One of India’s leading tyre manufacturers, CEAT has recently stated that the company is looking forward to investing a capex of INR. 4,000 crore over a period of next three years. By doing so, CEAT is expecting to increase its capacity across segments. This new capacity expansion is expected to generate a revenue of INR. 5,500 crore. However, there’s a catch in this news as according to the sources of the company, this expansion plan is dependent on the market demand. It is learnt that if the scenario deteriorates amidst the ongoing sales slowdown, then the proposal might be postponed. Moreover, CEAT has already spent INR. 1,300 crore and has plans of spending about INR. 1,200 to INR 1,300 crore respectively in FY 2020 and FY 2021.
CEAT is looking to enhance its Halol plant’s TBR (Truck and bus radial tyres) capacity with a capex of INR. 1,000. Currently, the Halol plant is producing 1,400 tyres every day. About INR. 2,050 crore will be utilised to enhance Chennai plant’s capacity for passenger vehicle tyres. Currently, the Chennai plant produces 20,000 tyres every day. The company has also allocated INR 450 crore and INR 500 crore for its two-wheelers and other production respectively.
CEAT is currently focused on enhancing OEM fitment. The reason for this is the fact that about one-third of the total consumers opt for replacement tyres of the same brand as OEM fitment. This, in future, is supposed to create a sizeable base for CEAT for its replacement segment. Currently, the company has about 1,400 touch points across India from where it can expand its sales in the replacement segment.