to March 2002.

Overall production grew 2 percent to 43.5 million units. If tyres for animal-drawn

vehicles (almost 488 000 units) are included, then half the total Indian output is for two

wheeled vehicles, broken down as motorbikes (12.28 million), scooters (8.55 million)

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and mopeds (135 000). Production of motorbike tyres was the highest ever in 2002,

according to ATMA.

The next largest category after scooter tyres is truck and bus (8.47 million units), down

by 2 percentage points on the previous year, followed closely by passenger car tyres (7.48

million). Light truck tyres (2.3 million) round off the main categories, with other tyre

types, such as …

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COMPANY PROFILE

CEAT Tyres of India Ltd

On the road since 1958, CEAT has run up to be one of the best tyre manufacturers in the

business. We not only make trailblazing tyres, but also market tubes and flaps. And that's

not all. At CEAT we personify our business; tough yet smooth, secure yet ready to

explore the undaunted.

We are young and revving to go; with a maturity that comes with years of market

presence. More than 3000 Cr annual turnover, an impressive list of clients and OEMs,

various awards and certificates are statistics that could speak for us. But we'd rather

scorch the road with our performance!

We believe that tyres are not just accessories; they are the force that moves your

aspirations. With us you get to choose from a wide range of tyres that suit your needs and

vehicle type. (Not to mention, our radials are racers in the world market!) Strength is one

of the most important attributes of our products, which complements our solid foundation

as a part of RPG Enterprises. Our commitment to quality ensures that you have a safe

ride, always. So go on, defy destiny.

This road leads to a million places yet!

Corporate History

A recollection of our past gives us pride, but it is the responsibility of the future that

makes us wise.

CEAT International was first established in 1924 at Turino in Italy and manufactured

cables for telephones and railways.

In 1958, CEAT came to India, and CEAT Tyres of India Ltd was established in

collaboration with the TATA Group.

In 1982, the RPG Group took over CEAT Tyres of India, and in 1990, renamed the

company CEAT Ltd.

The journey since has been smooth, ups and downs not withstanding. Today, we are

on a roll and looking long distance. Our current mileage:

Over 6 million tyres produced every year

Operations in Mumbai and Nasik plants

Exports to USA, Africa, America, Australia and other parts of Asia

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Network of 34 regional offices, 7 Zones, over 3,500 dealers and more than 100 C&F

agents

Dedicated customer service, with customer service managers in all four divisional

offices, assisted by 50 service engineers.

MD's Message

Welcome to new CEAT - a legacy of trust, reliability and honesty along with new mantra of

youth, dynamism and aggressiveness to serve our valued stakeholders - you.. our

consumers, dealers, investors, existing and future employees.

This change is symbolic... a change to reciprocate the trust our customers and dealers have shown

in us... a change to continue to provide the best of service along with contemporary products at

faster speed.

The era of turnaround at CEAT is over and its time to take things to the next level. CEAT has

swung back profit mode and is expected to continue its journey to provide great returns to its

investors.

CEAT also aspires to become one of the most preferred employers in the country. The team at

CEAT is young, dynamic and ready to take it on. Life here means passion to excel in all

aspects----the passion to ensure customer delight, the passion to provide best return to its

shareholders, the passion to challenge the status quo and become the most innovative

organization and the passion to achieve the impossible through teamwork! Empowerment and

Growth remain our driving factors.

The core values of respect and care ensure each CEATizen brings his/her own passion and

individuality to drive the company to new heights. I welcome each one of you to be part of this

journey as we "take it on".

Management Team

Free spirited guys who race beyond the conventional to do more than they're expected to do-and

always reach.

They are in the front seat because of their ability to see what no one else can. Thank god for that!

Because with them at the helm, we are sure the steering wheel is in the right hands.

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Highly experienced and well acquainted with the trips and turns of the business, the guys at the

top are sharp in the mind. And mavericks at heart.

Board Of Directors

Mr. R. P. Goenka Chairman

Mr. H. V. Goenka Vice-Chairman

Mr. Paras K. Chowdhary Managing Director

Mr. Anant Vardhan Goenka Dy Managing Director

Mr. A. C. Choksey Director

Mr. S. Doreswamy Director

Mr. Mahesh S. Gupta Director

Mr. H. Khaitan Director

Mr. Bansi S. Mehta Director

Mr. Hari L. Mundra Director

Mr. K. R. Podar Director

Mr. Vinay Bansal Director

Vision & Mission

Vision:

"CEAT will at all times provide total customer satisfaction through products and services of

highest quality and reliability."

Mission:

"To nurture an exciting and challenging work environment with fairness and transparency."

Achievements & Awards

Sometimes being up on the victory stand is all that matters. Getting an award is the pat-on-the-

back that is also a slight push forward. It means 'hey you've done well!' But it also means 'watch

it now; you've expectations to live up to!'

We do not believe in blowing our own horn. But we do believe that understating our success

would mean undermining the efforts that went into achieving it.

CEAT wins awards for Employer Branding and Best HR Practices for 2010

CEAT receives Reader's Digest Trusted Brand Gold Award for 2009

The 2007-08 Raid de Himalayas 2 wheeler Rally was won on CEAT Tyres

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CEAT was the no 1 in exports amongst all tyre companies in India..... Source ATMA Report

2007-08

CEAT Shoppe wins Best Innovation Award 2007-08 (* Franchisee Association of India)

From a 2 wheeler tyre to a Car Tyre to a Giant OTR Tyre, CEAT makes the entire Range of

Tyres.

CEAT won the Employer Branding Award for "Excellence in Training 2007-08" ( *

Awards by the Asia Pacific HR congress)

CEAT has adopted a village "Tirad Seth", near Nasik as part of its CSR activities.

ICQCC Distinguish award for Quality Circle in 2002 at Lucknow India

NCQC Distinguish award for Quality circle in 2004 at Mumbai

NCQC Distinguish award for Quality circle in 2006 at Kanpur India

CCQC Mumbai Chapter Distinguish Award for Quality Circle in 2007

Best case study award from CII in 2005

RPG Best TQ\M Team Award for CFT in 2005 and 2006

Recognized with RPG BTT Six Sigma Team Award in 2005-06

Winner of RPG Quality award in 2003, 2004 & 2006

Certificate of merit in RPGOE in 2005

100 percent vendors are ISO certified

Rated amongst top four auto ancillaries

National Exports Award (CAPEXIL) - 13 times

Best Exports certificate of merit - 7 times in the last 20 years

While we believe that quality speaks for itself, we take special measures to insure that we deploy

the best processes and practices. Our facilities are equipped with resources that allow our R&D

efforts to take the shape of perfection.

So either you are on the road or off it. And love the road, we do!

Manufacturing Facilities

We are a growing lot, and how

3 Manufacturing plants - 2 in India and 1 in Sri Lanka

10 outsourcing units for tyres, tubes and flaps

3 dedicated 2-3-wheeler plants controlled by CEAT

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And if that hasn't got your attention, watch this: with an upcoming plant in and with production of

various PCR and TBR sizes for the Indian as well as export market, CEAT is looking at

expanding its capacity from 60 thousand tyres every month to 3 million tyres!

We hope to better that yet, as we work toward technical collaborations with leading tyre majors

of the world.

 

R&D

Behind every successful product is a great R&D effort. At CEAT, 'long distance' is not just a

term, it is the way we think and plan. Every innovative step is toward giving the customer a high-

end product. Our research people are doing a great job at that since 1984. Every tyre that leaves

our facility has been tried and tested for best performance, (we also have the approval of the

Department of Scientific and Industrial Research (DSIR) on that).

Aided by modern design tools we can develop, test and process our products within a short time

span. With this we are able to introduce better products to keep up with the evolving market

needs.

We have always been avid propagators of advanced technology. And with good reason. High tech

processes enable us to presuppose the customers' needs and simulate their on-the-road experience,

to create the perfect product.

So, where the durability of our products is concerned: rest assured.

When we say long distance, we stay long distance.

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Youth@Factory

At CEAT factory, we have cultivated a kind of culture that defies all the traditional image and

perception of a typical plant. Young employees, dynamic work environment and fun@work

activities have made work all the more exciting and joyful for everyone.

Young talent have been encouraged to take up the leadership position through various initiatives

like YEB. YEB is a team of psuedo-Board members who meet up once in a month and discuss

range of issues concerning organization at a policy and strategic level. They have quite a number

of big achievements to their name.

Also, to develop we regularly organize inter department cricket matches for employees, have

actively participated in all the Mumbai Marathon and all festivals like Dushera, Diwali,

Christmas are celebrated in the factory by the team in a highly colorful manner. Also, young team

at CEAT celebrates days like safety day, environment day, May day are celebrated with a lot of

enthusiasm and spirit.

This youthful culture has taken the change beyond celebrations. They started active participation

in Cross Functional Team (CFT), Quality Circles (QC), Quality Based Management (QBM) and

other productivity enabling initiatives very actively.

Quality Policy

For the man who counts signals to reach home safely. For the woman who drops her child to

school. For the vendor who has to reach the market in time. For the young rider who wants to

race the wind... we make quality our responsibility. And we take our responsibility seriously.

We make sure our processes and products are approved by the appropriate certifying agencies.

We have been the first tyre company in India to get the ISO/TS 16949:2002 certification,

which is a combination of ISO 9000 and QS 9000.

We are mighty kicked about this one! Because it's not just a certification, it's a quality

management system that promotes continual improvement. It allows us to keep our supply chain

trim by preventing defects and reducing waste. Not only that, it measures the ultimate challenge

for any manufacturer- customer satisfaction. Some of the other things it ensures:

Export to almost all parts of the world

Fundamental quality management system requirements

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No multiple certification audits

The PDCA (Plan, Do, Check and Act) cycle of process approach

ISO/TS 16949:2002 was prepared by the International Automotive Task Force (IATF) and Japan

Automobile Manufacturers Association, Inc. (JAMA) with support from ISO/TC 176, Quality

Management and Quality assurance.

Quality for us is more than state-of-the-art, we would say it's state-of-the-mind. When you think

right, you always deliver right.

Beyond Tyres

When we give each other space to grow, to be ourselves, and share joy; we can perceive the

beauty of openness, dignity, healing and inclusion.

At CEAT, we care. Not only about our business and customers, but about all those whose life is

affected by us. Our employees and their world become our world; supporting local communities

that influence our business becomes our corporate responsibility. We make it our duty to give,

because we get a lot more.

We try to touch upon their life in any beneficial way we can; health, education, entertainment,

and even self empowerment.

In the end there is happiness in the realization that we have accomplished something.

CEAT Cares

CEAT Partners with Nashik Police for a crime-free Nashik

As part of our CSR philosophy and building strong social relationships, CEAT entered into a

unique partnership with Nashik Police.

