The company's gross sales increased 16 per cent to Rs 657.28 crore from Rs 563.5 crore in the first six months of last year. Other income dropped sharply to Rs 6.93 crore from Rs 23.27 crore.

Net profit improved to Rs 7.16 crore from Rs 6.08 crore in the first half last year, but in the second quarter it was lower at Rs 3.18 crore over Rs 3.53 crore in the same period of 1998-99.

Profit before tax rose 39.93 per cent, but provision for taxation was higher at Rs 2.02 crore against Rs 48 lakh in the same period last year. Net interest charges were curtailed to Rs 32.15 crore from Rs 40.81 crore.

The company's managing director S Samuel said in a press release that the steep increase in raw material prices, power and fuel costs are matters of great concern.

Ceat said it fared better in the truck and bus tyre segment, where it has launched 5 new brands. Sales in the replacement market grew 14 per cent, while in the truck and bus tyres it has clocked an average growth of more than 20 per cent against the industry average of less than 10 per cent.

On the operational front, Ceat had taken steps to optimise operating expenses and restructure its capital requirements. It had arranged for long-term low interest loans from financial institutions to replace short-term high-cost funds.

The company said it was going ahead with the construction of the new radial facility at Nashik with a capacity of 28,000 passenger radials per month in the first phase. The increased capacity will be commissioned by April 2000.