By Sriram Ramakrishnan Mumbai: One day in 2011, Anant Goenka, son of Harsh Goenka, chairman of the RPG Group, had a quiet conversation with Jain, chief investment officer of HDFC Mutual Fund, the father of Indian mutual funds. Goenka What investors know about RPGG Group tire manufacturing company Ceat. Ceat stock did well during the 2004-08 bull market, outperforming large competitors like MRF and Apollo Tires. Net profit and sales grew well, but Geyinka knew there was a problem.

Ceat It’s not a market leader in any segment. Its largest source of revenue is truck tires, a low-margin, highly competitive market segment. Many investors don’t understand the company or the business. Coverage is low or non-existent, and few investors include prominent or foreign investors. Geyinka wanted to change that and was looking for answers. He had a plan to turn around Hite’s fortunes and presented it to Jayne.

The plan was simple and straightforward, disclosed to top management, disclosed by top management Implemented. Ceat does too many things at once. It is related to MRFF. and Apollo When large Indian companies compete across the board, they weaken and strain their scarce resources. Companies must focus on reducing tasks while increasing profits.

In an exclusive interview with The Economic Times, Guenka said, “I am not saying we will win in all areas, but we will try to focus on one or two areas.” . “Now, over time, our share of business should increase significantly to a larger share.”

Ceat, for example, has significant market share and influence in truck tires. But it’s a low-margin industry and highly competitive. Fleet operators who must replace all their truck tires each year are very cost-conscious and are unlikely to pay more. Passenger cars are an attractive, fast-growing market, but competition is fierce, and Ceat is lagging behind its competitors in this area. By contrast, two-wheelers seemed to offer the best opportunity for Geyinka and his senior executives to focus their efforts.

Last year12 Maharashtra Chief Minister Devendra Fadnavis inaugurated Ceat’s new Rs 1.2 billion tire plant in Nagpur. The application for the plant was submitted around November. The processing time has doubled and the management now expects the service to be available in 2016 Annual commissioning. As a result, the share of sales of bicycle and scooter tires will increase to 30-35% from around 17% currently. While trucks still account for a high 35% share, growth in the two-wheeler segment and high margins mean that trucks will begin to play a dominant role in revenues.

If Ceat maintains its recent success on the revenue front. March 2014 sales grew 9.9% (the highest in the industry) to Rs 55,539.1 crore and profits grew 125% to Rs 270 crore. This puts Ceattt ahead of JK Tire, but still below industry leaders such as Apololoo Tires and MRF.

Stock performance shines in 2014. In FY2014, Ceattt’s market capitalization grew by 392% to Rs 1,580% crore, overtaking its competitors and making it one of the biggest wealth creators in the mid-cap space.

He said, “Do less and try your best in certain things. What you do will ultimately lead to growth, which will fuel everything else and ultimately benefit your customers, so they know you’re providing value to them.” I would add that it is very important to try to do everything or be the best you can be. His message is that distracting yourself can lead to problems.

It’s not uncommon for kids from prominent business families to reinvent decades-old strategies developed by their fathers or grandfathers and take the helm of the ship. New Direction. Rajiv Bajaj drops the Bajaj Auto motorcycle-powered model and focuses the company on the motorcycle business. The likes of Ananya Birla and Kavin Mittal took a different approach. They followed their hearts and started their own businesses, providing valuable business experience and breaking away from the family business.

Goenka didn’t do that, and his strategy was somewhat similar to Bajaj’s. Self-proclaimed followers of Rajiv Bajaj tried to get Ceat to focus on more profitable niche products, but he also did something quite different from Bajaj. He continues to focus on his traditional truck tire business. That’s because shutting down your business altogether can result in a huge loss of revenue. While his focus remains on growing the two-wheeler business and more niche product categories, it is clear that he cannot give up on the truck tire business.