Ceat Q2 net profit drops 86% to Rs 6 crore

Tyre maker Ceat on Monday said its consolidated net profit declined by 86 percent to Rs 6 crore for the second quarter ended September due to higher expenses.

The company had posted a net profit of Rs 42 crore in the July-September period of the previous fiscal.

Revenue from operations, however, rose to Rs 2,894 crore as against Rs 2,452 crore in the September quarter last year.

The company's total expenses rose to Rs 2,864 crore in the second quarter from Rs 2,402 crore in the year-ago period.

"The domestic market continues to witness an uptick in demand, which has led to strong growth in the OEM segment. During the quarter, we made price adjustments in the two-wheeler segment, which has positively impacted our margins. Internationally, we are beginning to see some headwinds in developed markets," Ceat Ltd Managing Director Anant Goenka said in a statement.

Going forward, the company expects the second half of this year to be better in terms of revenue and margins because of improving domestic demand and stabilising commodity prices, he added.

Ceat CFO Kumar Subbiah said there have been some corrections in the commodity prices recently, and if the trend continues, the tyre maker expects it to positively impact the business in the coming quarters.

The company said its board has approved an additional investment of around Rs 396 crore to enhance the capacity of farm radial tyres at the Ambarnath plant, Maharashtra by 55 tonnes per day over a period of the next two years.

The investment is proposed to be funded through a mix of debt and internal accruals, it added.

Shares of the company on Monday ended 1.61 percent up at Rs 1,608.05 apiece on the BSE.