Report India Report

CEAT’s Anant Goenka ‘earns’ his right to grow

Report: Avishek Banerjee, Photography: Mohd. Nasir

t’s an era of young and dynamic guns in the supply chain at KEC has substantially developed Indian automotive and its allied industries. my interest in factories or plants which ultimately Whether it is Raman Mittal (Sonalika), sharpens my focus towards operational efficiencies, Dheeraj Hinduja (Hinduja Group), Deepak putting in best practices like autonomous Jain (Lumax), Nikhil Nanda (Escorts), Prasan maintenance, quality management, etc in plants Firodia (Force Motors) or Neeraj Kanwar which I try to incorporate in CEAT now.” (Apollo), the list of youngsters in the industry Anant Goenka, who is an MBA from the Kellogg Iis endless and they all are set to unleash their School of Management and a B.Sc. in Economics potential and make a mark in their respective firms from The Wharton School, has also worked with and contribute with their futuristic ideas to the Hindustan Unilever, Accenture, and Morgan industry per se. Incidentally, most of them are third- Stanley, Hong Kong. There’s an unusual modesty generation entrepreneurs who have pursued their that accompanies him. masters degree from abroad and incorporated those Apart from zeroing in on the usual strategies to learnings in their family business. improve operational performance, he has been Some have also gone on to the extent of adding a actively working towards improving the channels of lot of value to the business due to the skills that they communications with employees. Looking up to his have acquired working with other group firms and late grandfather R.P. Goenka as his role model, he international companies. One such example is the describes his leadership style as being participative. corporate honcho Anant Goenka, who was elevated Since he took over the reins at CEAT on April 1, to the post of Managing Director of CEAT Tyres last 2012, a Young Executive Board has been put in place year to take on responsibilities and expansion plans at Ceat that advises the management on a variety of the 5,000+ crore firm. Incidentally, he is also of subject which are both strategic and operational. the Chairman of Automotive Tyre Manufacturers Prior to his MBA, he was also associated with CEAT Association (ATMA). In an exclusive interview with Limited as Head of the Specialty Tyre Business. Motown India magazine, the media-shy Goenka was Goenka shared, “I would say my leadership style quite upfront about where his company stands at is more of participative because of my age. People this juncture and what headwinds the domestic tyre who work with me have a lot of experience and industry is facing in the near term. domain knowledge. Getting their views first is Commenting on his previous stints at KEC very important before coming to any decision. I International and how it helped him in enhancing work towards building a consensus or taking their his management skills, Goenka said, “Initially when views and coming to decisions on that. As far as I started off, I was doing a large part of each activity formal and informal channels of communications myself. I had to learn to delegate as I grew into are concerned, I believe these communications larger functions. That was certainly one aspect of are extremely important. I believe the way the me. As I grew, I learnt the art of empowering and environment is changing; everyone needs to delegating. Secondly, I feel that my experience in understand the context in which they operate. And

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what kind of impact they are having perspective of the its products in Latin America and “We are not adding any further durable, customised tyres for most on the company, how things are whole picture of Europe both of which were restricted expansion at this point of time. Indian vehicles including trucks, progressing, and so on and so forth.” what is going on earlier. We have just set up a new plant at light commercial vehicles (LCVs), Goenka climbed up the corporate in the company. At However, the young Goenka was Halol (in Gujarat) and it churns out passenger cars (PCs), utility vehicles ladder starting with a stint at the end of it, we pretty categorical in saying that 150 tonnes per day where we are (UVs), tractors, truck trailers and Hindustan Unilever where he worked have a typical open his primary aim is to make CEAT currently at about 80pc utilisation two-wheelers,” shared Goenka. as an area sales manager on the house or a Q&A amongst the most profitable tyre (at 120tonnes per day). Our goal is At CEAT, Anant has been working outskirts of Mumbai. After various kind of a session companies in India in the next to make it a 100pc utilsed plant. And on changing the product mix with stints at business and engineering where people can 5-6 years by strengthening the then perhaps we may look at further greater emphasis on passenger car schools in the US, he was appointed put in any queries, brand and improving operational expansion in the radial category, radials to improve the margins of deputy managing director at the share ideas and efficiencies. He was quite clear which could be in Halol itself. But no India’s fourth largest tyre company. family-owned business. His style, thoughts. That is that it’s practically impossible decision is being taken now. Halol He also looks to create overseas he says, is collaborative because one example. The to figure among the top 10 tyre does both CV (80 tonnes per day) markets for the company. When he feels he is still young. “I’ve got second thing that makers in the world globally in and passenger vehicle (70 tonnes asked about the inorganic growth, to learn from people who’ve put so we have is with the foreseeable future. “Being a per day) tyres. So certainly there he stated, “We are not looking at much into the business,” he said respect to what we leading global player is will be no expansion at Mumbai and acquisitions at this point of time. When asked to speak about the call again as ‘Indi certainly something we channels of communication, “A connect’, which would be happy to look few types of formal and informal is really a system at. But from a realistic communication that we have for where I have a perspective, the top 10 example is one is in the form of series of lunches companies need to have what we call is connect with the ‘Top with the top talent a certain turnover of say Management’. We have branded it of the company. US$ 6 billion. Only if you as ‘Connect’ and is really is to do I cover about top make money, you can with top management addressing 100 people of the invest that further money the rest of the team or myself company through for further expansion and addressing the entire team in various the year and it can growth. I would like CEAT locations about what is going on be in small groups to be at the leading edge in the company and what could be or on a one-on-one basis. And I get get a flavour of what is happening. of tyre technology by done better. In a way, putting into a flavour of the people and they So I give them an update of what is focusing on research and happening. I also get a lot of insights development of radial of what is happening or what people tyres and development perceive about the market, internal of alternate materials. environment and also about the Making money is really the first goal. Nasik because they are all in the Organically too, the company is not company, how things are going on, Earn the right to grow, which is very buyers’ category tyres.” Incidentally, looking at any heavy investments in and whether they have any ideas important to me. If you have not Halol plant is the Group’s only radial the (domestic market). However, the and suggestions.” earned the right to grow, you don’t tyre plant in the country. company is looking at enhancing its deserve to grow further. We can’t The Mumbai-headquartered is presence in some specific segments Earning the right to say that we want to grow first and catering to a number of marquee of the automobile industry. We are grow become a particular size and then domestic and multinational clients looking at a few key sectors that we we will see how to make money. So like Mahindra & Mahindra, Tata have identified and are important Under Anant, the company now aims first make your money on whatever Motors, Ashok Leyland, Piaggio, for us. We are looking at expanding to optimise capacity utilisation of its size you have and then invest further Force Motors, Eicher Motors, AMW, in categories like motorcycle newest plant at Halol near for growth.” SML Isuzu, Maruti, Suzuki, Hindustan sector, passenger vehicle segment,” (Gujarat) as well as expand reach As far as its expansion plans are Motors, JCB, John Deere, etc. “We mentioned Goeka. After supplying in Asian markets aided by a new concerned, he stated that CEAT is believe in competing with ourselves. its products to Hero MotoCorp and facility in . CEAT has also looking at growth outside India as Working closely with research and HMSI, the company has cracked a bought the global rights to the CEAT the capex for the domestic market technology department of our OEM deal with quite a few players in the brand which will allow it to market has already been spent at Halol. partners, we manufacture highly- two-wheeler space like Royal Enfield,