Under the guidance of Police Commissioner Mr.Vishnudeo Mishra to curtail the crime in Nasik

City a Bit Marshal patrol is formed & deployed in various areas of the city. The bit marshals are

now equipped with advanced equipment's / weapons, new uniforms, & bikes. With the help of

CEAT LTD Nasik and Satpur Police head, the bit marshals have been provided with special

commando uniforms. The bit marshals will patrol near crowded areas, jeweler's shops, schools

Colleges, & other sensitive areas.

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Over 100 Bit Marshalls will have the CEAT logo on their uniforms . This once again reinforces

the commitment of CEAT towards a larger social cause. Commissioner of Police Mr. VD Mishra

had felicitated us during the inauguration ceremony which was attended by top 100 police brass

of Nashik and received a positive media coverage. He has also issued an appreciation letter as

well as mentioned CEAT's good work in press release.

The World Environment Day-09 was celebrated in the plant premises of Nashik Plant On Friday

5th June 2009.

The atmosphere was created for World environment day by fixing banners at Main Gate and in

Plant premisis, the banner comes with this years theme for the event which is " Your Planet

Needs You! Unite to Combat Climate Change" Environment related posters are displayed at

conspicious places in the plant to spread the awareness.

On 5th June at 10.30 am there was tree plantation program near the administrative building

lawns,which wasattended by Functional heads,Hod's union representative and workmen in large

nos.

Mr. Rahul Awasthi (Genral Manager) planted a tree which was followed by plantation by the

hands of all present.

In his Speech Mr. Rahul Awasthi addressed the Workmen and Management staff and explained

the importance ofEnvironment in industry, He explained about Global warming and its effects

andalsogave examples of effects of global warming in ourlives, Mr. awasthi also expressed

concern about the depletion of ozone layer and its potential hazard to life on earth.He appealed to

all present to help in preservation and protection of our environment and spread the message

down the line.

The plantation program was followed by screning of the Oscar winning world famous film on

Environment "The Inconvinient Truth" By Al Gore.

A drawing and painting competetion was organised on 7th June in which the employees children

aretook part.One of the subject given to them was "Environment Polloution" approximately 50

children participated in the event.

Mr. Khairnar Drawing teacher from Fravashi Academy and Mrs Desai Head Mistress of

Dr.Ambedkar Kanya Vidiyalaya were invited as Judges for the event, Mrs Awasthi & Mr. Rahul

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Awasthi were the Guest of Honour The Event was agreat success,the winners of the drawing

competetion were given prizes and the posters are displayed on display boards opposite

canteen.

CEAT Cricket Ratings Awards 2008-2009

In a cricket-crazed nation how can we be left out of our share of excitement. Well, the game is the

closest thing to patriotism here, and we involve ourselves with equal zeal. In 1995, the

Professional Management Group (PMG) and CEAT decided to transform cricket into an

experience, bigger and more exciting than the nail-biting finish of a one-dayer. For all those

players who have sweated at the crease to deliver a victory, we decided a pat-on-the-back was in

order.

And the first international rating system - CEAT Cricket Rating (CCR) - was set up to reward

outstanding performances across every sphere of cricket-batting, bowling, fielding and even

wicket-keeping!

CCR covers all international matches played over twelve months, between May 1 and April 30. It

rewards both, individual players as well as teams, and is indeed the world's most credible cricket

rating. After twelve months of scoring centuries, sending stumps flying and taking impossible

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catches, the 'CEAT International Cricketer of the Year' comes as the most rewarding title for any

cricketer. And for the teams, the 'CEAT International Team of the Year' is as prestigious.

The boiling water test for CEAT is over, and it has emerged stronger, wiser, and savvier. A new

refreshing look, a youthful approach and a desire to leave an impression, will take CEAT to new

heights yet.

The only thing, and the most important, that remains the same is our commitment to quality. That

is our brand value. Our true essence in the boiling water. At CEAT, we care. Not only about our

business and customers, but about all those whose life is affected by us.

Overview

RPG Enterprises, established in 1979, is one of India’s fastest growing business groups

with a turnover touching Rs. 17,000 cr. The group has more than sixteen companies

managing diverse business interests in the areas of Power, Tyre, Infrastructure, IT,

Retail, Entertainment, Carbon Black and Speciality.

Management

The RPG Management Board comprises highly qualified professionals with significant expertise

in various markets and are thought leaders.

Values

RPG’s business ethics promote higher levels of excellence. The group’s values of Customer

Sovereignty, People Orientation, Innovation & Entrepreneurship, Transparency & Integrity,

Passion for Superior Performance, Anticipation, Speed and Flexibility propel it to perform and

excel in all spheres of activity.

Quality

At RPG quality determines success. Continuous process improvements are carried out to ensure

complete satisfaction of customer and market requirements.

Beyond Business

The RPG group believes that the role of a corporate house extends beyond the narrow margins of

the balance sheet. It is this understanding that sees the group promote sport, art and culture.

18

Corporate Citizenship

The Group firmly believes that Corporate Social Responsibility is not just an added function to

business. It should be ingrained in core business operations. Thus, RPG CSR would cover

workplace, community and environment. The social endeavours of the group have been

categorized under the broad area of education, livelihood and environment.  

History

The history of RPG began in 1820 when Ramdutt Goenka, from a small town in

Rajasthan, India, came to Calcutta on the east coast, to do business with the British East

India Company. The following milestones speak of his enterprising efforts, and the

subsequent growth of the RPG group.

By the 1900s the Goenkas establish themselves in diverse business sectors like banking,

textiles, jute and tea.

Sir Hariram Goenka and Sir Badridas Goenka are conferred knighthood by the Queen

of England for outstanding contribution to business and the community.

In 1933, Sir Badridas Goenka becomes the first Indian to be appointed Chairman of the

Imperial Bank of India (now the State Bank of India). 

He is elected President of the Federation of Indian Chambers of Commerce and Industry

(FICCI) in 1945.

Keshav Prasad Goenka (son of Sir Badridas Goenka) carried the spirit of

entrepreneurship forward.

In 1950 Goenkas acquire two British trading houses - Duncan Brothers and Octavius

Steel.

After successful acquisitions in the areas of tea, automobile, tyre, jute, cotton textile and

electric cables, Keshav Prasad Goenka  passes on his business empire to his three sons.

One of the sons, Rama Prasad Goenka (better known as RP Goenka), establishes RPG

Enterprises in 1979 with Phillips Carbon Black, Asian Cables, Agarpara Jute and Murphy

India as constituents.

The 80s see further acquisitions by the RPG group, the first being CEAT Tyres of India

in 1981. The group then goes on to acquire KEC (1982); Searle India, now RPG Life

Sciences (1983); Dunlop (1984); Gramophone Company of India Ltd. (1986); and finally

CESC, Harrisons Malayalam, Spencer & Co. and ICIM, all in 1989.

19

RP Goenka's sons Harsh (Chairman) and Sanjiv (Vice-Chairman) spearhead the group’s

management from 1990.

RP Goenka currently oversees the group’s affairs as “Chairman Emeritus”. Today, RPG

has more than twenty companies across eight business sectors, with a Turnover of Rs.

17,000 cr.

Management Board

The Management Board comprises of highly qualified and experienced professionals from

different business areas.

Milestones  Select the year that you want to see

    2010

CEAT clocks highest net sales and operational profit @ Rs 2783 and @Rs 230Cr (YTD Feb’10) respectively.

20

After Antwerp in Belgium, CEAT goes abroad once again and opens office in Dubai to tap the growing demand in the Middle East.

CEAT rolls out first tyre from Halol factory. Capacity at Nasik plant expanded to 1000 tonnes.

With the acquisition of US-based SAE Towers, KEC becomes the largest globally operating tower maker.

CESC’s Cossipore power station, one of the oldest running coal-fired stations, turns 60.

KEC acquires Jay Railway Signalling Company to strengthen its Railways business

Raychem RPG acquires Tyco Electronics’ energy division in India Zensar Technologies opens Global Delivery Centre in Shanghai, China RPG Life Sciences inks long term API pact with Polpharma Integrated Coal Mining, an affiliate of CESC, buys stake in Australian coal mining

company     2009

PCBL moved up the ladder in global rankings from 10th to the number 8th slot in 2009

90,000 MMTPA carbon black plant and 16 MW captive power plant at Mundra commissioned in Q3FY10

PCBL re-commences activity for the Vietnam project PCBL commissiones a 30 MW captive power plant at Durgapur CESC bags thermal power project from Dhariwal Infrastructure. To set up 600

MW thermal power project at Chandrapur in Maharashtra Gujarat Chief Minister Narendra Modi lays the foundation stone for CEAT’s Rs.

700 crore new radial tyre plant at Hallol. KEC International and RPG Cables boards approve merger. Open Media Network launches OPEN, the weekly current affairs and features

magazine. Zensar inaugurates its third Global Delivery Centre in India in Pune in April CNBC-TV18’s Exporter of the Year Award for the year 2009 - IT, ITES and

electronics segment for the third consecutive year at the International Trade awarded to Zensar

    2008

CESC ties up with Singapore Power to revamp its distribution system Zensar goes Green by launching initiatives to make the Company and the City

Green, and to ensure we build energy efficient solutions for our customers’ business

RPG group achieves a turnover of 13,500 crore for FY ’08 Spencer’s flagship store of 70,000 sq ft at the South City Mall in Kolkata Spencer’s first standalone store at Baroda Exclusive tie-up with the ₤ 3 billion Woolworth’s PLC of UK for retailing the

latter’s internationally acclaimed toy brand, Chad Valley Tie-up with Au Bon Pain, the Boston-based fast casual dining and bakery café

chain with more than 200 outlets in the USA, South Korea, Taiwan and Thailand. Exclusive tie-up with Beverly Hills Polo Club CEAT unveils its new logo which is designed to reflect today's CEAT with a

vision to meet the demands of tomorrow’s next generation market.

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Bhoomi Puja carried out in Mundra on 24th January 2008 for a state of art Greenfield Carbon Black plant of capacity 90,000 MT along with a Power plant of 16 MW.

