The interest saving that will accrue to the company as a result will be in the region of 300 basis points during the curent fiscal, company sources said.

The company has recently retired another Rs 92 crore of short term debt from the proceeds of the sale of its 50 per cent holding in South Asia Tyres, the equal joint venture with Goodyear Tires of the US to manufacture radial tyres, and in RPG Ricoh.

In the process, company sources pointed out, Ceat has saved another Rs 12 crore of interest charges that got reflected in the 1998-99 fiscal.

For its radial requirements, Ceat has renewed its technical alliance with Yokohama of Japan. Before the venture with Goodyear, the Japanese major was Ceat's technology supplier.

Ceat has already placed orders worth Rs 60 crore so that it can begin tomanufacture radial tyres at its Nashik facility. The radial capacity at Nashik will be around 50,000 tyres per month.

As per the severance agreement with Goodyear, Ceat can continue to source its radial requirements till 2001. The company also plans to set up a greenfield radial tyre facility at a later stage. For acquisition of land, the company has zeroed in on Gujarat, Maharashtra, Karnataka, Madhya Pradesh and Tamil Nadu.

The company is also looking at production of radials for the light and medium truck segment in the next three years.

As part of brand development, the company plans to enhance visibility of the exclusive Ceat Shoppes, and more such outlets are expected to be set up in the western region over the next few months.

Ceat, in an effort to improve margins, has also initiated a major cost-reduction drive. Working capital, company sources said, had been reduced by Rs 87 crore during the last fiscal that resulted in interest cost savings of Rs 7 crore.

Other measures like materialsaving through technical changes, better rates for raw materials, a labour productivity agreement and optimal energy usage have resulted in savings of another Rs 21 crore during 1998-99, the sources said.

For the year ended March 31, Ceat posted a turnover Rs 1,166 crore and a net profit of Rs 16.82 crore. Interest charges had dipped to Rs 63 crore from Rs 72.62 crore in the previous fiscal.

Insight: The worst is probably over for Ceat Ltd, or even for the other tyre manufacturers for that matter. The operating performance has begun to improve on the heels of improving demand. The restructuring of its loan portfolio which will bring down interest costs will only serve its financials better. This is also the right time for refinancing, since interest rates will rise once a recovery gets going. The first quarter will be significantly better for the company.