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Yamaha Motor India and is now looking at Bangladesh as about a year and a half or two years more value-addition, better mileage, Bajaj Auto. the next set of expansion. The from now. So that is going to be our better loading, etc and tying up with It is to be mentioned flagship tyre manufacturing firm of next area of growth internationally. an OEM at an early stage where you that CEAT manufactures the RPG Group has signed a joint We are also looking at countries help them in creating a new product. a wide range of tyres for venture agreement with AK Khan in the subcontinent like South East With better products, you can various customer radials for & Co of Bangladesh to establish Asia through the export route from command a premium pricing in the Indian vehicles and caters a tyre manufacturing plant in the this plant,” he said. As per the JV aftermarket,” he shared. to various user segments aforementioned neighbouring agreement, the Indian tyre major including heavy-duty trucks country. CEAT and its Bangladeshi will hold a 70pc shareholding Growth Projections and buses, light commercial partner will jointly invest US$ 67 while its Bangladeshi partner will vehicles, earthmovers, million ( 355 crore) to set up the hold the rest of the shares. The Being cautiously optimistic, he was forklifts, tractors, trailers, new factory, which is likely to go on company hopes to achieve a 40pc cagey in sharing revenue projections cars, SUVs, MUVs, stream by the end of 2014. To be market share by 2016 after the plant and volume growth do you expect motorcycles and scooters, built in a phased manner, the factory becomes operational by the second in 2013-14. “Looking at the current auto-rickshaws. “We have industry scenario where the OEMs to move along with or are slowing down, I would say if we perhaps faster than the can get a revenue growth of 10pc industry. The commercial and a slightly higher profitable vehicle industry is around growth would be good for us. It 20pc radialised and we are is difficult for me to give numbers about 15pc radialised. For because it is dependent on too many us to be 100pc radialised factors,” he said. doesn’t make any sense. As However, he signed off by spelling far as passenger cars are out a modest vision for the company concerned, the industry and the challenges faced by ATMA. is 100pc radialised and “As I shared, we would be looking we are 90+pc radialised at expanding in countries outside of at this point of time. India. We are looking at leadership Motorcycles worldwide in a few categories we have are 1pc radialsed. So we will have a capacity of 110 metric half of 2014-15. identified. Those are the two areas can’t me more than that. tonnes a day. Even though the overall that we want to focus on. For the We will radialise at pace “This strategic partnership will automotive market has hit a speed ATMA, the biggest challenge is that with the industry”, noted enable us to establish a leadership breaker, Anant was happy that of the whole economy at this point Goenka. Going forward, presence in the large tyre market of BSE-listed firm’s profitability has of time. The economy has slowed the company is looking the Bangladesh. While we will provide got better over the past quarters. “I down substantially over the past tap the OE market for bikes technical and business expertise think this profitability will continue few months. Most of the automobile as well as the replacement and manage the JV company over a short period of time because companies are witnessing a de- market for both bikes and operations, our partner will bring of the benefits that we are getting growth. Most categories, except UVs which are expected in their knowledge of its market. like reduced raw material prices. SUVs, are witnessing a downward to grow faster than other The manufacturing plant at its full Rubber prices have come down from trajectory. And that is having an sectors. capacity will be able to cater to 240/kg three years ago to 160/kg impact on our OEMs’ sales. Over majority of the tyre requirement now. It is not a challenge anymore. the couple of years, it will have International of Bangladesh. The facility will Certainly the situation has got better an impact on the replacement markets manufacture bias tyres in truck, over the past few months and will sales. Although this will stay on for light commercial vehicle, and two- be finer in the next few months. A six months to a year, I am pretty After having successful wheeler and three-wheeler segments few areas we can look at improving confident that things will certainly operations in for the local market. We have is by increasing the percentage of get better. Our basic consumption is where it has a 40pc already acquired the land and the radials in our lineup or by radialising very strong and we will get out of it,” marketshare, the company new plant should also be in place in the market, by offering the customer he said.

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