Carbon Black declared as an independent Business Sector w.e.f. 1st August, 2008. Durgapur 30 MW Power Plant commissioned on September 29, 2008. Raychem RPG won The Best Vendor Award: TYCO Germany 2008

    2007

Zensar set up its Poland Centre to lead European Technical Outsourcing Operations

RPG group inches closer to the USD 3 billion mark with a turnover of INR 11,500 crore for FY ‘07

Zensar acquires ThoughtDigital, a leading US-based, Oracle consulting firm RPG acquires from Fujitsu controlling stake in Zensar

    2006

RPG on the threshold of INR 10,000 crore, with INR 9450 crore turnover for FY ‘06

Spencer’s Retail announces new expansion plans with Spencer’s Hyper, Super, Fresh and Daily formats

CEAT radial plant project for car radials gets under way CEAT Kelani inaugurates radial tyre factory in Sri Lanka Zensar acquires SAP services provider, OBT Global

    2005

RPG achieves 8000 crore milestone turnover, with INR 8460 crore for FY ‘05 1st ‘RPG Day’ celebrated on May 1st across the country RPG launches its wholly-owned retail venture under the Spencer’s brand ‘Music World’ stores opened in Mumbai Spencer’s Travel begins airport handling operations

    2004

RPG’s retail business opens its 2nd hypermarket in Mumbai and 3rd in Vizag ‘Saregama’ becomes the first Indian Music Company to place content on all major

digital downloads sites across the world Zensar achieves CMMI Quality Certification. It features among the ‘TOP 100

companies that matter in knowledge management’ in KM World     2003 RPG crosses the 7000 crore turnover mark with INR 7472 crore in sales RPG Life Sciences enters the US Generics market by launching Cyclosporin (for

kidney transplant) Zensar starts Global Development centers at Singapore and China

    2002

Integrated Coal Mining Ltd begins coal supply to CESC KEC becomes the only Indian company to win contracts for Iraq’s reconstruction

projects. The company executes 5 construction projects in Iraq in record time Raychem RPG acquires ‘Canara Electric Controls’, manufacturers of transformer

rectifier units for Corrosion Protection Systems

22

Saregama becomes the only music company to set up a separate publishing division. The Company ventures into home video by signing up with Warner Studios

    2001

    2000

International Computers India Ltd becomes Zensar Technologies Ltd Saregama achieves the milestone of the highest production of cassettes, producing

50 lakh units in one single month RPG Cables diversifies into house wiring products and turnkey projects

    1999

Searle India becomes RPG Life Sciences     1998

Saregama ventures into film-making through GRAMCO films, a new division of Saregama. Becomes the first Indian media company to be listed in the UK

    1997

‘Music World’ and ‘Health & Glow’ commence operations CESC’s 1st unit (250 MW) of Budge generating station is charged. (The 2nd unit

commenced in 1999.)    1996

RPG pioneers organized retail business in India RPG Netcom establishes TV cable connectivity in West Bengal

    1995

RPG Cellular commences operations in Chennai circle     1993

CEAT Kelani, a subsidiary of CEAT Ltd, commences operations Saregama launches ‘Dilwale Dulhaniya Le Jayenge’, the biggest hit of the Indian

music industry     1992

RPG acquires NOIDA Power (NPCL)     1990

Saregama releases two mega hits ‘Maine Pyar Kiya’ and ‘Chandini’    1989

RPG acquires Spencer’s, CESC Ltd, Raychem RPG, and Zensar Technologies (formerly ICIL)

    1988

RPG acquires HMV and Harrisons Malayalam Ltd

23

    1986

RPG acquires Gramophone of India Ltd     1983

RPG acquires Searle India     1982

RPG acquires KEC International    1981

RPG acquires Ceat Tyres of India and

 Quality

RPG Organizational Excellence

RPG Organizational Excellence is an effort towards achieving excellence by enhancing

performance through clarity of purpose, meticulous planning, tenacious execution and passion to

excel.

RPG Organizational Approach

RPG Organizational Approach translates the group’s organizational excellence strategy through

an effective 3-point program:

Six Sigma

TPM

Continuous Improvement

RPG Organizational Awards

The RPG Organizational Excellence Awards were initiated to give impetus to the group’s

excellence movement. Since 1999, these awards aim to encourage higher levels of business

excellence among the group companies.

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Quality

RPG Organizational Excellence Model

RPG has always been among the forerunners in the area of quality improvement. The group set

up the RPG Organizational Excellence Center in 1998 (then know as the Corporate Quality

Center), to enhance quality standards within RPG group companies.

To match world standards of excellence the center inducted the Organizational Excellence Model,

drawn from the EFQM framework of excellence and in alignment with the CII – EXIM Business

Excellence Model.

Principle 

Excellent results with respect to Performance, Customers, People and Society are

achieved through Leadership driving Policy & Strategy, People, Partnership & Resources

and Processes.

Frame Work 

RPG Organisational Excellence (RPG OE) is a non prescriptive framework based on nine

criteria. Five of these are Enablers and four are Results. The Enablercriteria cover what an

organisation does (Practices and Initiatives). The Resultcriteria cove what an organisation

achieves. "Enablers Cause Results"

Quality

RPG Organizational Excellence Approach

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RPG has been encouraging continuous improvement initiatives in all the group companies,

through an effective 3-point program: Six Sigma, TPM, and Continuous Improvement.

The quality drive has been promoted through QC, CFT, and 5S systems. Many of the group

companies have successfully applied the quality improvement program, implementing policy

deployment through the Business Balanced Score Card (BBSC).

The group companies have initiated the excellence drive by implementing TQM strategies like 5S

of housekeeping, and structured problem solving – CFT, Kaizen etc. These initiatives help in

embedding awareness of quality in all organizational processes; leading to employee

involvement, a culture of continuous improvement and definite changes in QCD.

RPG Organizational Excellence Awards

The RPG Organizational Excellence Awards were introduced in 1999, to encourage higher levels

of business excellence among the group’s companies.

These awards motivate the companies to instill quality control measures in all their processes.

The awards also generate a healthy competitive environment, encouraging the companies to

excel.

26

The RPG quality awards are given to group companies (in the manufacturing or the service

categories) that exhibit outstanding levels of organizational excellence. Each company is assessed

on predetermined criteria for RPG’s quality and organizational excellence awards, every year.

The ‘Best TQM Team’ and ‘Best TQM Facilitator’ awards are given to encourage and appreciate

improvement efforts at team and individual levels.

The introduction of the awards has been effective in creating a better working environment by:

providing direction and creating a uniform excellence culture throughout the group

recognizing contributions made by individual units

motivating the management and employees to work toward continuous improvement

improving business results, in turn providing a competitive edge to individual units in the

domestic and global market

improving company performance, based on the sound approach of strategy, policies and

processes, and its organization-wide deployment

Vision

 RANGE OF PRODUCT AND SERVICES

CEAT Ltd., one of the oldest among RPG companies, is one of India’s leading tyre

manufacturers, with an annual turnover of about Rs.2000 Crores (US $ 420 Million). It

manufactures and markets “CEAT” branded automotive tyres, tubes and flaps and has a

strong presence domestically and in nearly 100 countries worldwide, thanks to a very

strong brand equity. CEAT’s strong commitment towards providing excellent service and

support to its buyers and customers has also helped it to maintain the leadership position

in most of the markets. CEAT stands committed to continuously improve the quality in

all its products and services to satisfy current and emerging customer needs

27

 

 

 

 

 

28

 

 

 

 

The first CEAT Shoppe was established in 1986, to offer non-truck CEAT tyres to

the passenger segment.

29

Types of Tyres

CEAT Tyres

CEAT is one of the very few companies in India, which has the widest range of tyres for all user

segments – Heavy Duty Trucks & Buses, Light Commercial Vehicles, Earth Movers, Forklifts,

Tractors, Trailers, Cars, Two & Three Wheelers etc… up to 17 categories. CEAT also markets

tubes and flaps, which are outsourced from 7-8 units.

Ceat Shoppe

CEAT has more than 100 CEAT Shoppes, which are

exclusive CEAT retail tyre outlets, with a strong

corporate identity. Their main targets are cars, utility

vehicle and 2-3 wheelers. CEAT Shoppes will provide

expertise in tyres and tyre services all under one roof. It

will convert a grudge purchase into a pleasant tyre

buying experience, thanks to a customer friendly approach.

CEAT Tyres

CEAT is one of the very few companies in India, which has

the widest range of tyres for all user segments – Heavy Duty

Trucks & Buses, Light Commercial Vehicles, Earth Movers,

Forklifts, Tractors, Trailers, Cars, Two & Three Wheelers

etc… up to 17 categories. CEAT also markets tubes and flaps, which are outsourced from 7-8

units.

CEAT produces Truck & light truck tyres for commercial vehicles, for the transportation of

passengers and goods. The main brands are HCL Super and Lug-XL. CEAT produces about 8

lacks tyres per annum, which represents 18% market share in the truck tyre industry and 21% in

the light truck tyre industry. CEAT supplies all the major Original Equipment Manufacturers

(OEM), like Telco, M&M, Maruti Suzuki, Eicher, Swaraj Mazda… Thus, CEAT is ranked 3rd in

the tyre industry in the replacement market.

30

The Car & utility vehicle tyres segment is divided in two parts: conventional tyres and radial

tyres, which is a new and high technology. CEAT has recently introduced its ‘Spider’ range of

Tubeless Radials in the Indian market. This range of high performance premium tubeless radial

tyres is imported from the best tyre plants in Europe, Italian major Pirelli, the woCEAT is one of

the very few companies in India, which has the widest range of tyres for all user segments –

Heavy Duty Trucks & Buses, Light Commercial Vehicles, Earth Movers, Forklifts, Tractors,

Trailers, Cars, Two & Three Wheelers etc… up to 17 categories. CEAT also markets tubes and

flaps, which are outsourced from 7-8 units.

2 & 3 wheeler Tyres

Light commercial vehicle tyres

Multi Purpose Truck Tyres

Farm Tyres

Flotation Implement And Trailer Tyres

Truck tyres- convenctional

Operations

In India, CEAT enjoys a privileged position as a major supplier to Original Equipment

Manufacturers (OEM). CEAT has two large tyre plants based in Mumbai (Bhandup)

and Nasik (Satpur), a tyre plant in Cochin, in Kerala, through RADO Tyres, and two

plants in CKITL and ACPL in Sri Lanka, through CEAT Kelani. From a mere 45,000

tyres in 1960, production has multiplied over the years and today aggregates over 5.5

million tyres per annum. CEAT achieved 10,000 tons production in a month in March

2001. The production tonnage achieved in 2002-03 reached 130761 tons.

Bhandup plant commenced in 1958, and has a total land of 30 acres. It employs 2500

people, and produces tyres for truck and bus, Tractor rear, OTR, grader tractor front and

trailer. It has a capacity of 240 tons per day, which represents 72500 tons per annum.

This plant produces 4800 tyres per day, at 90% efficiency.

Nasik plant started in 1972 and has a total land of 25 acres, and employs 1880 people. It

produces tyres for scooter and motorcycle, truck and bus, tractor rear, tractor front, light

31

truck, passenger, industrial, GM loader, jeep, ADV & passenger car & UV radials. Its

capacity is 132 tons a day, which represents 47000 tonnes per annum. It produces 7240

tyres per day, at 90% efficiency.

The plant in Cochin in Kerala, through RADO Tyres, produces tyres for motorcycle,

scooter and 3-wheeler. CEAT acquired RADO Tyres of Kerala in 2000. Its capacity

increased from 25,000 tyres per month in 2000 up to 1 lack tyres per month in 2006.

