Ladies and gentlemen, good day and welcome to the conference call to discuss CEAT's recent strategic acquisition hosted by Emkay Global Financial Services Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance with the conference call, please signal to us by pressing star and zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Chirag Jain from Emkay Global Financial Services Limited. Thank you and over to Mr. Jain. Thank you, Renju. Good morning, everyone. I'm here from Emkay Global Financial Services. I would like to welcome you all to this conference call. To represent the management, we have with us Mr. Arnab Banerjee, MD CEO; Mr. Kumar Subbiah, CFO; and Mr. Amit Tolani, Head of Specialty Business. This is a call with brief opening remarks from the management, post which we will open the floor. Welcome to you, sir. Yeah, good morning and welcome to CEAT's strategic acquisition update call. I am joined today by Kumar Subbiah, our CFO, and Amit Tolani, who heads our specialty business. I would like to thank all of you for taking the time and joining us today. As you know by now, CEAT has entered into a definitive agreement to acquire Camso's off-highway construction, bias and rubber tracks business from Michelin Group. The deal is valued at $225 million, which in INR terms is about INR 1,900 crores. This is special for us as this is CEAT's first major acquisition. The acquisition of Camso will give us global ownership of the brand, along with two manufacturing units in Sri Lanka. For CEAT, this acquisition reiterates our commitment towards the three pillars of our growth strategy, which are premiumization, international business saliency, and investment in high-margin specialty segment, which is at the top of our investment hierarchy. I'm excited about this journey and thank you being part of this moment. I'll take you through our rationale for the transaction and what it means for us, after which Kumar shall share key financial implications, and Amit is around for answering specific business-related questions during the Q&A. First, the brand. Camso is a premium brand in the OHT segment, tires and tracks, with strong brand equity in North America and Europe. It has a loyal customer base built over the years across OEMs and distributors, which is based on product superiority, proprietary technology, service excellence, and manufacturing excellence. It supplies products to 50-plus OEMs and has an aftermarket network covering 200-plus dealers. It has got good market share in both tires and technologically intensive tracks categories. Some of its customers include JCB, CNH, GreenOx, Manitou, and Kubota. What is in it for us and why have we bought it? As communicated earlier, it fits into our key pillars of strategy, which are premiumization, internationalization, and OHT. The OHT segment comprises agriculture, construction, mining, and other industries and is globally approximately a $28-30 billion market. First of all, for us, this acquisition increases the contribution of OHT business saliency within CEAT. It is a top priority for CEAT, and after this acquisition post the closure of transaction, this will form roughly 25% of CEAT's revenues. The transaction will include a business with revenues of $213 million in calendar year 2023, which includes tangible assets in Sri Lanka, working capital, and the brand. The range is complementary to our catalog of products, which is compact construction tires and tracks, together constituting a $2 billion market potential. It gives CEAT an entry into the track segment, which we don't manufacture and sell today, which has much higher profit margins, and it has some proprietary technology associated with it. It's also a less crowded space, and Camso holds second position globally. In this tracks market, which is roughly $1 billion, about half of the market is premium, and Camso is number two in this market. The tire segment, which is again another $1 billion, the premium share is a little lower at quarter of the market, and Camso has a strong share there. In this segment, there is a significant value play also, which is not the case in the track segment where there is no value segment. In the tire segment, there's an opportunity for a dual brand play. We have to decide on that. In the track segment, there's a strong proposition, which is premium brand play. Secondly, internationalization. They've been talking about raising the saliency of margin-accretive international sales from 19%-20% to 25%. Post this acquisition, the contribution will be close to 26%. Thirdly, this enhances the premium element of CEAT's overall portfolio given Camso's steady premium positioning across all segments of the OHT market. This will significantly enhance realization in our own specialty category. Now, we also see, and I will explain later, beyond compact construction segments, how we can leverage the Camso brand over the next 10 years. We have a long history of successfully operating in Sri Lanka through our JV with Kelani Tyres over the last two decades. Since we are well positioned to enhance the operational activity in Sri Lanka for the Camso plants, we know the ecosystem well, we know the regulations well, and we know the people well. Let me now throw some light over the transaction parameters. Michelin bought this brand in 2018, and it's traveled several categories, including compact construction. We understand that their priorities may have changed over the years as compact construction tires and tracks, which is being bought by CEAT, is primarily a tire category tires. They might have decided to exit the category and focus more on realization. As I mentioned about the emergence of value segment in the tire segment of compact construction, which also may be sitting on their minds. The transaction includes business, which is around $213 million in current year 2023, and global ownership of the Camso brand along with the manufacturing facilities. The margin profile of this segment of the business is in high double digits, maybe close to 20%. We still have about 35% headroom in terms of capacity