Ceat plans Rs 1,000 crore capex in FY25 for capacity expansion

Ceat has earmarked a capex of Rs 1,000 crore for capacity expansion in FY25, a top company official said. This will include Rs 750 crore as the growth capex and Rs 250 crore as the maintenance capex. Notably, the company has ended FY24 with a capex spent of Rs 860 crore.

"Our expansion plans are on track. Growth capex would be focused on expanding the capacity of truck & bus radial (TBR) tyres and passenger car radial (PCR) tyres at the Chennai plant, and we believe this is sufficient to meet its growth requirements."

"Additionally, we are also planning to elevate the capacity of agri-radial tyres at the Ambernath plant in Maharashtra. Our capacity utilisation rate is 80% in all the segments barring TBR, which is fully utilised," CEO Arnab Banerjee said during a recent post-earnings call. 

The company management has identified the two-wheeler, PCR, and OTR (truck/off-road) tyre segments as strategic focus areas, given their abilities to boost margin and lower Ceat’s dependence on the truck segment. 

Ceat’s plant in Chennai manufactures passenger vehicle (PV) tyres, motorcycle tyres and truck and bus tyres. It is a 163-acre greenfield plant that commenced production in February 2020 with an initial investment of Rs 1,400 crore and has delivered about 200 SKUs (stock keeping units) over the last two years. 

The Mumbai-based tyre major expects to start fresh capacity at its Chennai plant in Q2 FY25. The current capacity of this facility for passenger cars is at 20,000 units per day, and going ahead, the company aims to increase capacity to above 28,000 units per day. Similarly, on the TBR tyre front, the Chennai plant expansion will add another 45,000 units per month, Banerjee added. This plant has received approvals from 12 OEMs, of which some marquee names are M&M, Maruti, Renault, Honda, Royal Enfield, and Hero. 

Ceat has six manufacturing plants in India located at Halol, Nashik, Nagpur, Bhandup, Ambernath and Chennai. Given a balanced presence across key segments, the company expects most categories to touch double-digit volume growth in both OEM and replacement segments in FY25.