Through its subsidiary CEAT Kelani , CEAT produces tyres in Sri Lanka, in CKITL

and ACPL, for truck, tractor rear, light truck, motorcycle & scooter.

CEAT has one of the largest distribution networks with about 5000 dealers, 31 regional

offices and over 100 C&F agents. CEAT has also the largest customer care field force

with 50 persons in the field.

CEAT has also displayed a high degree of backward integration. The Group’s companies

manufacture two of the most vital components that go into the making of tyres– rubber and

carbon black.

32

OBJECTIVES AND SCOPE

Is to analyze the present status of CEAT Industries in India.

To project the future scenario in times of growth prospect of CEAT Industries in

India.

To create awareness of CEAT Tyres and to create business for the same.

To conduct a comparative analysis of CEAT Tyres vis-à-vis to its competitors.

Find the market share of CEAT Tyres

To make an analysis of the shortcomings of CEAT tyres compared to its competitors.

Finally to conclude the findings and suggest the necessary corrective measures and

recommendations for improving the market position of CEAT Tyres

SCOPE OF STUDY

Being a trainee and fresher in the Industries did pose a number of problems. The

limitations and constrains, which mainly well a hindrance in the performance of the

project includes the following:

Lack of expertise, being a trainee, especially in understanding consumer behaviour.

In case of primary data, sometimes it was difficult to contact or meet the professionals,

due to their busy work schedule.

Sometimes professionals are unable to finish some of the information due to confidently

of the same.

It was difficult to know the exact detail due to time constrain.

It was difficult to find information that exactly fitted the needs of the project at hand in

case of secondary data or information.

Lack of upto date statistics.

Unreliable response from the retailer at times due to lack of time.

Question on sales highly sensitive and sometimes resulted in non-response from the

retailers.

Sometimes respondent do not really understand what specific information is required.

In some instances respondents may not have revealed the truth.

33

LIMITATIONS

I have to work under time constraint due to my present job, so I have got a less time to complete

the project.

The respondents were mostly college going students; low understanding of knowledge was there.

The respondents were discussing the questions prior to reply thus their could be biasness.

Different promotional schemes offered by different companies were not known by the

respondents.

Every attempt will be taken to obtain the error free and meaningful result but as nothing in this

world is 100% perfect I believe that there will still the chance for error on account of following

limitations-

1. Respondent’s unavailability.

2. Time pressure and fatigue on the part of respondents and interviewer.

3. Courtesy bias.

The limitations and constrains, which mainly well a hindrance in the performance

of the project includes the following:

Lack of expertise, being a trainee, especially in understanding consumer

behaviour.

In case of primary data, sometimes it was difficult to contact or meet the

professionals, due to their busy work schedule.

Sometimes professionals are unable to finish some of the information due to

confidently of the same.

It was difficult to know the exact detail due to time constrain.

It was difficult to find information that exactly fitted the needs of the project at

hand in case of secondary data or information.

Lack of upto date statistics.

Unreliable response from the retailer at times due to lack of time.

Question on sales highly sensitive and sometimes resulted in non-response from the

retailers.

34

THEORETICAL PERSPECTIVE

PRODUCTION

Definition:

production, in economics, all those activities that have to do with the creation of commodities,

by imparting to raw materials utility, added value, or the ability to satisfy human wants. The

farmer who grows wheat, the miller who grinds the wheat into flour, and the baker who

transforms flour into bread are examples of producers who, each in his own way, impart utility to

a natural or partially processed material. Production was the major thrust of industry until at least

the beginning of the 20th cent., when sales and marketing began to be considered equally

important in the transference of commodities from producers to consumers. Today, the prevailing

mode of production is called mass production, with cottage industry accounting for only a minor

portion of the market in most areas of the world.

Many historians place the beginnings of mass production around 1800, with Eli

Whitney's firearms factory approximating the labor process of modern industrial

production. The mass production method, generally involving the piecing together of

standardized, interchangeable parts by a number of workers, reached its apex in the

automobile manufacturing of the early 20th cent. Increasing automation, with attendant

increases in the division of labor, allowed manufacturers to hire unskilled or semiskilled

labor, which would repeatedly perform small tasks in the ultimate production of a

commodity. Hence, mass production often took the form of an assembly line, in which a

continuous flow of products moves steadily forward toward completion.

For most kinds of production in modern society, large amounts of capital in the form of

machinery are required. Equally essential are land and its natural resources, from which

the raw materials are obtained, and labor, which, with the aid of capital, extracts and

transforms the raw materials. To these three primary factors of production is sometimes

added a fourth: the entrepreneur who organizes the forces of production and assumes the

risks. Since under capitalism production is for a market, an important function of the

entrepreneur is to anticipate as accurately as possible the economic demands for goods

and to produce the kind and quantity of goods that will meet that demand. In order to

meet the great expenses of mass production, particularly the capital necessary in most

35

industries, groups of speculators often take on the risks of production, and the individual

entrepreneur has become less significant.

Another late 20th-century trend has been toward greater computerization of the

production process; increasingly, computers are not only being integrated into the

machinery of production but are replacing much of the human labor as well.

Computerization has made assembly lines faster and more accurate and has given them

more flexibility. Through computerized instructions, the design and manufacture of many

mass-produced products can easily be modified to suit the needs of the individual

customer.

Production Process

To ensure the effective functioning of the tyre manufacturing process, a carefully

designed and implemented material flow is required.

The major material flows in tyre manufacture are:

Transporting and handling of materials in the mixing department

Transporting rubber compounds from the mixing machines to component manufacture

and on to assembly

Transporting textile cords from the calendering equipment to the cutting equipment and

on to the assembly machines

Transporting steel cords from the calendering equipment to the cutting equipment and on

to assembly

Transporting steel wires from stock to the wiring machines and on to assembly

Transporting rubber strips from the calendering equipment to assembly

Flow of other materials from stock locations and component manufacture to assembly

The material flows in tyre manufacturing spread out from stock to several different

manufacturing processes, mixing department, component manufacture and assembly.

The assembly stage of the tyre manufacturing process is where all the material flows

converge. With the help of an assembly drum all the material required to produce a tyre

are combined, resulting in a tyre carcass. Following the assembly stage, the carcasses

have to be transported to the curing presses for curing. The post-assembly material flow

is relatively easy to arrange to function effectively: first get the material to curing and

then get the finished products from curing to pass through inspection and on to the

36

warehouse. The careful design of the tyre factory layout plays a key role in getting the

material flows to function effectively.

Layout planning should start from the assembly area. Planning will be extended to other

functions around the assembly department, such as component manufacture and curing.

With respect to the assembly department, the curing department should be placed so that

the transport distances of tyre carcasses are as short as possible, and their routes clear.

The management of the productional balance between the assembly and curing functions

is difficult because the processes consist of different manufacturing stages. To improve

the management of balance, a facility for intermediate storage of tyre carcasses will be

constructed between assembly and curing. The assembly cycle for a tyre is considerably

faster than the curing cycle. One assembly machine can produce carcasses for 4-10 curing

presses. Changes between products are often made at the assembly machines, but in

curing the changes are less frequent.

Automatic conveyors or transport systems can be developed to transport tyre carcasses

from assembly to curing. With the help of automatic transport systems, products

completed by assembly can be directed to pre-assigned curing presses, or should the

presses already have a sufficient number of carcasses for the next curing cycle, the tyre

carcasses can be moved to intermediate storage to wait for curing.

Automatization of the transport taking place between assembly and component

manufacture is difficult because the department uses individual assembly machines, and

there can be tens of them around the assembly department. Components are usually

manufactured in batches for a specific product at a time, and they are either stored in

drums or carriages with a separating fabric. Forklifts are used to transport the components

to their destination. The need for intermediate storage depends on the length of the

production batches and naturally on the shift arrangements both in the component

manufacture department and the assembly department.

How well the intermediate inventories of component manufacture are managed is

important from the point of view of productivity and the flexibility of the operation.

Excessive intermediate inventories cause quality problems (aging, defects associated with

serial production are not detected early enough). Financial losses arise from the cost of

having capital tied-up in the inventories, more equipment being needed to manage the

37

inventories, more space being needed to accommodate the goods in the inventory, and

from the additional handling of the material required because of the storage period.

A method to bring down the quantities kept in intermediate storage and to reduce the

costs associated is to integrate the manufacturing stages of component manufacture with

assembly. Manufacturing should be more process-like, not individual work stages.

This kind of process-type integration technologies for production are under development,

and in the future integrated production lines will be used to make longer production

batches. In the production models of the future, the workload of production will be

considerably reduced, which will also help reduce the amount of materials that need to be

kept in stock. The problems associated with applications of this kind are the insufficient

level of know-how and the unsuitability of the products to automate their production.

Quality producing

Managers responsible for the production process, and some separately identified

technical experts, oversee that the products are manufactured using the appropriate

machinery and methods, and that the materials used in their production meet all specified

requirements.

They shall define, among other things, the following:

compound and component identification

types of dies and profiles

cutting angles of ply materials

setting specifications for assembly and curing machines and equipment

production formulas

production tolerances

classification instructions

specifications for force variation etc.

It is the job of the production process to ensure that the quality criteria set for each

product respectively can be met with the existing equipment, methods and materials

chosen for the purpose.

The quality producing capability can be assessed with the help of Statistical Process

Control (SPC) and Failure Mode and Effect Analysis (FMEA) methods. In addition,

various types of test can be performed on trial production batches.

38

Quality of materials

Before materials are approved and introduced into production, they are subjected to

testing, and trial production batches are analyzed to make sure the materials are of good

quality.

A raw material specification has been prepared for all materials, and it is inspected before

the material is brought to production. A new raw material or compound recipe is first

subjected to laboratory testing, after which a trial production batch is produced and

analyzed both under laboratory conditions and during the production process. It is

standard practice to constantly measure the raw materials and components entering the

production process.

The production process is controlled on an on-going basis to ensure the quality level stays

constant. Information is gathered and documented at the various process stages to allow

the monitoring of changes and deviations.

Among the variables regularly measured and inspected are:

settings of machines and equipment

components: profiles, width, length, weight, angles, surface quality and cleanness

rubber components: profiles, thickness, width, length, surface quality, cleanness, etc.

cord materials: rubber thickness, width, cutting angle, evenly placed beads.

In the assembly stage, it needs to be verified at the beginning of every new production

batch that the appropriate materials and components are being used, and the machinery

settings comply with the product specifications. The curing stage needs to ensure that the

markings on the mould are correct and the curing process complies with the requirements

specified in the recipe. On-going monitoring helps ensure that the curing conditions

remain constant during the entire process.

Products are inspected visually, and each product type is subjected to testing. The scope

of testing and the method used shall comply with the product specifications.

Deviations in the quality of the tyres are constantly monitored and faults classified by

type. On-going development attempts to decrease the share of defective products.