utilization in the Sri Lankan plants. Plus, capacity is roughly 200 metric tons per day and split equally almost between tires and tracks. The manufacturing facilities have been operational in Sri Lanka for the last 40 years, servicing global demand in world-class shape under Michelin patronage, and of course, integration of a well-run plant, even if they have some challenges during the integration, which we will definitely face and handle. As per our agreement, the Camso brand will be permanently assigned to CEAT across categories after a three-year licensing period. This will expand CEAT's product portfolio in the high-margin OHT segment. Let me remind you that Camso brand has a turnover of $1.2 billion across different categories, including compact construction, which is being manufactured in the plant today. So after three years, this entire set of categories will be available to CEAT. So this compelling opportunity today that we are talking to you about is not only tires. It's also about rubber tracks. We spoke about rubber tracks in compact construction. There are rubber tracks in harvesters. There are rubber tracks in agriculture segment also. And about 80% of this futuristic segment for us, futuristic, 80% of that is premium. And Camso is the number one brand in rubber tracks in agriculture and harvester. It is number two in construction equipment. This is much higher in profitability, and there is no value segment play here at all. So on an overall basis, I think we are looking at it positively in first, business continuity, ramping up the capacity in the Sri Lankan plants in compact construction tires and tracks. And after three years, when the brand is assigned to us, make a foray into the profitable agriculture tracks, harvester tracks, power sports tracks, and other categories that we can enter with this kind of technology. So today, as we speak, the plant is 50-50 in terms of capacity between tires, compact construction tracks, and tires. The channel is roughly 53% OEM and 47% aftermarket. Geography, as I mentioned, key geography is U.S. with 50% and balance mostly in Europe. We are also acquiring or getting a team of qualified manpower base of roughly 1,600-plus employees, primarily in the manufacturing setup in Sri Lanka, and a few highly qualified employees in the product development setup from outside Sri Lanka. We see a strong cultural and operational fit between Camso and CEAT, including high emphasis on customer experience and employee experience, which is close to CEAT's TQM culture and people management approach. Michelin Group and CEAT have agreed to work very closely in transitioning this business from the seller to the buyer across the value chain. We do not foresee any layoffs at either of the plants we are acquiring. As a people-focused organization, we prioritize the well-being and stability of the workforce, so as we embark on this new chapter, I thank you for your trust and support. The transition will bring both opportunities and challenges, and I want to assure everybody that we have a detailed plan worked out between Michelin Group and CEAT to ensure a smooth and seamless integration with focus on continuity. Our first 100-day plan is business continuity in terms of the entire value chain, especially in relation to customer requirements. We will build on the synergies and strengths that this acquisition offers, unlocking new opportunities for growth and innovation with OEM-based mantra and people-friendly policies being in CEAT's DNA. With this, I will pause here and hand over the call to Kumar for his remarks. Thank you, Arnab. Good morning, ladies and gentlemen, and thank you for joining on this very important moment. As you are aware, the total deal value of this transaction is about $225 million. This $225 million includes manufacturing facilities, inventory, intellectual property, direct brand, trademarks, and business, etc. We've been carrying out this transaction on asset purchase model, and the acquisition of this business is in line with our capital allocation, where priority is given to a specialty/OHT business and also to our international business. As you all are aware that our balance sheet has strengthened over the last few years significantly, and that covers our leverage ratios, and hence we are comfortable with respect to this acquisition. Our current leverage ratios currently stand healthy at net debt to equity of around 0.6 and net debt to equity of 1.2. To make everything bonus aha, Janet Shakolaa. We expect our actual fund flow to happen after six months once all the approvals are in place. We will be financing the acquisition through mix of internal accruals and debt. We expect that we have 70% of the total value and balance through accruals. Our incremental debt at no point in time will not be more than 70% of the overall value of the transaction. Given CEAT's healthy financial position currently, it is very well placed to acquire the business, and we have already received necessary help and support from various other banking partners. Also, it is important to note that the deal value includes some amount of payments, which will happen progressively as per the schedule. Considering that the deal would happen in the financial year, quarter one of the financial year, we expect the acquisition value to reflect in our consolidated profit and loss account balance sheet only after quarter one of the financial year. In the next six months, we will be carrying out various. We, as well as the seller, would be applying for various regulatory approvals in Sri Lanka, India, and all other relevant parts of the world. We expect the acquisition to be margin-accretive, and EBITDA would be accretive over a period of time. Post funding of this acquisition, we expect our net debt-equity ratio to be still within our threshold of 1, and net debt to EBITDA to be under 3. We'll continue to drive CEAT's growth journey through organic and selective inorganic opportunities, strongly driven by our capital allocation guidelines. We'll keep updating you on our future quarterly interactions about the progress till the formal closure happens. Now we can open the floor for any Q&As. