 "Our debt has come down significantly: Anant Goenka")
Ceat managed to grow its net profit by 50 per cent last quarter on account of good demand from the replacement segment and a superior product mix. The company secured board approval for a Rs 500 crore debenture issue. Anant Goenka, managing director of Ceat, spoke to Swaraj Baggonkar about the company's plans. Edited excerpts.
How many original equipment manufacturers (OEMs) have you added during the quarter?
We added Yamaha and Renault during the quarter. This is in addition to the 20 OEMs we already supply to.
OEMs would be 23 per cent, export 18-19 per cent and the balance is replacement demand.
How are you going to use the proceeds of the Rs 500 crore debenture issue?
It will be largely used for capital expenditure, repayment of loans and borrowings. We have not taken a call yet on when to issue the debentures, but we have secured approval from the board. Ceat's credit ratings have improved significantly.
Where do you stand in market share of two-wheelers?
We have a 23-26 per cent market share in the replacement segment of two-wheelers, which puts us possibly at number two position.
How has finance cost gone down and what is your debt?
We had used our QIP issue to reduce debt. It is still not fully utilised. The benefit of reduction in raw material costs was also there. There was an overall improvement in the two-wheeler and passenger vehicle product mix. Our debt levels have come down significantly from earlier. The debt-equity ratio is very comfortable at 0.4 as compared to 1.1-1.2 a year ago. Our total outstanding debt is around Rs 700-800 crore.
How is the Bangladesh project shaping up?
The project is delayed. There is some problem with acquisition of land. It will not be possible to start production on the timeline given earlier.
There is a 8-10 month delay. Work has not started yet on the facility and fortunately there has been no capital infusion from our side. It will come on stream in 2016-17.
Is the expansion at Halol complete?
The Halol project will come on stream a month ahead of its scheduled time. It will commence production in June-July. The plant will add capacity of 5 lakh tyres per month of passenger vehicle radials.
What is your outlook for tyre sales?
We are optimistic about the year. Last year saw patchy growth. Now we are seeing positive signs. We are expecting double digit growth in volumes in the passenger vehicle segment.
When do we see the Nagpur plant come on stream?
The Nagpur plant will begin production in the fourth quarter of this year.
How many original equipment manufacturers (OEMs) have you added during the quarter?
We added Yamaha and Renault during the quarter. This is in addition to the 20 OEMs we already supply to.
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What is the split between replacement and OEM supply presently?
OEMs would be 23 per cent, export 18-19 per cent and the balance is replacement demand.
How are you going to use the proceeds of the Rs 500 crore debenture issue?
It will be largely used for capital expenditure, repayment of loans and borrowings. We have not taken a call yet on when to issue the debentures, but we have secured approval from the board. Ceat's credit ratings have improved significantly.
Where do you stand in market share of two-wheelers?
We have a 23-26 per cent market share in the replacement segment of two-wheelers, which puts us possibly at number two position.
How has finance cost gone down and what is your debt?
We had used our QIP issue to reduce debt. It is still not fully utilised. The benefit of reduction in raw material costs was also there. There was an overall improvement in the two-wheeler and passenger vehicle product mix. Our debt levels have come down significantly from earlier. The debt-equity ratio is very comfortable at 0.4 as compared to 1.1-1.2 a year ago. Our total outstanding debt is around Rs 700-800 crore.
How is the Bangladesh project shaping up?
The project is delayed. There is some problem with acquisition of land. It will not be possible to start production on the timeline given earlier.
There is a 8-10 month delay. Work has not started yet on the facility and fortunately there has been no capital infusion from our side. It will come on stream in 2016-17.
Is the expansion at Halol complete?
The Halol project will come on stream a month ahead of its scheduled time. It will commence production in June-July. The plant will add capacity of 5 lakh tyres per month of passenger vehicle radials.
What is your outlook for tyre sales?
We are optimistic about the year. Last year saw patchy growth. Now we are seeing positive signs. We are expecting double digit growth in volumes in the passenger vehicle segment.
When do we see the Nagpur plant come on stream?
The Nagpur plant will begin production in the fourth quarter of this year.