CEAT converts $24.5m inter-company loan to equity in Sri Lanka unit
- Executed USD 24.5 million loan-to-equity conversion in CEAT OHT Lanka on September 23, 2026
- Issued 12,788,094 ordinary shares at LKR 642.67 per share following BOI approval
- Converts 30.6% of the total USD 80 million inter-company loan into equity
- Subsidiary reported INR 4,206 million turnover in FY26, its first year of operations
- Ownership structure remains unchanged with CEAT OHT Lanka continuing as a 100% WOS
*this image is generated using AI for illustrative purposes only.
CEAT Limited executed a USD 24.5 million loan-to-equity conversion in its wholly owned subsidiary, CEAT OHT Lanka (Private) Limited, on September 23, 2026. The transaction strengthens the capital structure of the Sri Lanka-based tyre distributor.
The conversion involved transforming a portion of a pre-existing inter-company loan into ordinary shares. This action follows a disclosure made on August 17, 2026, and received necessary approval from the Board of Investment (BOI) in Sri Lanka under local norms. The total outstanding loan amount to the subsidiary was USD 80 million, of which this specific tranche has now been converted.
Transaction specifics
The agreement resulted in the issuance of 12,788,094 ordinary shares at a subscription price of LKR 642.67 per share. The total consideration for this equity infusion amounts to LKR 8,218,525,000, equivalent to USD 24.5 million. Since the shares arose from a debt conversion, no separate cash payment was required from the parent company.
| Particular | Details |
|---|---|
| Target Entity | CEAT OHT Lanka (Private) Limited |
| Conversion Amount | USD 24.5 million (LKR 8,218,525,000) |
| Shares Issued | 12,788,094 ordinary shares |
| Subscription Price | LKR 642.67 per share |
| Total Pre-existing Loan | USD 80 million |
| Regulatory Approval | Board of Investment (BOI), Sri Lanka |
Subsidiary profile and impact
CEAT OHT Lanka is engaged in the sale of automotive tyres, tubes, tracks, and other ancillary products. Incorporated on March 3, 2025, the entity reported its first turnover of INR 4,206 million in FY26. Prior fiscal years, FY25 and FY24, recorded nil turnover as the entity was not yet operational or fully established.
The conversion does not alter the ownership structure. CEAT OHT Lanka remains a 100% wholly owned subsidiary of CEAT Limited. As a related party transaction, the company confirmed that promoter group entities hold no other interest in the subsidiary beyond this parent-subsidiary relationship.
What the numbers show
The conversion reduces the subsidiary's external debt burden by converting 30.6% of its total inter-company liability (USD 24.5 million out of USD 80 million) into equity. This move likely improves the subsidiary's balance sheet health by eliminating interest obligations on the converted amount while maintaining full control by the parent. The shift from debt to equity supports the newly formed entity's financial stability as it begins generating revenue.
Historical Stock Returns for CEAT
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +0.91% | +4.56% | -3.68% | -2.98% | -1.11% | +152.11% |
How will the remaining USD 55.5 million inter-company loan be structured, and are further debt-to-equity conversions planned to optimize the subsidiary's leverage?
What specific growth targets has CEAT set for CEAT OHT Lanka's revenue trajectory given its rapid ramp-up from nil turnover in FY25 to INR 4,206 million in FY26?
How might the strengthened capital structure of the Sri Lankan subsidiary impact CEAT Limited's consolidated interest coverage ratios and overall financial flexibility in upcoming quarters?
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