Debt & internal accruals to fund Ceat acquisition of Camso tyre biz from Michelin: Arnab Banerjee
Arnab Banerjee, MD & CEO, Ceat, says acquisition of this business will make Ceat’s international business contribution to cross 25%from day one and, this is EBITDA accretive and will contribute to the overall margin accretion of Ceat consolidated. OHT business will almost double in turnover post this acquisition and will be almost 23-24% of Ceat’s overall turnover from day one and progressively improve to 27-28, 30% over the next three to four years.
Ceat is going to acquire Camso tyres and tracks business from Michelin. This transaction aligns with your goal to expand internationally but from the numbers perspective, is this deal going to be EPS accretive and if yes, can you quantify the impact then?
Arnab Banerjee: Yes, it will definitely be EPS accretive over a period of time. First of all, it will take about six months to complete the deal. We will get possession of the property by May-June of FY26 and thereafter we will start consolidating this result. So, in the initial period, there is offtake and a supply agreement with Michelin so that business continuity is mentioned. That is a very good arrangement and when we gradually start getting control of the entire operation, it will be EBITDA accretive first and then EPS accretive. So, in the initial two to three years, we might see a slight dip in EPS which will come back up.
How do you plan to fund this acquisition? Will this involve raising additional debt? Are there any other financing strategies which are in place?
Arnab Banerjee: We are in a very
