Companies roll back capex cut as demand rises and plants run close to full capacity

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26 Aug, 2025 12:21

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In light of the faster-than-expected turnaround in demand, a few automotive and parts making companies are partially reversing the cut in capital expenditure they had announced over the previous months.

TVS Motor Company, Tata Motors, Ceat Tyre and Mahindra CIE have either made a provision for an upward revision in their capital expenditure (capex) for the year or are preparing to do so. The increase in capex ranges from 20-60 percent from the reduced levels announced in the first quarter.

This decision comes after the industry witnessed growth in sales for passenger vehicles (PV) and two-wheelers for the third consecutive month in October. PV sales surged 30 percent in October while two-wheeler sales rose 17 percent during the same month.

TVS Motor

Chennai-based bike and scooter maker TVS Motor Company has added Rs 200 crore to its previously announced capex of Rs 300 crore, taking the total to Rs 500 crore for the year. This includes a fresh investment of Rs 40 crore in British motorcycle company Norton, which TVS had bought.

Speaking to analysts, KN Radhakrishnan, Director and Chief Executive Officer, TVS Motor Company, said: “We are improving the estimated capex for the year to Rs 500 crore because of new products, export business and some areas where we may have to invest in production capacity.”

Tata Motors

Tata Motors’ standalone business, comprising cars, SUVs (PV), trucks and buses (commercial vehicles) could witness a higher capex if demand continues to be robust, especially for the PV business.

From the usual Rs 4,000 crore, Tata Motors had slashed capex on standalone operations to Rs 1,500 crore for the current year. The company has now provided a capex guidance of Rs 1,500-2,000 crore for the year.

“Capex will look dynamic because if you’re going to see 100 percent kind of growth rates coming through in PV, with the model mix changing toward petrol, you will need to do a few corrections. But none of this changes the fact that our main focus is to deleverage the business. And therefore, the need for capex will be significantly higher than availability of capex. We can assure you of that,” said PB Balaji, Chief Financial Officer, Tata Motors, speaking to analysts.

Mahindra CIE

The Indo-Spanish joint venture of Mahindra CIE has to add capacity as some of its plants in India are already working at 90-100 percent utilisation levels. During the April-June quarter the company said new expenditure had been stalled.

“We did not stop our investment programmes, because we were expecting that the market will come (back) soon, and that’s what has happened,” said Ander Alvarez, CEO, Mahindra CIE Automotive.

“In the last three quarters we invested something like Rs 200 crore to increase capacity and we will continue this. In certain verticals, we are improving our facilities so we can continue growing.”

Ceat Tyres

For Mumbai-based tyre maker Ceat Tyres there will be an increase of 10-20 percent in capex. After reducing it to Rs 500 crore for the year (announced during the June quarter) the company has put its revised capex “broadly in the range of Rs 550-600 crore”, said Kumar Subbiah, CFO, Ceat Tyres, speaking to Moneycontrol.

JK Tyre

JK Tyre and Industries, Ceat’s rival and market leader in truck and bus radials, is restricted in putting up new capacities since the company is currently focussed on deleveraging the business. This is despite running plants at full capacity.

“We had gone through a difficult time in the last 6-8 months and had to stop major capex plans. Only maintenance capex will be done now. Therefore our focus right now is to sweat our assets fully and not add any (more) debt to our balance sheet and focus on deleveraging,” said Arun Bajoria, President and Director, JK Tyre Industries, told analysts.

“We were operating at 80 percent utilisation at the end of the September quarter. All our plants making truck, bus and farm tyres are working at 100 percent capacity. We are expecting this trend to continue,” he added.