New Delhi: Tyre maker Ceat will invest Rs 300 crore to set up a manufacturing facility in Maharashtra to primarily serve export market for off-road radial tyres.
The company, which on Friday reported a 27.03 per cent increase in consolidated net profit at Rs 113.39 crore for the fiscal third quarter that ended on December 31, has already transferred its land in Ambernath, Maharashtra to its wholly-owned subsidiary Ceat Specialty Tyres Ltd (CSTL) to set up the plant.
Besides, Ceat has made an equity investment of Rs 25 crore to CSTL.
"Given the strong growth potential in the OTR (off the road) sector and its synergy with Ceat capabilities, we have taken a strategic decision to increase our focus there," Ceat managing director Anant Goenka said.
CSTL has been created to ensure dedicated focus and drive towards this opportunity, he added.
"We will be investing Rs 300 crore for an initial capacity of 40 metric tonnes a day," Mr Goenka said.
The company's board, which met on Friday, also approved providing of corporate guarantee to the tune of Rs 220 crore to the bankers of CSTL as a collateral security for the long term loan(s) being taken by CSTL from the said bankers."
The Mumbai-based company had reported a net profit of Rs 89.26 crore for the third quarter of the previous fiscal year.
Net sales of the company rose to Rs 1,374.03 crore as compared to Rs 1,399.11 crore for the same period of previous fiscal year, Ceat Ltd said in a regulatory filing.
"Reduction in average borrowings levels coupled with reduction in interest rates led to interest costs reduction this quarter," Ceat Ltd CFO Manoj Jaiswal said.
Shares in Ceat, on Friday, ended 0.74 per cent lower at Rs 892.90 apiece on the BSE, whose benchmark Sensex index finished up 0.15 per cent.
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