Ceat Eyes $2 Billion Revenue In The Near Term: Anant Goenka

In an interview, Goenka, managing director and chief executive of the tyremaker for over a decade, traced his growth through the group, prospects for the company and the group’s changing management style. Edited excerpts:

How has been your personal journey since joining the group?

It’s been 20 years since I’ve been in the group. To me, the first 10 years were one of skill-building where I started as a territory leader, sales, at Ceat and moved on to grow in different roles, from leading a small SBU (strategic business unit) to heading the supply chain at KEC International. In each of these roles, I felt like I was thrown into the deep end of the ocean, where I had to quickly learn functional skills as well as softer aspects of leadership and people management. I inherently feared public speaking, which I had to overcome as I took on the CEO role of Ceat.

Managing various stakeholders such as investors, the board, media and customers have been another enriching experience. I have always had a personal attachment to Ceat as, from a young age, it was the easier company to relate to being a product and marketing-based company.

EPC (engineering-procurement-construction) and tech are not as intuitive to understand, and therefore when someone asked, “What does your family do?", “We are in the tyre business", would be my answer. The last 10 years at Ceat have been vital again as I understood the importance of purpose and values in an organization. This belief system came through our total quality management (TQM) journey, for which we were recognized with the Deming Prize in 2017.

What is your vision for Ceat?

Overall, I’m very optimistic about the sector, whether it is the tyre or the auto sector industry. Be it inflationary pressure, changes in safety and loading norms, GST and demonetization, various events have kept the last four or five years subdued from an auto demand perspective. However, today, the sector is poised for further growth.

Regarding Ceat, our vision will be to cross $2 billion in revenues in the near term by focusing on the passenger and off-highway tyre (OHT) segments. We are already at a leading position in the two-wheeler segment and are now expanding our growth in the passenger car and SUV (sport-utility vehicle) segments, where penetration in India is still low. Internationally, India is becoming the farm tyre manufacturer for the world, and we have made strong gains in the EU and US markets over the last five years.

There’s a lot of innovation in the auto and tyre sectors, driven by the push for EVs, sustainability and connected vehicles. We are already dominant in the two-wheeler EV segment and have rolled out our specialized low-noise, low rolling resistance and high-durability range of EV tyres across all product segments.

Within the company, digitalization to improve customer experience and efficiency in factories are high priority. With climate change becoming a serious threat to our quality of life, we are not only focused on our products being eco-friendly but the entire value chain from sourcing, manufacturing, transportation and end of life of the tyre. It is our responsibility to give back to the earth what we are taking away from it.

Most importantly, our purpose is towards ‘Making Mobility Safer and Smarter’. We do this by constantly understanding our customers’ needs, solving their problems and inventing on their behalf.

Are you exploring inorganic opportunities that may come up at this point in time? Are you looking to partner with private equity investors like you have done in the past?

We are open to acquisitions; however, the tyre industry is relatively small, and opportunities are rare. However, if there are capability-based acquisitions, we will look at them.

How is the group incubating new businesses? What is your capital allocation strategy?

We allocate about 70% of our capital to the core, 20% to adjacencies and about 10% to high-risk, high-return businesses. Each company in the group looks at mega-trends and their own endowments to decide which is the next area to invest in.

For example, at Ceat, we believe that truck fleets have large cost-saving opportunities through driver training, fuel management and tyre management.

We also have a large number of direct fleets with whom we have relationships.

With the reducing cost of sensors and connected vehicles, we can work with fleets to bring down their costs. Similarly, for RPG Life Sciences, as the world is de-risking its exposure to China, there could be an opportunity to accelerate growth in the API space or, for KEC, green energy.

RPG Group is one of India’s oldest business groups. How has the group’s management style changed over the years?

The RPG Group comprises businesses that are quite different from each other—tech, pharma, tyres and engineering-procurement-construction.

We have a federated structure with most companies retaining a different brand name, unlike many other conglomerates. We give a lot of freedom to each company and the group is largely involved in senior management recruitment, people systems, M&A and high-level strategy. One aspect that binds the group is our belief system of being people-focused—whether it be investing in their growth, giving them freedom or having a larger purpose of making a difference in the world. We truly care for our people and their happiness.