Material waste is collected at every stage of the production process, and its monetary

value is assessed so that future development can be focused on the problem areas causing

the biggest financial losses.

39

A defect classification system has been designed to facilitate the inspection of the

finished tyre. On the basis of this system, it is possible to classify tyre defects

systematically by defect type and position where defect occurred.

On every tyre is cured an individual tracing number which makes it possible to find out

the materials and production phases of the tyre afterwards. This code follows the green

tyre since the assembly stage.

Tyres made in India can be broadly classified as crossply and radial. Crossply tyres

account for 90-95% of tyres sold in India. The body of the tyre called the carcass is made

up of layers of rubber coated nylon or rayon fabric called piles. The main difference

between these two tyres is the direction in which ply cords are arranged and the type of

reinforcement medium used. In a crossply tyre, the fabric cords of the tyre criss cross

each other and the major reinforcing materials used are rayon and nylon tyre cords.

Radial tyres have more flexible sidewalls and the reinforcing medium include polyester,

nylon, fiberglass and steel. As such, there is a substantial price difference between

crossply and radial tyres. Radial tyres are 10-15% costlier compared to the crossply ones.

40

Radial tyres can be differentiated on the type of belt used – fiberglass, steel and nylon.

Worldwide, steel belted radials are most popular owing to their superior performance.

Radial tyres provide certain advantages like better vehicle control and road holding,

longer life and lower fuel consumption.

Radialisation in India

Rate of radialisation is actually an index of the status of road development, vehicle

engineering and the economy in general. Radialisation can be aptly classified as the most

important innovation in tyre technology. Despite its several advantages cited above,

radialisation in India did not catch on at a pace that was expected, since its introduction

way back in 1978. This could be attributed due to several factors, viz. Indian roads

generally not being suitable for ideal plying of radial tyres; vehicles produced in India not

having suitable geometry for fitment of radial tyres (and hence the general, and wrong,

perception that radial tyres are not required for Indian vehicle); unwillingness of

consumer to pay higher price for radial tyres etc.

However, the situation has radically changed in recent years, especially for the passenger

car tyre segment where estimated production of cross ply and radial passenger car tyres

has been in the ratio 37:63 in FY01. A few years back a beginning was made in

radialisation of truck and bus and LCV tyres and this process is gaining momentum.

Radialisation is expected to reach 10-13% in this segment in two years.

Retreading

Retreading is a process of bonding a new flap of pre-vulcanized rubber in place of the

worn-out flap. This can be done either by the conventional hot process or the new

precured cold process. While the tread is done after bonding the flap in the hot process,

the cold process involves the bonding of a precured traded rubber flap on the tyre surface.

The precured process improves the fuel efficiency.

According to a study, retreading has eaten 10% of the replacement market tyre sales. The

popularity of retreading stems from the fact that it costs only 20 per cent of a new tyre but

increases its life by 70 per cent to 80 per cent. Most of the transporters in India retread

their tyres twice during its lifetime, while a few fleet owners even retread thrice. In their

zealousness to economise costs, they overlook the reality that retreading reduces the

quality of the tyre. It is highly popular in the South unlike in the North where the

41

transporters overload their trucks and have to ply their vehicles in a rough terrain an

environment in which buying a new tyre is the best option. Though retreading has

penetrated 25 per cent of the tyre market, it has not made much of a dent in the rapidly

growing two-wheeler and passenger car segments.

Raw Materials

The tyre industry is raw material intensive, which accounts for more than 60% of the

production cost. Therefore, prices of raw materials directly affect the profitability of tyre

companies. Since most of these raw materials are petroleum based, their prices fluctuate

with the international prices of petroleum products. The main raw materials for tyre are

rubber (natural or synthetic), carbon black, nylon tyre cord and rubber chemicals. Except

natural rubber, the costs of all other raw materials in tyre production are related to crude

oil prices. Table 1 shows the proportion of each raw material in terms of their value and

weight.

Table 1: Raw materials

Raw materials By Value (%) By Weight (%)

Rubber 52 49

Carbon Black 23 10

Nylon tyre cord 8 24

Chemicals 15 12

Others 2 5

Total 100 100

Natural Rubber

Natural rubber accounts for 52% of the value of the tyre. In India mixture of both natural

as well as synthetic rubber is used for making tyres. However the consumption ratio is

towards higher usage of natural rubber due to Indian climatic conditions, over loading of

vehicles and poor road condition. In India the consumption of natural to synthetic rubber

42

is 80:20 which is in stark contrast to international ratio. The industry uses RSS – 4 grade

rubber.

India’s 90% of the rubber production comes from Kerala. Domestic rubber production

has increased at a compounded growth rate of 9% annually from 1991 to 1997 after

which the production slowed down. However In FY 2001, rubber production soared and

crossed double-digit mark at 10.2%.

Synthetic Rubber

Synthetic rubber is generally of two types – poly-butadiene rubber (PBR) which forms

40% of the synthetic rubber used in tyres. The other variety is Styrene Butadiene Rubber

(SBR) primarily used in passenger car radials to give the grip to the tyres. At present,

IPCL is the only domestic producer of PBR. However it able to meet only 44% of the

tyre industry’s requirement. Thus India is a significant importer of synthetic rubber.

There is an urgent need to increase production capacity of SBR to supplement natural

rubber.

Carbon Black

Carbon black is a key raw material used in the manufacture of automotive tyres. More

than 70 per cent of the demand for carbon black is from the tyres segment. Carbon black

feed stock (CBFS) is the key raw material used to manufacture carbon black. Roughly 2.2

tonnes of CBFS is required to produce one tonne of carbon black. Its main use is as a

reinforcing agent in tyres.

Though there are more than twenty types of CB, the ones used for tyre production are

mainly of three types, N220, N330 and N660. N660 is mainly used in the carcass of the

tyres, N330 is used for the tread and N220 is used for the tread of heavy-duty tyres. On

an average, about 45% of the CB consumed by the tyre industry is of the N660 variety,

28% of N220 and 27% of N330 variety.

Truck tyres consume 20 kgs of CB per tyre, while smaller tyres like Maruti consume 1.5

kgs. Overall approximately 60 – 65% of the CB produced in India is consumed by the

tyre industry. Indian market is dominated by the top three players in the industry --

Philips Carbon Black, Hitech Carbon (unit of Indian Rayon) and Cabot India (a

subsidiary of Cabot Corporation, US).

43

Nylon Tyre Cord

This is mainly a reinforcing material and lends strength and tenacity to the to a tyre. It is

placed below the tyre tread, in contact with the road. Almost 90% of nylon cord

manufactured in India is consumed by the industry. The tyre cord fluctuates in

consonance with the prices of caprolactum its main input.

Rubber industry in post GATT era

With the lifting of physical barriers on imports of all commodities by April 2001, as also

phasing out of various subsidies for exports, the rubber industry is in for a very rough

tide. With the slowdown in economy compounding the problem, the automobile majors

are in for a major shake-out.

Table 2: Consumption Patterns of Major Raw Materials

(All Figures in Tonnes)

Raw Materials Consum

p.

Tyre-

Sector

Non-Tyre

Sector

Import Tyre

Imports*

Non-Tyre

Imports

Natural Rubber 628,000 50% 50% 16,400 85% 15%

SBR 53,800 49% 51% 33,200 77% 23%

PBR 49,200 81% 19% 11,400 85% 15%

Carbon Black 245,000 69% 31% 30,000 66% 34%

Nylon 66,000 95% 5% 25,000 100% Nil

Rubber

Chemicals

24,000 60% 40% 3,000 85% 15%

Steel Tyre Cord 1,800 100% Nil 1,800 100% Nil

Butyl Rubber 37,900 64% 36% 37,900 64% 36%

* Mainly duty free imports against export of tyres

44

Marketing & after sales support

The company provided aggressive marketing and sales support by comprehensive

advertising and promotion campaigns. The company undertook around 700 promotional

activities with the successful accomplishment of recording over 75,000 one-to-one

consumer interactions. The company undertook a new programme - CEAT Tyres Farm

Tyre Adjuster Programme for educating and authorizing OEMs and dealers to handle tyre

claim settlement. CEAT Tyres launched another unique programme, Tyre Maintenance

for Maximum Mileage and Economy. This programme is aimed at benefiting

organizations with a large fleet of transport including buses.

Exports

Having been in the export business for over forty years, CEAT today enjoys 14% of the Indian

market share of global exports, clients in over seventy countries, and a turnover of US $47

million.

Exporting technologically advanced products

From five world-class plants, three in India and one in Sri Lanka, we manufacture a wide range of

tyres for all user segments including trucks, buses, and LCVs. We also export farm, industrial,

grader, OTR, car, scooter, auto-rickshaw, motorcycle and passenger car radials.

Enjoying large market shares

Our individual market shares include 64% in Singapore, 22% in UAE and 22% in Philippines.

We also send our products to USA, Bangladesh, Pakistan, Vietnam, Iran, Nigeria, Egypt and

other African, Middle-East and Far-East Asian countries.

Meeting global standards

With our manufacturing processes being globally approved by DOT (Department of

Transportation) and IN-METRO, our products have direct entry into the US and Latin American

markets.

45

Honoured with Quality certificates

We are the first Indian tyre company to receive an ISO certificate (ISO/TS 16949: 2002, in the

year 2003-2004). Over the last ten years, we have consistently been receiving export awards from

AIRAI and CAPEXIL. A rare honour, indeed.

Operation Management

CEAT enjoys long-standing relationships with leading OEMs in the tyre industry. Working

closely with our partners' Research and Technology departments, we manufacture scientific,

highly-durable, customised tyres for all Indian vehicles including Trucks, Light Commercial

Vehicles (LCVs), Passenger Cars (PCs), Utility Vehicles (UVs), Tractors, Truck Trailers and

Two-wheelers.

By creating new business opportunities, reducing costs, getting to market faster and increasing

customer satisfaction, our OEM partners have empowered us to grow exponentially.

Our OEM partners include:

Category OEM Partner

Truck TATA Motors, Ashok Leyland, Eicher Motors

LCVTATA Motors, Eicher Motors, Swaraj Mazda, Mahindra &

Mahindra

Passenger Car Maruti Udyog, Bajaj Tempo, Piaggio, Mahindra & Mahindra,

Scooters India, Bajaj Auto

Utility Vehicle TATA Motors, Maruti Udyog, Mahindra & Mahindra

Farm Mahindra & Mahindra, Eicher Tractors, HMT, TAFE

HCV JCB, L&T

Two-wheelers Bajaj Auto, TVS, Hero Honda, HMSI

OTR Caterpillar, JCB, TELCON, L&T, BEML

 

46

Demand determinants

Demand for tyres in OEM as well as replacement market is driven by growth of

automobile industry and higher vehicle population. An upsurge in demand for

vehicles will spur growth of tyre manufacturers.

Relative importance of road transport and long distance travel by road leading to

increased need to replace tyres.

