Ceat India to Buy Out RPG Group's Stake in ACHL.

Ceat India plans to increase its stake in Sri Lankan JV Ceat Kelani International Tyres from 27% to 50%.

After the stake hike, the manufacturing capacity of Ceat Kelani will go up from 45 tonnes to 60 tonnes per day.

According to the current scheme of things, Ceat India holds a 54.84% stake in Associated Ceat Holdings (ACHL), a company incorporated in Sri Lanka. The balance 45.16% in ACHL is held by other RPG group companies. ACHL formed a JV with Kelani Tyres to float CEAT Kelani Associated Holdings (Pvt) Limited (CKAH) in which Kelani Tyres holds 50% stake. CKAH commenced operations from July 1, 1999. Ceat Kelani International Tyres is a wholly owned subsidiary of CKAH.

Ceat India has decided to buy out 45.16% stake of other RPG group companies in ACHL and make it a 100% subsidiary of Ceat India.
This will automatically enhance Ceat India's stake to 50% in Ceat Kelani. Currently, negotiations are on with other RPG group companies regarding the valuation of 45.16% in ACHL. The deal is expected to be completed this fiscal.

Earlier this year, Ceat India had bought out Associated Motorways Ltd's 36.84% stake in ACHL.

Ceat Kelani, a tyre manufacturing unit, offers a range of tyres for trucks, light trucks, farm vehicles, two- & three-wheelers and radials for cars and vans. The company also markets tubes and flaps. While Ceat has worked out plans to strengthen its presence in Sri Lanka, in India too it is increasing its tyre production capacity from 400 tonnes per day to 575 tonnes per day through its greenfield plant at Halol and brownfield expansion at Nasik. The company aims to be a Rs 5,500-crore conglomerate by FY12.

The Halol plant, which will commence production from September next year, will produce 4 million radial tyres (which means 140 tonne per day) in phase 1. Subsequently, the capacity will be increased in next 10 years. The total investment will be Rs 690 crore. Of this, Rs 300 crore will come from internal accruals and the rest Rs 390 crore is the loan component. In addition, the Nasik plant will add another 35 tonne per day tyre capacity.

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