Can Camso transform Ceat into a high-margin business?

Ceat is buying Michelin's Camso brand's off-highway tyres and tracking business for $225 mn

- Ranjani Raghavan & Satish John

Nant Goenka, vice-chairman of RPG Group, recalls a chance meeting with an HSBC banker during a flight from Delhi to Mumbai some six months ago, which sparked the conglomerate's interest in acquiring Michelin's off-highway tyres and tracks business.

In the next 4-6 months, Ceat faced a brief process as it had to navigate competing interests from Indian and Chinese tyre manufacturers that were also pursuing Camso. The company needed to determine its strategy and propose a price, which ultimately led to a deal announcement last week.

On Friday, tyre maker and RPG Group company Ceat said that it has entered into a definitive agreement with the French tyre maker Michelin to acquire its Camso brand's off-highway tyres (OHT) and tracking business for $225 million (about ₹1,905 crore). The deal also includes two manufacturing plants in Sri Lanka.

The business comes with very large OEM (original equipment manufacturer) clients such as JCB and New Case Holland and distributors. Ceat will also have access to high-technology products and Camso's track business customers.

Although Ceat will not have access to the tyres business now, in three years, it will gain access to the Camso brand.