CEAT Looking to Increase Production of Chennai Facility by 40%

CEAT Ltd has initiated a substantial capacity expansion project at its Chennai plant, aimed at boosting production of both truck & bus radial (TBR) and passenger car radial (PCR) tyres. Arnab Banerjee, Managing Director & CEO of CEAT Tyres, provided details on the project, noting that Phase I of the TBR production expansion was completed in the last quarter. The company is now moving forward with Phase II, which will be implemented over the next six to nine months, increasing the plant's TBR production from its current capacity of 45,000 units per month. The plant currently produces 20,000 units per day, and the company plans to expand this capacity by 30% to 40%, raising daily production to 27,000 to 28,000 units

In addition to the TBR expansion, CEAT is increasing its PCR production capacity. Banerjee stated that the company will incrementally increase production based on demand growth.

The expansion is part of CEAT's Rs 1,000 crore capital expenditure (capex) program for the year. Alongside capacity increases, CEAT also implemented a price hike of 2% to 3.5% for its TBR and PCR products on October 1, driven by rising natural rubber prices and supply shortages in domestic natural rubber (NR). Banerjee mentioned that further price increases across other product categories, ranging from 1.5% to 2%, are expected in October, November, and December.

Banerjee also discussed the impact of rising raw material costs, which increased by 6% in the second quarter (Q2). However, these costs are expected to rise more modestly, by 2% in the third quarter (Q3), with a projected easing in the natural rubber supply curve in Q4.

CEAT's exports have faced challenges due to a container shortage, worsened by China's efforts to dump electric vehicles (EVs) into the U.S. market ahead of anti-dumping deadlines, as well as elevated freight rates. Despite these obstacles, CEAT recorded standalone Q2 revenue of Rs 3,298 crore, with a net profit of Rs 136.5 crore.