How long has CEAT been in the business of specialty tyres?
CEAT has been in specialty tyres for a long time. CSTL was born about a year back, with the idea of having more operational focus on this business.

What would be the key milestones in specialty tyres business?
Historically speaking, specialty definition for us is OTR tyres for both India and international markets, while for agriculture, it is only international. Indian agriculture is not treated as part of specialty business, for various reasons. We came out with our first specialty tyre in early 1980s starting with the port segment. Over a period, CEAT has developed a very large product portfolio and we can meet any buyer/radial requirement. For us, the bigger focus now is to see how we can grow internationally. In the domestic segment, we have strong market share but the international market is 50-70 times larger than the Indian market. We already export to over 60 countries across the globe but our focus is now cracking that milestone.

What percentage of OTR tyres are being exported by CSTL?
Currently our break-up of sales between domestic and exports is 50:50.

What would be your strategy to grow internationally?
Internationally it is a niche market but is a part of $150 billion market size. By itself, it is a clean $15 billion market. The complexity is incredible. So the first strategy that we have is to focus on specific segments and geographies to attack. We are not going for a shotgun approach, in fact it will be more like rifle shots. Lot of focus will be on Europe, the US and the more developed markets, where the demand is high.

What is your take on the scenario that international truck, construction and mining equipment markets declining sharply and your focus to grow internationally?
I would say that when we are doing something as strategic, putting money, efforts and creating a separate entity, the business has long term goals. The last couple of years have not been great for any of these segments, including international agriculture, but I think that the long term potential of these segments is very high. CEAT has been in this business for 58 years and we truly believe in its potential. Fundamental drivers of growth exist. Therefore, if the couple of years have been hard, so be it. We have to learn to live within those cycles.

What are the fundamental growth drivers in these regions?
In agriculture, if I look at the bottom line, the area under farming has either remained constant or shrunk across the globe. Population is growing. Hence, the requirement of greater productivity from the existing land resulting in greater mechanisation is very clear. To me these will be very significant drivers of growth. If I look at OTR segment space, it is more like the horrible commodity cycle that has happened. People have realised that they have to be more efficient in their operations. Efficiency demands continuous investments in technology and mechanisation, most of it will be evident. So for me, they will be major growth drivers.

What do you see at play in the new emerging markets like rural, far flung sub-Himalayan and North-Eastern regions in India, supported by government funds?
Most of it will be in the road segment. So the products that we have will be required for the wheeled machines involved in these projects. Our role is to play with our OEM and aftermarket partners to ensure that we grow in these regions. The other thing is that we are coming out with products for specific requirement; for example, we expect road construction to grow, we will keep building on our related portfolio. I wish to explain that for ports and mining, we found there was a specific requirement of tyres with high NSD. As the tyre tread depth becomes bigger, there is higher heat generation in the tyre, but then it delivers higher tyre life. So we develop such versions in the SKUs that we offer because they reduce the cost per hour of use, but there are strong controls to ensure that the sales team does not sell them to the wrong customer. Like we found that 12 x 24 rear tyres for mining trucks need high NSD, so we have developed such tyres specifically for this application. Similarly for ports under specific operating condition, tyres with NSD are best suited so we developed the same. Another example would be the radial tyres which we have developed for agriculture.

What is your take on the use of green materials in tyres?
We have looked at green at two levels. One is obviously green as a company, our manufacturing systems and processes. For materials, we have started making a lot of changes; for example some of the best green materials for tyres come out of petroleum products. Europe is very advanced in compliance to these processes to ensure they are as green as possible. However, by extension being reach compliant has a cost and in Europe they accept these costs. So when we are making a product for Europe, as a rule we use green materials and make sure that we incorporate these changes in all the related SKUs. The current procurement cost for these green materials is high and is not in our hands. The day we can get such materials at similar costs in India, we will be able to flow it back into the country.

What is your take on dumping of popular sizes of tyres which are best sellers by countries like China, Thailand etc?
Firstly, I think that the Chinese do manage to deliver tyres at the lowest prices. I am not going to delve into how they do it. At CSTL, over the time, we have migrated from a purely product business to a service business. We leverage our sales and on-ground support with infrastructure teams, and we support our target customers in a much better way than our Chinese counterparts. Our customer offering is not tyres but in some sense it is certain hours of usage in their vehicles at a certain cost. One of the ways in which we fought competition was by giving service support to our key customers. We manage all their activities related to tyre maintenance, provide training, work with their managers and guide them on safety. Ideally there should be some protection against dumping, but the decision has to be taken at industry or government level. We at our level are working to deliver what the customer needs and I think it works because most customers realise that you can be opportunistic but there is a cost of downtime and it is better to develop a strong relationship and that is the best we can do.

Have you identified any new products and tyre sizes for the domestic and international markets?
Internationally, the market for agriculture tyres is massive. So for our new plant at Ambernath, we have nearly a hundred SKUs lined up for production in the coming months. Those will be focused on international radial requirements. The first tyre from Ambernath facility would be out in December 2016. Domestically, we are filling the gaps in our radial portfolio. Secondly, in our buyer?s portfolio, we will continue to make niches instead of offering our standard tyres. These would be the three elements of our new products? plan.

Having taken over the leadership of CSTL, what is the DNA you would like to inculcate?
One rarely gets a plain canvass to work on and I have been lucky to get it. I think that there are several elements I would like to work on. First, everyone has to spend time in the field. Second, outcome of a session. No one should say this is not my job, instead they should realise this is what needs to be done and I am obsessed about achieving that. And third, this is built on bedrock of an organisation where everyone mutually respects and supports each other. This is what I keep thinking about and whether I am pushing it enough or not.