Ceat to Further Boost Capacity at Chennai Plant with Rs 1,314 Crore Investment

Tyre maker Ceat Ltd will invest Rs 1,314 crore to further boost the passenger vehicle tyre capacity at its Sriperumbudur plant in Chennai by around 35% as the company looks to cater to the anticipated good growth in the passenger car and utility vehicle category.

“Our board has approved Rs 1,314 crore of capital expenditure to add an additional 35 lakh tyres per annum to passenger car capacity. We expect this capacity addition to be progressively completed by the first half of the financial year 2028,” CFO Kumar Subbiah told investors on Tuesday.

The RPG Group company’s capacity at the Chennai plant would currently be around 95 lakh tyres per annum, including the 25 lakh tyre capacity addition, which is under implementation. The plant’s capacity utilisation, excluding the additional capacity already under implementation, is around 80%.

In July 2025, the company said it is expanding the plant’s capacity from 70 lakh tyres per annum to 95 lakh tyres with an approved capital expenditure of Rs 450 crore, and it planned for it to be completed by the end of the financial year 2027.

The latest capacity addition plans, for another 35 lakh tyres per annum, will be on top of the 95 lakh tyres per annum. With this, the plant's total capacity by the end of the financial year 2028 will be at 1.3 crore tyres per annum.

“The company expects good growth in the short to medium term in the PCUV [passenger car and utility vehicle] category. This investment is intended to add capacity progressively, to service the anticipated future demand,” Ceat said.

When asked about the requirement for higher capital expenditure, the company attributed it to higher tonnage requirements.

Management said passenger car tyres are becoming progressively heavier due to the changing vehicle mix, larger wheel sizes and higher performance requirements. As tyre weight increases, each unit generally consumes more raw material and processing capacity, which means incremental capacity additions will require higher capex compared to earlier expansions.

Following the utility vehicle tyre expansion plans, annual capital expenditure guidance from the financial year 2027 onwards is likely to increase to Rs 1,000–1,200 crore from the Rs 900–1,000 crore level. The current financial year’s capital expenditure is estimated to be close to Rs 1,000 crore.

Regarding demand, the management added that the company is witnessing growth across all three verticals, with international demand strengthening as the company consolidates market share in regions such as Latin America and Europe, while its US operations are still evolving.

“In the domestic OEM segment, growth is being driven by new entries into several high-volume vehicle platforms across multiple OEMs, including electric vehicles, following a low base last year after exiting some programmes over the past two to three years,” Subbiah said.