Tyre maker Ceat expects 10-15% revenue boost on Camso acquisition

CEAT expects a 10-15% topline boost after acquiring Michelin's Camso compact construction line in a $225 mn deal, gaining Sri Lanka plants and global brand rights

CEAT expects a 10-15 per cent boost to its revenue as it winds up the acquisition process to take over Camso Construction brand’s off-highway tyres (OHT) and tracking business from French tyre maker Michelin Group.

 

The Indian tyre maker on Monday announced that it has completed the acquisition process.

 

It had, in December last year, entered into an agreement with Michelin to acquire the Camso brand’s off-highway construction equipment bias tyres and tracks business in an all-cash deal valued at $225 million (₹1900 crore), which includes two manufacturing facilities in Sri Lanka and the global rights to the Camso brand.

 

Arnab Banerjee, MD & CEO, CEAT said that they expect a 10-15 per cent rise in topline once the business comes to them.

 

The acquired business recorded revenues of $213 million in calendar year 2023.

 

This transaction also grants CEAT global ownership of the Camso brand, which will be permanently assigned across categories after a three-year licensing period. Michelin will exit from the activities related to compact line bias tyres and construction tracks.

 

Banerjee added that benefits to the bottom line will take some time to kick in as they understand the supply chain, and hence in the next four-six quarters they are not expecting significant accretion to their margins.

 

CEAT announced $171 mn (around ₹1500 crore) investment in Sri Lanka aimed at expanding manufacturing capacity for off-highway tyres (OHT) and tracks at the Midigama and Kotugoda facilities. These facilities will focus on export-oriented production.

 

With the Camso integration, international business would be close to 25 per cent of CEAT’s consolidated revenues. CEAT India exports are around $250 million and Camso has potential for another $150 million. Both put together, exports would be around $400 million on an annualised basis.

 

Off-highway tyres are used in agriculture, construction and mining. It is currently a $28-30 billion market globally.