In 2021, Ceat announced the setting up of a 163acre greenfield project at Kanchipuram near Chennai to make passenger radials.
Having scaled down its capex plans for this fiscal, Ceat is rejigging its focus to high-margin products Lin domestic and overseas markets. The company's leadership has identified passenger cars, two-wheelers, off-highway trucks (OHT) and exports as strategic areas with higher margins, and which will help reduce the company's dependence on the truck segment.
These numbers provide some perspective as revenue contribution from the focus areas is said to have spiked to nearly 57 percent during fiscal 2021 from about 20 percent in FY2020. With renewed focus, the company expects it to reach about 60-65 percent in 4-5 years' time. According to Anant Goenka, Ceat's managing director, with the shift in focus to certain categories, it needs to allocate capital for investments. As the Indian economy recovers from Omicron, the vehicle scrappage policy and geopolitical issues such as the China plus one policy and anti-dumping duties on Chinese tyres adopted by the US and European countries have helped boost demand for Indian tyre makers.
Ceat has, therefore, reduced its capex plan to about Rs 800 crore for FY2022 from Rs 1,000 crore envisaged earlier. For fiscal 2023, the company hopes to invest Rs 700 crore. While phase-1 of the truck and bus radial tyres (TBR) expansion plan involving around Rs 700-750 crore capex has been deferred by a year, phase-2 which would have seen capex of about Rs 500 crore has been deferred indefinitely. This segment in which Ceat has a 7 percent market share is seeing intense pricing pressure as a result of a slowdown in the replacement market in recent months due to rising competition and commodity prices
This story is from the 15th March 2022 edition of Autocar Professional.
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This story is from the 15th March 2022 edition of Autocar Professional.
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