CEAT Converts $24.5 Million Loan to Equity as Camso Off-Highway Integration Reaches 85% Customer Migration Threshold

In a key capital restructuring move following its $225 million acquisition of Michelin's Camso off-highway business, Indian tyre major CEAT has converted a $24.5 million (~₹234 crore) inter-company loan into equity for its Sri Lankan subsidiary, CEAT OHT Lanka (Private) Limited. The balance sheet adjustment coincides with CEAT reaching an 84% to 85% direct customer migration milestone by the end of September, while overseas marketing arms in Europe and the U.S. absorb upfront distribution costs ahead of full revenue realization.

Integrating the global off-highway construction equipment tyre and track business involves a two-phase transition covering front-end sales networks and back-end manufacturing logistics. While Michelin previously provided legacy customer support, CEAT has assumed direct management of the vast majority of client accounts, with the remaining 15% scheduled to transition by December.

Addressing reported losses in overseas sales units, CEAT Chief Financial Officer Kumar Subbiah explained that marketing subsidiaries in Europe and North America incurred short-term operational expenses after establishing office infrastructure and recruiting sales teams two months prior to revenue migration.

"The entire loss from the subsidiary companies is largely attributable to the Camso business," Subbiah stated, noting that distribution infrastructure had to be operational before migrating customer accounts. "There is a gap between the time that revenue has started generating versus the infrastructure which was kept ready two months before we started migrating."

In the specialized off-highway segment—which covers heavy agricultural machinery, construction equipment, and industrial material handling—upstream rubber compound manufacturing remains a critical operational link. CEAT is currently constructing upstream compound processing capability in Sri Lanka to achieve complete manufacturing independence.

"We are in the process of setting up that upstream... by quarter one of next year, of manufacturing will get integrated," Subbiah noted, pointing to Q1 FY28 as the target to eliminate reliance on external compound sourcing.

For Indian tyre manufacturers expanding globally, acquiring specialized off-highway assets offers access to higher-margin international OEM and replacement markets. Although extended transit times for Sri Lankan shipments into Western markets have temporarily tied up working capital, completing the Camso integration is expected to strengthen CEAT’s export earnings once direct channel migration is finalized.