Development of export market will also enable higher capacity utilization levels.

Economic scenario and credit availability will determine ability to purchase

automobiles and in turn spur demand for tyres.

Radialisation increases the life of tyres and reduces the need for replacement. This

will inhibit volume growth.

CEAT Tyres was incorporated in 1922 as a private limited company under the name The

CEAT Tyres Tire and Rubber Company (India) Ltd with the object of dealing in tyres

and other products. In 1961, the company was converted into a public limited company

and the name was changed to CEAT Tyres India Ltd. A factory was constructed in 1961

at Ballbgarh, Haryana for manufacturing of tyres and related products and production

commenced in Aug ‘61. Besides, manufacturing a wide range of tyres, the company

trades in some industrial rubber products like conveyor and transmission belts. In 1995,

CEAT Tyres formed a 50:50 joint venture called South Asia Tyres Ltd (SAT) having

initial capacity of 0.6m tyres pa for manufacturing steel belted and all steel radial tyres at

Aurangabad. As per the agreement, both the companies were sharing the production

among themselves equally. The company bought Ceat’s entire stake in SAT in 1997. The

parent company hiked its stake from 51% to 74% in CEAT Tyres.

CEAT Tyres Tyre and Rubber Company

CEAT Tyres is a multinational with a universally recognized brand name. The CEAT

Tyres name is a brand name for quality in the tyre and rubber products business. It

manufactures and markets tyres, several lines of belts, hose and other engineered

rubber products for the transportation industry and various industrial and consumer

markets, as well as rubber-related chemicals for various applications. CEAT Tyres

operates plants in 28 countries. It reported annual sales of $14bn in 2001.

Plant locations

47

CEAT Tyres has a plant at Ballabgarh, Haryana for manufacture of tyres, tubes and

related products. The company manufactures a wide range of tyres, tubes including those

for passenger cars (bias and radials), light commercial vehicles, truck and bus, tractors

and earthmovers. CEAT Tyres also buys tyres from South Asia Tyres (SAT) and sells it

under its own name. SAT's plant is located at Waluj, Aurangabad.

Tyres made in India can be broadly classified as crossply and radial. Crossply tyres

account for 90-95% of tyres sold in India. The body of the tyre called the carcass is made

up of layers of rubber coated nylon or rayon fabric called piles. The main difference

between these two tyres is the direction in which ply cords are arranged and the type of

reinforcement medium used. In a crossply tyre, the fabric cords of the tyre criss cross

each other and the major reinforcing materials used are rayon and nylon tyre cords.

Radial tyres have more flexible sidewalls and the reinforcing medium include polyester,

nylon, fiberglass and steel. As such, there is a substantial price difference between

crossply and radial tyres. Radial tyres are 10-15% costlier compared to the crossply ones.

Radial tyres can be differentiated on the type of belt used – fiberglass, steel and nylon.

Worldwide, steel belted radials are most popular owing to their superior performance.

Radial tyres provide certain advantages like better vehicle control and road holding,

longer life and lower fuel consumption.

Radialisation in India

Rate of radialisation is actually an index of the status of road development, vehicle

engineering and the economy in general. Radialisation can be aptly classified as the most

important innovation in tyre technology. Despite its several advantages cited above,

radialisation in India did not catch on at a pace that was expected, since its introduction

way back in 1978. This could be attributed due to several factors, viz. Indian roads

generally not being suitable for ideal plying of radial tyres; vehicles produced in India not

having suitable geometry for fitment of radial tyres (and hence the general, and wrong,

perception that radial tyres are not required for Indian vehicle); unwillingness of

consumer to pay higher price for radial tyres etc.

However, the situation has radically changed in recent years, especially for the passenger

car tyre segment where estimated production of cross ply and radial passenger car tyres

has been in the ratio 37:63 in FY01. A few years back a beginning was made in

48

radialisation of truck and bus and LCV tyres and this process is gaining momentum.

Radialisation is expected to reach 10-13% in this segment in two years.

Retreading

Retreading is a process of bonding a new flap of pre-vulcanized rubber in place of the

worn-out flap. This can be done either by the conventional hot process or the new

precured cold process. While the tread is done after bonding the flap in the hot process,

the cold process involves the bonding of a precured traded rubber flap on the tyre surface.

The precured process improves the fuel efficiency.

According to a study, retreading has eaten 10% of the replacement market tyre sales. The

popularity of retreading stems from the fact that it costs only 20 per cent of a new tyre but

increases its life by 70 per cent to 80 per cent. Most of the transporters in India retread

their tyres twice during its lifetime, while a few fleet owners even retread thrice. In their

zealousness to economise costs, they overlook the reality that retreading reduces the

quality of the tyre. It is highly popular in the South unlike in the North where the

transporters overload their trucks and have to ply their vehicles in a rough terrain an

environment in which buying a new tyre is the best option. Though retreading has

penetrated 25 per cent of the tyre market, it has not made much of a dent in the rapidly

growing two-wheeler and passenger car segments.

Raw Materials

The tyre industry is raw material intensive, which accounts for more than 60% of the

production cost. Therefore, prices of raw materials directly affect the profitability of tyre

companies. Since most of these raw materials are petroleum based, their prices fluctuate

with the international prices of petroleum products. The main raw materials for tyre are

rubber (natural or synthetic), carbon black, nylon tyre cord and rubber chemicals. Except

natural rubber, the costs of all other raw materials in tyre production are related to crude

oil prices. Table 1 shows the proportion of each raw material in terms of their value and

weight.

Table 1: Raw materials

Raw materials By Value (%) By Weight (%)

Rubber 52 49

49

Carbon Black 23 10

Nylon tyre cord 8 24

Chemicals 15 12

Others 2 5

Total 100 100

Natural Rubber

Natural rubber accounts for 52% of the value of the tyre. In India mixture of both natural

as well as synthetic rubber is used for making tyres. However the consumption ratio is

towards higher usage of natural rubber due to Indian climatic conditions, over loading of

vehicles and poor road condition. In India the consumption of natural to synthetic rubber

is 80:20 which is in stark contrast to international ratio. The industry uses RSS – 4 grade

rubber.

India’s 90% of the rubber production comes from Kerala. Domestic rubber production

has increased at a compounded growth rate of 9% annually from 1991 to 1997 after

which the production slowed down. However In FY 2001, rubber production soared and

crossed double-digit mark at 10.2%.

Synthetic Rubber

Synthetic rubber is generally of two types – poly-butadiene rubber (PBR) which forms

40% of the synthetic rubber used in tyres. The other variety is Styrene Butadiene Rubber

(SBR) primarily used in passenger car radials to give the grip to the tyres. At present,

IPCL is the only domestic producer of PBR. However it able to meet only 44% of the

tyre industry’s requirement. Thus India is a significant importer of synthetic rubber.

There is an urgent need to increase production capacity of SBR to supplement natural

rubber.

Carbon Black

Carbon black is a key raw material used in the manufacture of automotive tyres. More

than 70 per cent of the demand for carbon black is from the tyres segment. Carbon black

50

feed stock (CBFS) is the key raw material used to manufacture carbon black. Roughly 2.2

tonnes of CBFS is required to produce one tonne of carbon black. Its main use is as a

reinforcing agent in tyres.

Though there are more than twenty types of CB, the ones used for tyre production are

mainly of three types, N220, N330 and N660. N660 is mainly used in the carcass of the

tyres, N330 is used for the tread and N220 is used for the tread of heavy-duty tyres. On

an average, about 45% of the CB consumed by the tyre industry is of the N660 variety,

28% of N220 and 27% of N330 variety.

Truck tyres consume 20 kgs of CB per tyre, while smaller tyres like Maruti consume 1.5

kgs. Overall approximately 60 – 65% of the CB produced in India is consumed by the

tyre industry. Indian market is dominated by the top three players in the industry --

Philips Carbon Black, Hitech Carbon (unit of Indian Rayon) and Cabot India (a

subsidiary of Cabot Corporation, US).

Nylon Tyre Cord

This is mainly a reinforcing material and lends strength and tenacity to the to a tyre. It is

placed below the tyre tread, in contact with the road. Almost 90% of nylon cord

manufactured in India is consumed by the industry. The tyre cord fluctuates in

consonance with the prices of caprolactum its main input.

Rubber industry in post GATT era

With the lifting of physical barriers on imports of all commodities by April 2001, as also

phasing out of various subsidies for exports, the rubber industry is in for a very rough

tide. With the slowdown in economy compounding the problem, the automobile majors

are in for a major shake-out.

Table 2: Consumption Patterns of Major Raw Materials

(All Figures in Tonnes)

Raw

Materials

Consump. Tyre-

Sector

Non-Tyre

Sector

Import Tyre

Imports*

Non-Tyre

Imports

Natural Rubber 628,000 50% 50% 16,400 85% 15%

SBR 53,800 49% 51% 33,200 77% 23%

51

PBR 49,200 81% 19% 11,400 85% 15%

Carbon Black 245,000 69% 31% 30,000 66% 34%

Nylon 66,000 95% 5% 25,000 100% Nil

Rubber

Chemicals

24,000 60% 40% 3,000 85% 15%

Steel Tyre Cord 1,800 100% Nil 1,800 100% Nil

Butyl Rubber 37,900 64% 36% 37,900 64% 36%

* Mainly duty free imports against export of tyres

The Anatomy

To the casual observer all tyres look alike. Tyres offer a degree of handling, ride comfort,

traction, treadwear and fuel economy that far exceeds tyres built just a few years ago.

A single tyre today contains more than 200 raw materials. Today's tyres also feature a

complex architecture of steel belts, textile plies and computer designed tread patterns, all

designed to produce optimum performance characteristics for each type of tyre.

The radial positioning of the plies and the layers of steel belts in a radial tyre allow it to

flex and absorb the irregularities of the road surface. Plies that are arranged radially also

52

produce much less friction, resulting in longer tread life and increased fuel economy.

Other advantages include better traction, handling and ride comfort.

How are tyres made?

Typically, tyre manufacturing is divided into departments as follows:

Materials department: incl. purchasing and storage

Primary processing: compound mixing, coating of cords (textile and steel cords)

Component manufacture: tread and sidewall extrusion, calendering of rubber strips,

manufacturing and cutting of cords and manufacturing of other components

Tyre assembly: combining rubber materials from components to green tyres

Curing and inspection: curing of tyres, visual inspection and testing

Warehousing: transport, storage and dispatch of tyres

A new conventional car tyre weighs about 10kg, consisting of 85% rubber, 12% steel and

3% fibre. By weight the rubber component is 51% hydrocarbon, 26% carbon black, 13%

oil, 2% zinc oxide, 1% sulphur and 7% other chemicals. When the tyre is worn out, it still

weighs about 9kg and still has the original amount of steel and fibre.

