CEAT’s int’l Filesadmin.co, replacement market to see better growth: VC Anant Goenka

Tire maker CEAT expects recovery in its international business and replacement market, which are more profitable segments, in the future, according to company vice president Anant Goenka.

With raw material prices remaining stable, the company expects “double digit plus margins” going forward.

“The international business or export sector has faced some headwinds because of global issues, whether it’s war (Russia-Ukraine), whether it’s about devaluation in a lot of developing countries…” Goenka told India’s PTI Interaction.

Moreover, he said, the Indian sub-continent — Sri Lanka, Pakistan, and Bangladesh — was hit “due to issues related to currencies and forex,” and in the developing world or the developed world, there was a recessionary environment.

When asked about the outlook, he said: “We expect the international market as well as the alternative market, which are the more profitable sectors, to see better times going forward. The international business itself has been weak over the past four to six months and we’ve seen some upside there,” Goenka said.

In the replacement market, he said, it was very strong in the commercial vehicle segment followed by passenger cars due to significant growth in SUVs and vehicles in the Rs 10 lakh-plus categories.

However, he said, the sub-Rs 10 lakh segment witnessed a relatively slight slowdown.

“The two-wheeler and smaller auto segments were hit more than the mid-to-high-end segments,” he said.

Also in the replacement sector, Goenka said, rural markets have been a little bit tougher as inflation has picked up there.

In terms of raw material prices, he said, they have been relatively stable and the company does not expect a significant change at least in the next four months or so.

“Fifty percent of our feedstock is crude oil derived products, and 30-40 percent is rubber. Natural rubber has been up a little bit, but I’d say pretty much we expect double-digit margins going forward.”

For the financial year ended 31st March 2023, CEAT Ltd recorded consolidated net profit of Rs.182.39 crore as compared to Rs.70.58 crore in FY22. Its revenue from operations in FY22 was Rs.2311314.88 crore as against Rs.9363.41 crore in FY22.