India's CEAT to make tyres in Bangladesh by 2014

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India's CEAT to make tyres in Bangladesh by 2014


India's CEAT to make tyres in Bangladesh by 2014
Mumbai-based company signs deal with AK Khan & Co; $67m set aside for the project
Suman Saha
India's tyre giant CEAT and its local partner AK Khan & Company plan to set up a manufacturing plant in Bangladesh with an initial investment of $67 million, to cash in on the automotive boom.
The Mumbai-based company formed a joint venture with Bangladesh-based AK Khan & Co in India on Friday.
CEAT will hold a 70 percent stake in the subsidiary to be named CEAT AK Khan Bangladesh Ltd, while the remaining by AK Khan & Co.
The plant, expected to be functional by 2014, will have a production capacity of 110 tonnes a day, Salahuddin Kasem Khan, managing director of AK Khan & Co, said yesterday.
The plant to be sited outside Dhaka will make tyres for trucks, light commercial vehicles (LCVs) and motorcycles for the Bangladeshi market.
CEAT will provide technical and business expertise and manage the operation, while AK Khan will bring in knowledge of the Bangladeshi market besides providing the strength of goodwill and local presence.
Khan said the joint venture has prompted one of the largest Indian investments in the country's manufacturing sector, while creating jobs for around 1,000 people.
"The plant will earn valuable foreign exchange for the country by exporting around 20 percent of its output to the North eastern part of India and rest of the world."
Moreover, the plant will save foreign currency as its products would be import substitutes, added the AK Khan MD.
The joint venture company comes at a time when demand for tyres is rising fast in the country.
Around 10,000-12,000 buses and trucks are entering the roads a year, according to an industry insider.
Demand for motorcycle tyres is booming as well, with 25,000-30,000 pieces being sold a month.
Bangladesh spends over Tk 1,500 crore annually to import around 15 lakh tyres of all sizes, as per importers, distributors and sellers.
Of the amount, more than a third is spent on LCV tyre imports.
Around 70 percent of the imported tyres come from India, followed by China, Indonesia, Japan and Thailand, industry insiders said.
CEAT, which supplies to Tata Motors and Bajaj Auto, will fit those brands' vehicles to be sold in Bangladesh with the tyres manufactured in the plant, Khan said.