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment as the question queue assembles. The first question comes from the line of Mumuksh Mandlesha from Anand Rathi Institutional Equities. Please go ahead. Thank you for asking, sir. It's pretty grand. How should we look at these things in the key segments? For instance, compared to our buyers? Also, is the segment significantly changed through regulation? Also, can you help us know how the Camso revenue segment has been in the last 15 years and how it has been gaining in the future? I'll answer the first part of the question. The industry is, I mentioned, compact construction tires and tracks in different segments. Both are roughly $1 billion size. The growth in compact construction tires is roughly 2%-3%. The growth in compact construction tracks is roughly 5%-7%. So that has been the growth rate. What was the other question? Sir, regulating. Tracks will always be biased. That will be biased forever. The tires may. There is some radialization that has happened and will continue to happen. However, the core of compact construction tires will be biased because of the varying operations of the machines and applications it is subjected to. It requires strong sidewalls, and the increase in life of radial tire and the increase in cost of the radial tire doesn't create a good value equation for the customers. The core of compact construction tire will be biased. With some radialization of the fringes, tracks will be 100% biased. On the revenue trend? The revenue trend over the last five years. Post-COVID, in the year 2021 and 2022, the business saw some good growth momentum. In the year 2023, there was a marginal decline because of higher sales happened in the previous years. So largely in the range of about 5-6% kind of growth happened till 2022. There is some drop in 2023. Sir, can you give me some numbers for the low-price tires in Sri Lanka? What is the market share? So the market share of the brand is in two digits, and they are market leaders in the premium segment. So that's what we've seen. So those supporting only, is there any challenge or advantage in terms of operation and service? As a ecosystem, China has been very high. And any increase in this shifting forecast, sir? No. See, with respect to forex, actually, it's a plus. A couple of years back, when Sri Lanka faced issues on account of currency, those who have been dependent on imports where currency outflow happened faced some challenges. Considering that they have a JV in Sri Lanka, and we had a little bit of challenge with respect to import payment. This entity is 100% exports, earns all of that income in foreign currency. So therefore, generally, there would be a government, as well as government agencies, would be supporting and encouraging such entities who are highly export-oriented. So from that point of view, we do not expect any issues in terms of this unit being located in Sri Lanka with respect to forex. Otherwise, I don't think there's any major concern as far as in terms of location of Sri Lanka from overall geopolitical reasons point of view. Can you please section it quick, sir? Please repeat, sir. Can you repeat the question? Sorry. Yeah. Can you please mention it quick? Is that Is that Sri Lanka? Restructuring. See, look, we are going to get this manufacturing facility along with people who are currently working in that particular facility. What we may have to do is maybe we may have to add some hardware so that the unit is fully self-sufficient. Okay. So which we would be doing in the course of time so that there is no dependence with respect to it is fully independent in terms of its ability to handle all operations of manufacturing. Otherwise, there's no restructuring plan. Thank you. Mr. Mandlesha, please join the queue for more questions. First question comes from the line of Chockalingam Narayanan with ICICI Prudential PMS. Please go ahead. Yeah. Hi. So one question was with regards to, I think you talked about $1.2 billion of revenues that this business currently has, and it will be available for this factory to do. So could you kind of elaborate on that? Camso does a business of $1.2 billion from various factories, including Sri Lankan operations, operations in the U.S., and operations in the EU. The segments are compact construction, mining, power sports, agriculture, material handling, harvesters, so on and so forth, solid tires, right? So when this brand straddles this business, the factories that we are getting as part of this deal manufactures compact construction and tracks only. They don't manufacture any of the other categories which I mentioned. So when the brand is adapting to us after three years, we can make a foray in any of these categories with Camso brand, and the manufacturing of that will have to come through some other facility which we have to invest in. Okay. So So today, I'm assuming you'll be present in some of those categories today. What is the pricing difference between your brand and Camso, which is there in those categories? So while our realization stands close to $3-$4 per kg, we see that Camso's realization in similar categories is anywhere between $5.5-$7 per kg. So around 45%-60% of premium over our brand. To kind of work with this kind of category, how much of CapEx do you need to kind of? So as I mentioned, our first objective is continuity, and we have about 35% upside in the Sri Lankan plant in compact construction tires and tracks. Our first focus is to utilize that capacity. Post that, the tracks across various segments have significantly higher attractiveness in terms of the brand power, trust, as well as margins. So this will be relevant only after three years. So we'll have to work out which of those categories we would like to first make an entry. Should we invest in-house or outsource capacity? All those things are under consideration, but we'll definitely make a foray. Maybe we'll update you subsequently when we are ready. Would you be receiving any licensing