Reinventing The Wheel

Anant Goenka, MD of CEAT Tyres, talked about retooling the company to make it a profitable, future-proof organisation

LAST Tuesday, the Rotary Club of Bombay welcomed Anant Goenka, MD of CEAT Tyres, to talk on “When rubber hits the road.”

Established in 1958, CEAT is one of India’s leading tyre manufacturers today with a strong presence in global markets. CEAT produces over 15 million tyres a year, offering the widest range to all segments. It manufactures world-class radials for: heavy-duty trucks and buses, light commercial vehicles, earth-movers, forklifts, tractors, trailers, cars, motorcycles and scooters as well as auto-rickshaws.

Prior to CEAT, Anant (son of RPG Group Chairman Harsh Goenka) was with KEC International, where he led functions such as supply chain, manufacturing, planning and quality. Anant has also worked in Hindustan Unilever Limited, Accenture and Morgan Stanley. He was also the Chairman of Automotive Tyre Manufacturers’ Association (ATMA) in the year 2013.

However, Anant’s journey at CEAT was no cake walk. When Anant joined, the company was rather in urgent need of repair. Employeemanagement relations were at an all-time low and plants were old and unreliable. Worker distrust was evident to the management. Financial growth was poor with volatile profits and high debt to equity ratio. With a number of companies already in competition, CEAT was struggling. Anant says that there was no singular strategy either. At this time, his boss said three things that influenced him for the better.

• Everything is common sense, but common sense is not common.
• Keep things simple.
• Doing the right thing is more important than doing things right.

Adhering to these three golden rules, Anant set himself on the road to achieve a goal of having a thousand crore turnover. He set a long-term vision and made a focused strategy. They targeted two wheelers. Anant was well aware that tyres are not something that interested the buyer as much as, say, electronic gadgets, fashion, etc. Tyres could be easily ignored and would be the last thing one would ‘shop’ for. However, while onto the strategy focussing on two wheelers, what the team found is that the customer looks for grip: the grip of holding on to the road.

“The streets are filled with idiots” is one of CEAT’s campaigns to promote safety. CEAT also focuses on better sales channel distribution and has now entered into strategic OEMs (Original Equipment Manufacturer) with Honda, Suzuki, Yamaha, Bajaj and Hero.

In order to overcome the challenges of frequent work stoppages, high level of Muri (a key Japanese concept in the Toyota Production System (TPS) as one of the three types of waste (muda, mura, muri), accidents and absenteeism, poor infrastructure, low worker involvement and lack of trust, Anant kicked off initiatives for Muri reduction and elimination of unsafe condition programme, improving basic infrastructure of the plant and proactive collection of employee trouble. These initiatives helped the management gain substantial trust among the workers. No returns, in terms of higher productivity, were expected from the workers, mentions Anant.

While the Muri reduction was in place, workers were given the autonomy to work from home and take sabbaticals. There were flexible work timings and a five-day work week was instituted for manufacturing. QBM (Quality Based Management) is followed at CEAT as a way of management for the entire organisation. It consists of philosophy, systems, tools and techniques from Total Quality Management (TQM) and Total Productive Maintenance (TPM) for capability building.

Overall effects were seen in the quality, delivery, safety and morale of the company. There was a 97 per cent reduction in product claims, 87 per cent reduction in plant breakdown hours, 97 per cent reduction in accidents and 40 per cent increase in employees’ improvement activities involvement. There has also been a marked improvement in the motorcycle market share.

Thus, CEAT rose to become one of the fastest growing companies. It was ranked No. 1 in J.D. Power Survey (2017) in passenger car segment in all parameters – Appearance; Durability; Ride; Traction Handling. With the purpose of ‘Making Mobility Safer And Smarter Every Day’ CEAT became the first tyre company outside Japan to win the Deming Prize. With new technology, Muri reduction and new plants, the company has now also started to provide employment for women and is aiming to have 50 per cent women in its workforce in the future. This is a notable change given the history of CEAT.