Ceat re-negotiates export order prices

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Ceat re-negotiates export order prices

Tyre manufacturer Ceat, part of the Rs 13,500-crore RPG Group, has been able to re-negotiate prices for a bulk of its existing export orders for the next 4-5 months on steep surge in cost of inputs such as rubber and carbon black.

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Mumbai, Aug 4

Tyre manufacturer Ceat , part of the Rs 13,500-crore RPG Group, has been able to re-negotiate prices for a bulk of its existing export orders for the next 4-5 months on steep surge in cost of inputs such as rubber and carbon black.

With the company managing to re-negotiate the prices for nearly 80 per cent of its inventory of export orders in July, this is expected to reflect in its second quarter earnings this fiscal. Last quarter, the company had taken a hit in its export realisation, as it had to supply products at older prices.

"This is the first time we are re-negotiating prices for our export orders and this will perhaps be the last time. We were compelled to take this step as the rise in input costs had been abnormal," Mr Paras K. Chowdhary, Ceat Managing Director, told Business Line.

Focused on Exports

Normally, the company has export orders for a period of 4-5 months at any given time, with its average export turnover for a quarter being Rs 120 crore at present.

As exports are beginning to yield better price realisation for its tyre products, Ceat plans to sharpen its focus on exports this fiscal. Last fiscal, its export turnover was Rs 506 crore and this year it expects to increase this by over 20 per cent.

Industry sources say that the spiral in raw material costs was, indeed, abnormal. Generally, most companies in this sector calculate raw material prices as weighted average 'recipe'- they take the weighted average prices of the different inputs they consume to manufacture tyres.

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