CEAT plans Rs 750 crore in capital expenditure for FY24

31 Jul 2023 , 11:59 AM

According to CEAT Ltd’s MD & CEO Arnab Banerjee, who talked to PTI, the business has planned a capex of roughly Rs 750 crore for the current fiscal, the majority of which would be used to increase the production capacity of agri-radial tyres at its Ambernath factory in Maharashtra. 

The firm anticipates that the volume of deliveries to original equipment manufacturers (OEMs) will increase in the third and fourth quarters of this fiscal year as it completes the shift from lower rim sizes to larger diameters, with approvals from automotive manufacturers expected soon.

In the replacement market, where CEAT had significant growth in the first quarter, particularly in motorcycle tyres, the firm expects the trend to continue, however, in the rural sector, which has been inactive for some time, growth visibility may take another two quarters.

‘For the year, we’ve been talking about Rs 700 crore to Rs 750 crore.’ ‘We did around Rs 220 crore in the first quarter,’ Banerjee told PTI.

He was responding to a question on the company’s projected capital expenditures for the current fiscal year.

The majority of the investment will go toward increasing production of agri-radial tyres at the Ambernath factory, where the company makes specialized tyres.

In terms of the motorcycle tyre replacement market, he stated that growth was strong in the first quarter.

‘Demand from 50,000 or more people, which is mostly in urban areas, is good for motorcycles, but we have yet to see rural demand pick up.’ For quite some time, this market has been idle. ‘We’ll know in a quarter or two whether the growth is coming from here,’ he said.

Banerjee explained that while the farm sector of the rural economy is functioning well, the job-dependent, remittance-driven, and small traders sector has not recovered in the post-COVID era.

‘So they’re delaying the purchase of a two-wheeler even though it’s a commuter vehicle… people are delaying the purchase of a two-wheeler and delaying the purchase of tyres as well,’ he said, adding that it would be interesting to see how the impact of a normal monsoon percolates to the overall rural economy.

For feedback and suggestions, write to us at [e-mail]