Tyre maker Ceat sets aside ₹800 crore for capex in FY23

Portion of funds to help expand Kancheepuram plant

Tyre manufacturer Ceat Ltd. has firmed up plans for capital expenditure (capex) of ₹800 crore for FY23 towards expanding its greenfield plant at Kancheepuram, debottlenecking its plants and for renewable energy, said Anant Goenka, MD.

“For FY22, we had set aside a capex of ₹1,000 crore, but we had pruned it to ₹800 crore. This fiscal, we have spent almost ₹700 crore,” he said. “For the next fiscal, we are setting aside the same amount for expansion and debottlenecking, among others. In the subsequent years, capex will come down, as we would have completed all the expansion work,” he added.

Earlier, Mr. Goenka said that Ceat had planned a capex of about ₹3,500 crore. About another ₹1,000 crore that is left over the course of the next 12-15 months, i.e Rs.150 crore for FY22 and Rs.800 crore for FY23. Out of the earmarked sum for FY23, ₹150 crore is meant for phase-II expansion work of the first green field plant at Kancheepuram, ₹150 crore for debottlenecking the Halol plant, ₹150 crore for IT infrastructure, ₹50 crore for renewable energy and the balance for other expenses. The funding needs will be met via a mix of internal accruals and borrowings. “We have invested about ₹2,000 crore in the Kancheepuram plant. It has installed capacity to produce 20,000 car tyres per day and plans are on to increase it to 30,000 tyres per day. It calls for an additional investment of ₹150 crore,” he said. “Currently, the plant is producing about 12,000-13,000 tyres per day. We hope to increase the production capacity 60% to 80% in three-four months. Thereafter, we will commence the phase-II work and it will be completed in 20 months,” he said.

Regarding the Halol plant, he said it produced almost 1.20 lakh tyres of radial tyres per month. Some tweaking will be done to increase the capacity to 1.50 lakh tyres per month in six months. Production had already crossed the pre-Covid level, he said, adding that spiralling raw material costs forced the company to increase prices in February and it might go in for another jump next quarter. It is difficult to predict the quantum or the date, he said. The ₹7,609 crore firm gets 60% of revenue from the replacement market, 20% from OEMs and 20% from international markets. Plans are on to increase the export market share by 2-3% by tapping aggressively into the European and U.S. markets. Mr. Goenka said going forward, the focus will be on upcoming technologies such as EV, green energy and smart tyres. Ceat has currently deployed solar panels across its plants, which addressed 25% of its power consumption. It would be doubled, for which ₹50 crore had been set aside. Ceat, meanwhile, announced that it had roped actor Karthik Sivakumar as brand ambassador to promote the SecuraDrive Range of premium car tyres. The idea behind the campaign is to highlight the importance of quality and safe tyres to help guard against surprises on the roads.