Indian tire makers put on hold investment plans for a new commercial vehicle tire manufacturer.

Managing Director Anant Goenka told The Economic Times that the company would have invested Rs 3.96 billion to produce high-margin off-road tires for the US and European markets. “We have disinvested in the commercial vehicle segment. The margins in this segment are low. The off-road tire segment has higher margins and we will invest in increasing our production capacity in this category.”

The Board of Directors of the Company has approved an investment proposal to increase the capacity of agricultural radial tires at Ambarnath, Maharashtra, from the current capacity of around 50 per day per day to 55 tons per day over the next two years. The investment is being financed through debt and internal accruals.

Goenka said the company will benefit from using 80-85% of its commercial vehicle tire capacity.

Ceat plans to invest Rs 120 crore to set up a new plant near Chennai for manufacturing commercial tires. In January this year, Goenka said he decided to reduce the planned investment by Rs 50 crore and delayed the opening of the plant by six months to early next year.

In May 2022, the company announced a capital expenditure of Rs 9 billion for the current financial year.

Also, Goenka Demand in the Indian market looks good, but the international market is facing headwinds due to the slowdown in Europe.

He said, “Demand parameters in India look good. Demand from OEMs (automakers) is strong and the chip shortage has been resolved to some extent. The commercial vehicle market is growing steadily, albeit from a low base.”

“As demand improves and raw material prices stabilize, we expect sales and margins to improve in the second half of the fiscal year,” he said

Ceat reported a 17% decline in standalone net profit at Rs 299 crore for the second quarter of the fiscal year ended September 30, 2022, the company said. Operating profit increased by 18.7% to Rs 28,863.7 crore.