- Natural rubber prices in India have reached a 20-year high, says CEAT CFO Subbaiah
- CEAT raised tyre prices multiple times in H1 FY, with another hike planned for September
- Price realisation in OEM segment improved 10-11% from July 1 under quarterly pricing
CEAT Chief Financial Officer Kumar Subbaiah said natural rubber prices in India have hit a 20-year high, prompting the tyre maker to take a series of price increases across segments through the first half of the fiscal year, with one more hike planned for September.
Speaking to NDTV Profit, Subbaiah corrected an earlier reference to a 15-year high in rubber prices.
"One small correction, natural rubber prices in India is at a 20-year high now. It's no more a 15-year high," he said, adding that domestic prices continue to hover between Rs 275 and Rs 280 per kg, while international prices, previously at a discount of Rs 15-20 per kg, have now moved to parity, trading around $2,400 a tonne.
On the company's response, Subbaiah said CEAT had taken a 5.5% average price increase in the replacement segment in the first quarter, followed by a 5.6% hike in July and a further 2% increase towards the end of August.
"We intend to take one more increase in the month of September in the order of about 1.5% to 2%," he said, adding that by the end of the quarter, the company expects its realisation to "largely recover" raw material costs in rupee-per-kg terms, though not in percentage terms.
In the original-equipment-manufacturer segment, which operates on a quarterly pricing arrangement with a one-quarter lag, Subbaiah said price realisation had improved by 10-11% from July 1.
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In the international business, the company took a 5% increase in the first quarter on fresh orders, with another 3% increase being targeted in the current quarter.
On demand, Subbaiah said growth had remained strong for eight to 10 consecutive quarters, led by the OEM and international segments, while price-sensitive categories like commercial replacement tyres showed some softness.
Capacity utilisation in the passenger car, two-wheeler and truck-and-bus radial categories stood at 90-95%, prompting additional capacity expansion through capex, he said, with utilisation expected to remain high over the next four to six quarters.
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