Ceat to implement Rs 100-crore profitability improvement plan

Papiya De & Subhadip Sircar

Mumbai, Nov 5: The RPG Group promoted Ceat Ltd is implementing a Rs 100 crore profitability improvement plan to improve efficiency at all levels within the company. As part of this strategy, Ceat has undertaken a massive cost reduction programme which entails manpower reduction, improving material efficiencies, operational expenses and technical improvements.

“We are looking at a total cost reduction of Rs 40 crore for this fiscal. We have achieved Rs 25 crore already,” says Ceat Ltd
managing director Paras K Chowdhary.

Ceat, which has around 300 managerial staff, which includes assistant managers and above, has already reduced its managerial strength by 10 per cent through a voluntary separation scheme (VSS). Mr Chowdhary added that a further manpower rationalisation is on the cards.

The company has started achieving cost reduction in a substantive manner since October this year. “We are looking at reducing costs to the tune of Rs 2 crore per month from October,” he added.
Ceat has also raked in Rs 20 crore from the sale of real estate property.

The company is also toning up the supply chain mechanism to improve inventory management. The results of all these initiatives are expected to begin from the third quarter of the financial year, which is also expected to improve operating profit margins.

Ceat has also been restructured with a younger management team at the helm.

Mr Kalyan Paul of TI Cycles has joined as vice-president (sales & marketing), Mr TK Thomas of Vikrant Tyres as vice-president (technical) and Mr Sudhir Sohoni of British Oxygen as vice-president (human resources).

All the above senior level appointments have been made within five months of Mr Chowdhary taking charge in January last. Mr Chowdhary is hoping that all these measures will get reflected in the next two quarters. “We are looking at achieving full capacity and also getting our market-share back by the end of this fiscal.”