Higher share of off-highway tires business to boost overall business margins: Anant Goenka
Ceat’s acquisition of Michelin's off highway tyre (OHT) brand Camso will help the RPG Group company boost margins by raising the share of these more-profitable tyres in the overall mix to 25-30% from the current 15%, Anant Goenka, vice chairman, RPG Enterprises told ET.
Ceat signed a definitive agreement with the French tyre maker for acquiring the Camso brand for $225 million, the company said in a statement on Friday. OHT includes agriculture tyres, harvester tyres, power sports tracks and material handling tyres.
“The acquisition will be margin accretive for us. The margins of this business are higher than the CEAT margins,” said Goenka. The entire category (OHT) margins are fairly high—at 15-20% compared to 12% for regular tyres, especially those that are operating or have the manufacturing in South Asia, he said.
With Camso in its fold, Ceat, which caters to the agriculture segment and competes with Balkrishna Industries, will also be able to sell agri tyres under the Camso brand. The latter doesn't have a presence in the segment.
Goenka said Camso is a $1 billion dollar plus (value of the brand) brand and Ceat is buying $250 million of that business in Sri Lanka, said Goenka.
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