Tyre major Ceat: Ceat to expand Chennai plant

TNN

Ceat is also expanding its PCR (passenger car radial) capacity in its Chennai plant.

Tyre major Ceat has embarked on a significant capacity expansion project for its Chennai plant. Said Arnab Banerjee, MD & CEO, Ceat Tyres: “We have completed Phase I of our TBR (truck & bus radial) production expansion in Chennai last quarter. The second phase of TBR capacity expansion will happen over the next six to nine months.” Currently the company’s TBR capacity in its Chennai plant is 45,000 units per month.

Ceat is also expanding its PCR (passenger car radial) capacity in its Chennai plant. “Currently PCR capacity is 20,000 units a day and as part of an ongoing capacity ramp up project we will expand this by 30% to 40%,” said Banerjee. That will take Ceat’s PCR production to around 27,000 units to 28,000 units per day.

“We will incrementally increase production in line with demand growth,” he added. The Chennai plant expansion is part of the company’s Rs 1000 crore capex programme this year.

Ceat, which already hiked prices of its TBR and PCR products on October 1 by 2% to 3.5% is looking at further price hikes in other product categories. “We are looking at price hikes in the third week of October and further increases in November or December,” said Banerjee. The hikes in the other categories will be in the 1.5% to 2% range, he added.

The price hikes are on account of rising natural rubber prices and a production shortage in domestic NR. “Sequentially raw material prices went up 6% in Q2 but this will come down in Q3 where the increase will be around 2% higher,” said Banerjee. “We expect Q4 to see domestic NR curve easing out.”

In terms of export, the company has more than a month’s order book but exports have been hit by the container shortage on account of China dumping EVs to US before anti-dumping deadline and the rise in freight rates. Ceat recorded standalone Q2 revenue of Rs 3,298 crore. Net profit stood at Rs 136.5 crore. Ceat CFO Kumar Subbiah said, “Our standalone revenue was supported by double digit growth in replacement and international businesses. We partially mitigated the impact of steep increase in the prices of natural rubber through price increases and cost efficiencies. This quarter also saw our overall debt level rise by Rs 280 crore.”