Ceat to invest Rs 10,000-mn

Mumbai: Tyre maker Ceat Ltd, the flagship company of RPG Group, said that the company would invest Rs 1,000 crore in two to three years for setting up two new plants and a research and development facility.

An amount of Rs 900 crore will be used for setting up new plants. One of the new plants will be dedicated for radial tyres, and the other one will be for making speciality tyres. An amount of Rs 60 crore is to be allocated for research and development centre.

“We announce a radical change. Ceat’s turnover in the last year crossed Rs 2,600 crore. We are likely to report the highest-ever profit in the year that has gone,” said Mr Harsh V. Goenka, Chairman, RPG Group.

The company has decided to set up one plant in Ambarnath in Maharashtra. “We are scouting for land for our radial plant facility. This is likely to be in Gujarat, Karnataka or Tamil Nadu,” said Mr Paras K. Chowdhary, CEO, Ceat.

“The funding of the projects will be through internal accrual, borrowings and sale of land,” he said. Ceat had sold seven acres in Bhandup for Rs 130 crore in the second week of March.

Mr Chowdhary also said that the company was in talks with a number of international players for a technology tie-up to enhance its radial tyre portfolio. Of the total Rs 1,000 crore investments, Rs 550 crore will be for radial tyre plant, Rs 350 crore will be for speciality tyres and Rs 60 crore will be for the new R&D centre to be set up adjacent to the Ambernath plant.

He said that the outsourcing of tyre production will be increased to 30 per cent of the total production. Ceat outsources tyre manufacturing to countries such as Sri Lanka and China.

The rising input cost has been putting pressure on the company’s margins and it had to raise the tyre prices by five per cent, he said. The rubber prices have gone up by 20 per cent in the last two months.

The cost of many petroleum-related raw materials used in the tyre production has also increased by 20 per cent. The price hike will be effective from April 18.