Ceat targets 20% margins, $1 billion revenue from Camso acquisition

Mumbai: Ceat Tyres is targeting operating margins of up to 20% and a $1 billion annual revenue opportunity from its acquisition of Camso, as the RPG Group company moves to take full control of the premium off-highway tyre brand from Michelin over the next three years, said top executives at the Mumbai-based tyre maker.

Last September, Ceat announced the acquisition of the premium brand globally and its Sri Lankan assets from Michelin Group that is expected to transform it into a global player in the high-margin off-highway tyre (OHT) business catering to farm, industrial, and other categories.

Also read: Too early to say if rise in small car demand after GST cuts will sustain: CEAT MD & CEO


Ceat, which currently earns Ebitda margins of 13-15%, expects Camso to be significantly margin accretive once the Sri Lanka plant achieves full operational independence and the brand ownership transfer from Michelin is completed.

"In a steady state, we should reach high teens or 20% operating margin from this business," Arnab Banerjee, MD & CEO, Ceat Tyres, told ET.

Ceat will steadily take over Camso's customer accounts from Michelin, with the full transition targeted by the second quarter of FY27. "Q3 onwards is when we will be controlling the entire sales and entire demand," said Amit Tolani, CEO, Ceat Specialty Tyres.

Full operational independence-including control of sourcing and supply-will take another 12-18 months as Ceat installs upstream equipment at the Midigama plant in Sri Lanka. The brand ownership transfer is slated to happen in three years.

Rights to the Camso brand-worth $700-800 million-remain with Michelin. Once ownership is transferred, Ceat plans to enter these segments. "It is a much bigger opportunity than the $150 million business we have bought," Banerjee said.

Also read: Ceat looks to strengthen global play; focuses on developing tyres to suit different markets

Key original equipment manufacturers (OEMs) customers being on-boarded include construction equipment makers including CNH, Bobcat, Doosan, Vermeer and Prinoth across North America and Europe, markets Ceat had limited access to earlier. A recovering global OEM cycle is also supporting demand.

"We have seen the bottom flatten and are now seeing an uptick from OEMs over the last 12 months," Tolani said.