Ceat to spend Rs 330 to set up off-road tyre manufacturing plant

Indian tyre manufacturer Ceat is planning to invest Rs 330 crores to setup an off-the-road (OTR) radial tyre plant in Ambernath, Maharashtra. This information was revealed in the company's 3rd quarter investor presentation.

The company has transferred Ambernath land to Ceat Specialty Tyres Ltd (CSTL), a subsidiary of company that was introduced last year with the aim of manufacturing specialty tyres (including off-the-road tyres).

"Given the strong growth potential in the OTR (Off the road) sector and its synergy with Ceat capabilities, we have taken a strategic decision to increase our focus there," Ceat Ltd. Managing Director Anant Goenka said.

Ceat has released Rs 25 crores as an equity investment in CSTL. This investment will build the facility that will have an initial manufacturing capacity of 40 metric tonnes per day. The production operations at this new plant will commence by 4th Quarter of 2017 financial year.

[caption id="attachment_2240" align="alignnone" width="1128"] Off-The-Road Tyres[/caption]

The company's board has approved to provide a corporate guarantee of Rs 220 crore to the bankers of CSTL as a collateral security for the long term loan being taken by CSTL.

Ceat reported a 27.03 per cent rise in consolidated net profit at Rs 113.39 crore for third quarter that ended December 31.

"Reduction in average borrowing levels coupled with reduction in interest rates led to interest costs reduction this quarter," Ceat Ltd CFO Manoj Jaiswal said.

In addition to its off-the-road tyre business, Ceat is aiming to expand the tyre manufacturing capacity for 2/3-wheeler and four-wheeler segments. The company is planning to achieve this through various activities like expanding in-house production and increasing outsourced production along with it.