November 30, 2020

Tyre alternative market can get well and develop in FY-21: Anant Goenka, MD, Ceat Ltd

MUMBAI: Tyre maker Ceat Ltd sees a “clear development” in demand stemming from alternative of tyres within the latter three quarters of this fiscal whilst gross sales to car producers and exports market stay beneath stress.

Anant Goenka, managing director of the RPG Group firm, stated demand within the phase acquired again to pre-Covid ranges in June and the expansion within the coming quarters might even presumably compensate for the misplaced gross sales through the June quarter on account of Covid-induced lockdowns.

“The alternative phase, which is extra worthwhile, has bounced again to regular and even greater than regular ranges, whereas the OEM (authentic tools producers) phase continues to be in a tough place,” he stated.

The alternative market accounts for 60% of Ceat’s gross sales, with OEM gross sales accounting for 27% and exports about 13%.

“We’re in a significantly better place than we had anticipated. It regarded a lot worse in April,” Goenka stated.

The corporate has resumed manufacturing at full capability throughout most of its six manufacturing areas. Nonetheless, Goenka stated whereas demand was greater than anticipated, the scenario was nonetheless unsure given the rising Covid-19 infections within the nation. It could be tough to foretell the demand for the remainder of the yr, he stated.

The federal government’s current transfer to place imports of tyres, amongst different commodities, into restricted class might additionally give fillip to native producers. Imports make for 6-10% of the Rs 60,000-crore home tyre market and these restrictions might probably reduce them in half, Goenka stated. Nonetheless, the affect of this might be tough to isolate within the unsure market at current, he stated.

Ceat has pruned down its deliberate capital expenditure by 30%, Goenka stated. “We are going to proceed to be cautious. We are going to take a look at funding as and once we see the market choosing up. It’s too early to make a name on the revival of investments to regular stage.”

Ceat on Wednesday reported a consolidated lack of Rs 34.eight crore for the primary quarter of this fiscal as income contracted by over 36% to Rs 1,123 crore. It had reported a revenue of Rs 82.6 crore on Rs 1,764 crore income through the corresponding quarter within the earlier monetary yr.

The corporate’s inventory fell 2.27% to shut at Rs 847.75 per share on the BSE on Thursday.