Ceat JV in Bangladesh moving forward

ERJ staff report (TB)

Tire Business Staff Report

Mumbai, India — A Ceat Ltd joint venture in Bangladesh has secured 27.5 acres (111 288 sq.m.) of land in that country for a tire plant the Indian tire maker is planning to build in partnership with a diversified Bangladeshi industrial and trading firm.

Ceat and joint venture partner AK Kahn & Co. Ltd plan to invest $67 million (€51 million) to build the plant for bias-ply light and medium truck and two-wheeler tires. The plant is rated at 65 tonnes per day at start-up, set for late 2014, and 110 tonnes per day in Phase II, the partners said.

Ceat Managing Director Anant Goenka disclosed the land purchase in a recent conference call with financial analysts. Ceat didn't disclose the site's exact location, however.

The company will own 70 percent of the venture, Ceat Bangladesh Ltd. The partners already have established a sales company to handle the Ceat brand in Bangladesh. They expect to achieve annual sales of $110 million with a few years with an operating profit margin of 18 percent.

Ceat is contributing its technical and business expertise and will manage the venture's operations while AK Khan will bring its knowledge of the Bangladesh marketplace. Founded in 1945, AK Khan engages in a range of business venture with multinational companies in industries such as textiles, telecommunications, water, fishing, etc.

The venture partners said they expect to achieve a 40-percent market share in Bangladesh.

Separately, AK Kahn Managing Director Salahuddin Kasem Khan said the venture "will earn valuable foreign exchange for the country by exporting approximately 20 percent of its output to the region and rest of the world."

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Article from Tire Business