These remaining materials are resources that can be recovered for further use, such as the

manufacture of other useful products. In addition, the tyres still have a high calorific

value as approximately 23 litres of crude oil equivalent for raw materials are needed to

make one tyre (Maunsell Pty Ltd 1994). An average tyre can produce the same heat as

10kgs of coal or 10 litres of fuel oil (Warmer Bulletin August 1993). However, during the

tyre manufacturing process, all the tyre components are vulcanised into one compound

that requires expensive technology to separate out the components for recycling. But

dumping them in landfill prevents this energy from being recovered.

There are proposals for tyres to be monofilled, i.e. only tyres are buried and stored

underground, in the hope that one day in the future someone will discover a new

technology that can reuse or recycle them economically and in an environmentally

friendly way. Ideally tyres should be retreaded and reused before recycling.

53

METHODOLOGY PROCEDURE OF WORK

Title Justification

Operation Management of “CEAT Limited

Data Sources – “Systemised Method to gain knowledge”. The technique deployed to

analyze and interpret the data for the purpose of hitting the target objective plays a crucial role.

The effective research technique has a significant contribution for effective objective

achievement . Throughout this project, a combination of secondary and primary research was

undertaken to undertaken CEAT Industries.A small customer survey was conducted to know

about their preference regarding the Ceat Tyres Industries.

Being a trainee and fresher in the Industries did pose a number of problems. The limitations and

constrains, which mainly well a hindrance in the performance of the project includes the

following:

Lack of expertise, being a trainee, especially in understanding consumer behaviour.

In case of primary data, sometimes it was difficult to contact or meet the professionals,

due to their busy work schedule.

Sometimes professionals are unable to finish some of the information due to confidently

of the same.

It was difficult to know the exact detail due to time constrain.

It was difficult to find information that exactly fitted the needs of the project at hand in

case of secondary data or information.

Lack of upto date statistics.

Unreliable response from the retailer at times due to lack of time.

Question on sales highly sensitive and sometimes resulted in non-response from the retailers.

Sometimes respondent do not really understand what specific information is required.

In some instances respondents may not have revealed the truth.

The present study is the study on CEAT Ltd, one of the India’ largest tyre production marketing

organization. From the study one can easily infer the present market position of CEAT tyres with

its leading competitors.

54

The study is designed and focused primarily on identifying the present market position of the

CEAT tyres. It also includes identification of its core competitors and enhancing efforts towards

brand repositioning in present and in future.

QUESTIONNAIRE DESIGN / FORMATION

Database serves as a base for concluding any type of research. It is necessary to know which type

of data is relevant for the present research. While the secondary data are normally easy to and

quantify, relatively easy to assign money value, objectively based, a common measure of

organizational performance and very credible, primary data on the other hand are difficult to

measure or quantify directly, difficult to assign money value, subjective, less credible but it

provides the immediate feedback about the authenticity of the responses. Thus in order to avoid

the disadvantages and by looking upon the advantages of both primary and secondary data, both

have been used at their appropriate places as follows:

Primary Source

Primary data is that kind of data which is collected by the investigator himself for the

purpose of the specific study. The data such collected is original in character. It has been

used in form of questionnaire and observation which are the two basic methods of

collecting primary data and which suffices all research objectives.

Secondary Sources

When an investigator uses the data that has been already collected by others is called secondary

data. The secondary data could be collected from Journals, Reports and Various Publications. The

advantages of secondary data can be economical, both in the term of money and time spent. It

includes data already provided by sources like company monthly fact sheet, newspapers, and

websites. These include data which have already gone through stastical processes.

55

ANALYSIS OF DATA

Analysis of retailer’s responses towards Ceat Tyres

1. Since how long you are selling tyres?

a) less than 1 year 2%

b) 1 to 3 years 10%

c) 3 to 5 years 42%

d) more than 5 years 46%

56

2. WHAT ARE THE PREFERENCES OF DEALERS?

40% of Dealers prefer Ceat

30% of dealers prefer J.K

20% of dealers prefer MRF

10% of dealers prefer other brands

PERCENTAGE

40%

30%

20%

10%

CEAT

JK

MRF

OTHER

57

3. Please mark the following companies (from 1 to 4) according to the given features?

Ceat J.K MRF Other

Quality 2 3 2 3

Price 3 2 1 1

Availability 1 1 3 2

QUALITY

RANK

2

32

3 CEAT

JK

MRF

OTHER

58

PRICE

RANK

3

2

1

1

CEAT

JK

MRF

OTHER

AVAILABILITY

RANK

1

1

3

2 CEAT

JK

MRF

OTHER

59

4) Are you happy with the schemes given by Ceat companies?

Absolutely

Happy

Some what

happy

Neither happy of

nor unhappy

Some what

unhappy

Absolutely

unhappy

39% of the dealers say neither happy of nor unhappy.

52% of the dealers say some what happy.

9% of the dealers say absolutely happy.

60

5) Which company has prompt and effective response?

a) 14 % of the dealers responded for Ceat

b) 52% of the dealers responded for J.K

c) 29% of the dealers responded for MRF

d) 5% of the dealers responded for Other

61

6) Which company you think has the best sales promotional scheme?

a) 12% of the dealers responded for ceat

b) 54% of the dealers responded for J.K

c) 31% of the dealers responded for MRF

d) 3% of the dealers responded for Other

62

7.) Location of the store

a) main market 40%

b) residential area 58%

c) commercial 2%

63

ANALYSIS OF CONSUMER’S RESPONSES TOWARDS

CEAT TYRES

1) Do you own vehicle?

a) Yes 90%

b) No10%

64

2) Which vehicle you own?

a) 2-wheeler 55%

b) 3-wheeler 3%

c) 4-wheeler 40%

d) Other 2%

65

3) How satisfied you are with the tyre that you buy?

Absolutely

satisfied

Somewhat

satisfied

Neither happy

or nor un-

dissatisfied

Somewhat

dissatisfied

Entirely

dissatisfied

59 % of the respondent responded for absolutely satisfied.

28% of the respondent responded for some what satisfied.

3% of the respondent responded for neither satisfied of nor unsatisfied.

66

4) Are you satisfied with the retailer’s outlet?

0 1 2 3 4 5 6 7

Not at all

satisfied

Extremely

satisfied

4% of the respondent responded on the scale 3.

20% of the respondent responded on the scale 4.

42% of the respondent responded on the scale 5.

5% of the respondent responded on the scale 6.

19% of the respondent responded on the scale 7.

67

5) Please rank the following tyres according to your perception.

Rank

Ceat 2

J.K 3

MRF 1

Other 4

6) Rank/ tick mark (tyre characteristics)

68

Ceat J.K MRF Other

Quality 2 3 1 4

Economics (low

cost)

3 2 4 1

Availability 1 1 2 3

Special offer 4 4 3 2

CEAT

RANK

2

3

1

4

QUALITY

LOW COST

AVALABILITY

SPECIALOFFER

JK

RANK

3

21

4QUALITY

LOW COST

AVALABILITY

SPECIAL OFFER

69

MRF

RANK

1

4

2

3 QUALITY

LOW COST

AVALABILITY

SPECIAL OFFER

OTHERS

RANK

4

1

3

2QUALITY

LOW COST

AVALABILITY

SPECIAL OFFER

70

FINDINGS INFERENCES AND RECOMMENDATIONS

According to the annual survey of industries, material cost including cost of their transport to

factory came to approx. 60% of the total production cost, which is further going to increase due to

more competition in the market.

Since material account for roughly 2/3 of the total cost of production, small changes in their cost

can result in large sums of money saved or lost. Material management including inventory control

is accordingly fruitful area for cost control and deserves careful attention.

SCM emerged as an effective tool to reduce costs and improve manufacturing

efficiencies for organizations that seemed to have exhausted all means of reducing costs

including increasing manufacturing efficiencies and focusing on logistics management.

SCM improves customer service, inventory management, transportation systems and

distribution networks.

In the traditional way of doing business, the functions of marketing, distribution,

planning, manufacturing, and purchasing organizations operated independently along the

supply chain. The conflicting objectives resulted in a lack of co-ordination that hampered

the overall efficiency of the chain. Often, there is not a single, integrated plan for the

organization. SCM is a strategic tool that helps organizations tie these functions together

into an integrative whole. It can be defined as, ‘a systemic, strategic coordination of

traditional business functions within a particular company and across businesses within

the supply chain, for the purposes of improving the long-term performance of individual

companies and the supply chain as a whole.’

The inventory turnover rate in our country is quite low compared to other developed nations. It

therefore entails considerable costs in the form of interest on capital, storage charges and losses

on account of obsolescence. The average manufacturing company makes a profit of about 10% on

its production cost. Since material cost amount approx. 70 % of the total production cost, slight

reduction in it would exert enormous leverage on profit. If material costs are reduced by 3%,

which is by no means difficult, the profit margin increases from 10 to 12 % and total profit go up

by 21%. Any such saving in material cost is thus, the equivalent of raising sales by more than

20%. That being so every effort in the direction of reducing material cost, including cost of

carrying inventories, is well worthwhile.

Seeing the progress of this organization one can say that the procedures and inventory control

system used for material management may be satisfactory. However, material manager cannot sit

71

idle in spite of satisfactory results since there is tremendous scope for improvement in such a

complex function. An idle system for an organization may not apply to another due to different

operating environment, product, place etc.

On the basis of research and analysis of the study conducted in Delhi on CEAT tyres, I would like

recommend the following suggestion to the company.

Customers are looking forward for special delivery schemes

We should improve on our replacement policy.

Dealers have rated ceat tyres to be in the 3rd place among competitors in the sales

promotional schemes. We should improve our promotional schemes so that he get a

better inhand on our dealers.

Our company should have a strong after sales services so that the perception of

dealers and customers increases.

The market share of ceat tyres can be further increase by launching attractive gift

schemes both for the consumers as well as for the retailers.

For increasing the market share of ceat tyres new markets should be identified and

attention should be paid to the small retailers

They should provide easy replacement facility to the retailers so that they could be

attracted towards selling the ceat tyres .

The company should start promotional campaigns at the micro level by increasing the

visit of the company’s representatives to the retailers.

The company should start media campaigns on mass entertainment channels like Star

Plus, Zee TV and various other news channels.

72

CONCLUSION

FROM THE ANALYSIS, THE FOLLOWING CONCLUSION CAN BE ARRIVED AT:

CEAT enjoys the trust of the retailers as well as the consumer because of

its quality and huge brand image.

Some distributors does not give proper information to the retailers about

the product and offers given by the company for the promotion of the the

tyres which leads bad image of the company.

The supply of CEAT tyres is not proper in some specific areas, which

gives wrong messages about company.

The competitors are providing easy replacement facility to the retailers

which are attracting them towards those companies.

Some of the competitors are providing wider margins to the retailers.

