Ceat to Cut Costs Through Plant Relocation

Ceat Ltd. intends to move its factory located in the Mumbai suburb of Bhandup to Patalganga, near the city of Thane and around 30km northeast of Mumbai. According to a report published in India’s Economic Times on August 8, the main motivation behind the proposed shift is to reduce costs and bring down the amount spent on local ‘octroi’ taxes.

The almost half-century old factory will be dismantled and relocated in phases, and CEAT has already decided upon the sale of 6.5 acres of surplus land at the plant site. At current real estate prices the site’s entire 31 acres may well fetch up to Rs 5 billion (£61 million) when disposed of.

“It is the reality of life. The company has to shift out tomorrow if not today,” said Ceat managing director Paras Chowdhary. Ceat, a company achieving a net profit of Rs 390 million (£4.7 million) in the year to March 2007, reportedly hand over about Rs130 million (£1.6 million) in local taxes on materials entering Mumbai city limits for use, consumption or sale.