Tyre maker Ceat Ltd on Monday said it sold 6.92 acres of its factory land at Village Road, Bhandup near Mumbai for Rs 130 crore to Ashford Infotech Limited. Of the total amount, Ceat Ltd, the flagship company of the Rs 13,500 crore RPG Group, has already received Rs 120 crore from the sale and will get the balance amount within six months.
Further, the company clarified that this transaction will not impact its existing tyre manufacturing operations which will continue in the usual manner on the balance portion of about 24 acres of land at the same location. Paras Chowdhary, managing director, Ceat said, ?The amount received through the sale of the Bhandup property will be utilized for setting up a radial plant for which the location will be finalised within eight weeks.? Simultaneously, the company is also looking at setting up another facility to manufacture tyres for tractors, earthmovers and other large vehicles.
Giving a break-up of investments needed to fund both the plants, Chowdhary added that Rs 500 crore will be invested in the radial plant and Rs 300 crore in the other facility for manufacturing tyres.
?Both the plants are expected to be operational within two years,? he said adding that the company plans to steadily relocate the manufacturing from Bhandup to one of the new plants and hopes to sell the remaining land in 2-3 years,? he said.
However, according to sources, the company expects to hike tyre prices by 2% in April to offset higher raw material costs following hardening rubber and oil prices. Rubber makes up for about 60% of a tyre?s cost.
The announcement of the sale of land gave a boost to the company?s shares which rose 11.95% on the Bombay Stock Exchange on Monday to close at Rs 140.55.
Meanwhile, the company also has plans to extend the number of Ceat Shoppes to over 100 for its customers.