Wider margin is making the retailers to push the sales of the competitors

In the light of the increasing pressure from competitors and industry slowdown, CEAT

tyres had no option but to improve its operational efficiencies. CEAT tyres benefited in

many ways from the revamped SCM practices. Transit time was reduced to 7 days and

goods were handled only 5 times. As against a first quarter working capital of Rs 500

million for 2009, the figure was only Rs 200 million in 2010. Significantly, supply chain

costs were reduced by 26% in 2010. A majority of these savings were due to the savings

in transportation and warehousing. CEAT tyres could reduce warehousing costs

because of the direct dispatch model, in which there were no grouping centers.

By reducing supply chain costs, inventory costs and by negotiating favorable credit

terms, CEAT tyres was able to reduce its working capital requirements, improve cash

flows and reduce the interest burden. This system also improved the availability of goods

to the market, which reduced the lead-time from order booking by the trade partner to

the delivery of goods.

Keeping pace with the modern times, the company has fully automated its inventory

control system using state of the art computer system and data base management

software packages. Certain areas of recommendations are as under:

73

1. In order to prevent stock outs, certain minimum reorder levels should be fixed for

all items.

2. The ABC classification of inventory should be reviewed periodically to keep pace

with the frequent changing electronic market.

3. The selective control should be exercised in procurement of stores according to

the ABC classification of stores with the view to reduce the inventory of class A

while increasing of class C items. This will reduce inventory carrying and ordering

cost.

4. Investigation and analysis of existing inventory control system has lead to the

conclusion that material requirement planning system be introduced in the firm

for improved control of inventories.

Following specific recommendations regarding various system parameters are being

made at the culmination of the studies:

1. Planning horizon of 3 months will be most appropriate for the firm. Tentative

portion of planning horizon will be in addition to it, which can be for another 9

months.

2. A bucket size of one week is most practicable.

3. Weekly cycle of re-planning will be more suitable.

74

SUMMARY OF THE PROJECT REPORT

Indian Tyre Industry

Domestic tyre industry has witnessed a remarkable recovery in FY10, after a slowdown in FY09.Conservative estimates of tyre manufactures on automobile demand scenario for FY10, led to supply constraints in the industry and in-turn pushing imports.Going by the global trend it seems that the radial tyre demand in India is at inflection point and with almost 97 – 98 per cent of the passenger car tyre production has been radialised, T&B tyre category is the next major category to witness spurt in the demand for radial tyres.Despite offering higher mileage, lower fuel consumption and improved safety, radial

tyres have not yet caught on primarily because of poor road conditions and high initial

cost which is approximately 25% higher than bias tyres. Moreover, the two important raw

materials required for producing radial tyres (Steel Tyre Cord and Polyester Tyre Cord)

are not manufactured domestically. Moving towards radialization will be vital if tyre

producers want to protect their share in international markets. As of 2008, radialization as

a percent of total production in passenger car tyres, LCV and heavy vehicles was 95%,

12% and 3% respectively.

Off the Road Tyres: Last year saw the top manufacturers, including CEAT and JK Tyres increasing their capacity of OTR (Off the Road) tyre production. OTR tyres are customized tyres and provide relatively higher margin.CEAT Tyres of India Ltd

On the road since 1958, CEAT has run up to be one of the best tyre manufacturers in the business. We not only make trailblazing tyres, but also market tubes and flaps.

In 1958, CEAT came to India, and CEAT Tyres of India Ltd was established

in collaboration with the TATA Group.

In 1982, the RPG Group took over CEAT Tyres of India, and in 1990,

renamed the company CEAT Ltd.

CEAT Ltd., one of the oldest among RPG companies, is one of India’s leading tyre manufacturers, with an annual turnover of about Rs.2000 Crores (US $ 420 Million). It manufactures and markets “CEAT” branded automotive tyres, tubes and flaps and has a strong presence domestically and in nearly 100 countries worldwide, thanks to a very strong brand equity.

75

ANNEXURE

i. Proposal

Title of the Project

Operation Management of “CEAT Limited

Objectives

Is to analyze the present status of CEAT Industries in India.

To project the future scenario in times of growth prospect of CEAT Industries

in India.

To create awareness of CEAT Tyres and to create business for the same.

To conduct a comparative analysis of CEAT Tyres vis-à-vis to its competitors.

Find the market share of CEAT Tyres

To make an analysis of the shortcomings of CEAT tyres compared to its

competitors.

Finally to conclude the findings and suggest the necessary corrective measures

and recommendations for improving the market position of CEAT Tyres

Need for the Topic

Being a trainee and fresher in the Industries did pose a number of problems. The

limitations and constrains, which mainly well a hindrance in the performance of

the project includes the following:

Lack of expertise, being a trainee, especially in understanding consumer

behaviour.

In case of primary data, sometimes it was difficult to contact or meet the

professionals, due to their busy work schedule.

Sometimes professionals are unable to finish some of the information due to

confidently of the same.

It was difficult to know the exact detail due to time constrain.

It was difficult to find information that exactly fitted the needs of the project at

hand in case of secondary data or information.

Lack of upto date statistics.

Unreliable response from the retailer at times due to lack of time.

76

Question on sales highly sensitive and sometimes resulted in non-response from

the retailers.

Sometimes respondent do not really understand what specific information is

required.

In some instances respondents may not have revealed the truth.

Methodology and Procedure of Work

DATA SOURCES: Primary sources will be used for gathering information.

PRIMARY DATA: Consists of original information gathered for the specific purpose at hand

through various instruments like structured interviews and questionnaires. It is the data collected

first hand relating to specific queries and problems. The primary data will be collected using

questionnaires and face-to-face interviews using structured questionnaire.

INTERVIEWS: Are the basic tools used during the process.

COLLECTION OF INFORMATION: The respondents will be chosen randomly.

SECONDARY DATA: Secondary data will be collected from previous researches and

literature to fill in the respective project. The secondary data will be collected through:

Text Books

Articles

Journals

Websites

Statistical Techniques to be used (if any)

This study will go in along way in helping the company in choosing the right strategy and

taking the right decision.

This study is restricted to parts of Delhi & NCR which may not seem to present the

general picture of the product.

All the retailers and farmers were not covered because of the constraints of time.

The sample frame or size for evaluating may not completely reflect the market.

The respondents may due to one or other reason, conceal the true facts, thus giving

erroneous figures.

77

Some respondents replied half-heartedly.

Chapterisation

S.No. Topic

1) Introduction

2) Objectives and Scope

3) Company Profile

4) Limitations

5) Theoretical Perspective

6) Methodology Procedure of Work

7) Analysis of Data

8) Findings Inferences and Recommendations

9) Conclusion

10) Summary of the Project Report

11) Annexure

i. Proposal

ii. References

iii. Questionnaire

78

ii. References

Ong Eng Long: Rubber Industry Development and Domestic Use of Natural Rubber in

Malaysia. Steichen, Richard J.: Impact of Future Tire Trends on Natural Rubber.

Sivakumaran, S., Yew Foong Kheong, Johari Hasan and Wan Abdul Rahaman:

Carbon Sequestration in Rubber: Implications and Economic Models to Fund Continued

Cultivation.

Nurhawaty Siagian, Irwan Suhendry and Karyudi: Technical and Financial Assessment

of Planting Systems Producing Latex-Timber.

1995A Synthetic rubber prices Dr Prachaya Jumpasut

1996A Economic aspects of marketing rubber in a changing world Dr Prachaya Jumpasut

1996BThe elastomer industry – its current state and outlook Dr Prachaya Jumpasut

1996C Prospects for the world rubber trade Mr M E Cain

1996D World rubber consumption trends and patterns Dr Prachaya Jumpasut

1997A Sufficiency or shortage in tomorrows markets? Mr M E Cain

1997B World future trend of natural and synthetic rubber supply and demand Dr

Prachaya Jumpasut

1997C Future sustainability of natural rubber supplies Mr M E Cain

1997D The importance of West Africa and South America for the future sustainability of

natural rubber supplies Mr M E Cain

Mentzer T. John, Supply Chain Management, Response Books, 2001.

Philips net loss at Rs 21.15 crore, The Tribune, February 13, 2002.

Mehta Mona, Philips’ Supply Chain Initiatives: Towards A Sound Strategy, Financial

Express, April 6, 2002.

Surendar T. The Exit Option, Businessworld, May 20, 2002.

Ramchandran K, The Power of an Efficient Supply Chain, www.ima-india.com

SCOR Can Help Analyze Your Supply-Chain Operation, www.isr.umd.edu

www.indiainfoline.com

www.philips.co.in

79

APPENDICES

QUESTIONNAIRE

QUESTIONNAIRE FOR DEALERS

Name of the stores______________ Shop size _______________

Location of the store

a) main market

b) residential area

c) commercial

1) Since how long you are selling tyres ?

a) less than 1 year

b) 1 to 3 years

c) 3 to 5 years

d) more than 5 years

2. WHAT ARE THE PREFERENCES OF DEALERS?

Which all brand do you have?

i) Ceat

ii) JK

iii) MRF

iv) Other

3) Please make the following companies (from 1 to 4) according to the given features?

Ceat J.K MRF other

Quality

80

Price

Availability

4) Which brand has effective response?

a) Ceat b) J.K c) MRF d)Other

5) Which company you think has the best sales promotional scheme?

a) Ceat b) J.K c) MRF d) Other

6) Are you happy with the schemes given by Ceat companies?

Absolutely

Happy

Some what

happy

Neither happy of

nor unhappy

Some what

unhappy

Absolutely

unhappy

7) From which brand you are getting more profit?

a) Ceat b) J.K c) MRF d) Other

81

QUESTIONNAIRE FOR CONSUMERS

Personal details

Name: _______________ Age:_________________

Gender : male/female Occupation: ___________

Income :

a) less than rs 3000/- P.M

b) Rs 3000/- to Rs 6000/- P.M

c) Rs 6000/- to Rs 10000/- P.M

d) Above Rs. 10000/-

1. Do you have vehicle?

a) Yes b) No

1. Which vehicle you own?

a) 2-wheeler b) 3-wheeler c) 4-eheeler d) other

2. How satisfied you are with the tyre that you buy?

Absolutely

satisfied

Somewhat

satisfied

Neither happy

or nor un-

dissatisfied

Somewhat

dissatisfied

Entirely

dissatisfied

3. Are you satisfied with the retailers outlet?

0 1 2 3 4 5 6 7

Notat all

satisfied

Extremely

satisfied

82

4. Rank/ tick mark (tyre characteristics)

Ceat J.K MRF Other

Quality

Economics

(low cost)

Availability

Special offer

5. Please rank the following attributes of tyres (1- most important and 4- least

important)

A) Quality b) low cost c) packing (looks) 4) availability

6. Please rank the following tyre according to your perception.

a) Ceat b) J.K c) MRF d) Other

7. How attractive do you think is the consumers scheme?

________________________________________________________________

83