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Tire maker Ceat has decided to reduce and defer 40% (i.e. 50 CAPEX of Rs 100 crore for FY 2023 due to sharp fall in demand for tires from road transporters.

To make matters worse, rising raw material prices continued to put pressure on the company’s costs, forcing it to raise prices, leading to a loss in the third quarter due to surging costs.

The company plans to raise prices by 2% 3% this quarter to improve margins.

Ceat Managing Director Anant Goenka told The Economic Times that the planned investment of Rs 120 crore in a commercial vehicle (CV) tire plant near Chennai would be reduced by Rs 50 crore and the opening of the plant would be delayed by six months.

“We were expecting that the plant would be completed in 10 months this year. Now we will have a smaller version of the plant sometime in the first half of next year,” he said.

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According to Goenka According to the report, the demand for tire replacement is low among transport fleet operators. This is one of the largest market segments for tire manufacturers. Commercial vehicle operators, passenger cars and two-wheelers account for about 65% of the replacement demand in terms of sales.

Goenka said, “We will see how we can improve the demand. Only we can authorize the expenditure. ‘

Ceat reported a loss in the December quarter as it was unable to fully cover the high cost of investment For consumers. Tire makers rely on raw materials such as rubber, crude oil and steel, which account for 60% of their costs. Goenka has seen the average price of these commodities soar by 40% compared to the same period last year.

Now, the Mumbai-headquartered tire maker plans to increase prices by 2-3% this year. According to the managing director, the company plans to raise around 5-6% in the current quarter and the next six months to offset the increased investment costs. However, he added that competitive pressure in the market will limit its ability to raise prices.