revenue from Michelin? We won't be receiving because licensing is given to us by Michelin in the first three-year period, and post which the full ownership of the brand or assignment of the brand will happen. So therefore, the total consideration value includes all, includes some portion that has been assigned for the purpose of licensing, which is a small portion of it. Michelin's press release has this word, $0.049 adjusted EBITDA. What does Adjusted EBITDA here mean? No, I think we relied on actual EBITDA for the purpose of evaluation of the business. And there could always be upsides whenever you buy a business. So we went by what has been achieved, and there are some opportunities as Arnab just now mentioned. There's an upside possible in terms of utilization of the plant at a higher level. So our evaluation is based on whatever they have achieved in actuals in the last two or three years. So if you were to understand what's the difference between the two, would it be possible to identify? I think in earlier conversations, I mentioned that at this point in time, after their way of issuing financial statements, we saw a number of mid-teens kind of a margin number in the financial statements. That was the basis on which we have done the evaluation. Wonderful. And as part of this, how much is working capital today? So what we would be getting as part of this value is the manufacturing facilities, normative level of finished goods inventory, normative level of raw materials, and some engineering items. We're not going to take over any other elements of working capital as part of this. So you assume some current assets will be coming along with it. Liabilities and receivables is something which will come into working capital of ours once we completely take over the business. Okay. And last question from my end. What's the CapEx currently being impacted in this business, and how much CapEx incrementally required that you kind of mentioned? How much incrementally? Not much of CapEx. In the last three, four years, the seller has upgraded the plant to some extent. Considering capacity utilization is not very high, so therefore, with respect to adding capacities, not much of CapEx is required. However, once we take over this business, some small amount of CapEx we'll have to incur so that the plant is fully sufficient. We do not expect any significant CapEx in the initial period. At least three, four years, we don't expect anything as far as this particular plant is concerned. Thank you. Thank you for all the questions. Thank you. We might have all the questions. So restrict yourself to one question and we'll follow up. The next question comes from the line of Siddhartha Bera, Nomura. Please go ahead. Yeah. I'm glad for the opportunity and press on the decision. Sir, first question again was for some near-term numbers, if you can share in current year, what is the revenue and margins you are looking at for this business in FY 24? And if I look at the longer term, you mentioned that you are already the number two player in these categories. And given this market size, about 20% market share is what it seems to have. In the longer term, do you see market share gains or how has been the history, and what are the drivers which can help you achieve that? Yeah. So let me answer the second part of the question. We have got this business with an eye to market share gain. So both in construction tires and where we see a possibility of a dual brand play. And in tracks where we'll focus on the premium brand of Camso, we see definitely a scope of market share gain through better engagement with OEMs in NPD and also in the aftermarket situation. So that's number one. The market share I am able to verify in rubber tracks, our market share, Camso market share is 20% entirely in premium segment. So 20% entire market entirely in premium segment. And tires market share, where there's a value play also, and Camso being in premium segment, market share is 10%. So with Camso, as well as with the dual brand strategy, we see our market share growing. This production of tires can happen in Sri Lanka as well as in our existing setup in Bhandup and Nasik. So this is possible. So therefore, supply-wise as well as intent-wise, we are looking at tires market share definitely in the tires and tracks business. And looking at current year, you asked about current year situation, which is calendar year FY24. We expect turnover to be lower than $213 million that we mentioned in calendar year 2023 because of two issues, primarily the headwinds in the market that we see in the OEMs, which we are also experiencing. All players are experiencing. And secondly, because of this transition kind of situation, there will be a drop. And since fixed costs are not going away, there will be no retrenchment or layoff. So therefore, the margins will also appropriately drop. We saw this during the deal, and we see this coming back up when the value chain transfers to us. It will climb back up FY26, 27 onwards. Okay. And in the medium term, do you see a possibility of shifting some of the plants from Sri Lanka to India also, given the business scenario which we also have faced in the past for the macro issues? Or do you think we may continue from there only in the medium term, those sort of demand? We intend to continue utilizing the capacity of Sri Lankan plant, where there's a headroom of around 35% at least, as we mentioned earlier. But there could be opportunities for faster growth through manufacturing in India. So looking at the customers and growth opportunities, we could manufacture additional in India. We are not looking at transferring any capacity out of Sri Lanka to start with. Thank you. A reminder to all the participants, please restrict yourself to one question only. The next question comes from the line of Amar Kant Gaur, Axis Capital. Hi. Thanks for taking my question. And congratulations for a great addition. My question is largely on the brands and synergies that you see. So let me get it right if this understanding is correct, that after three years, you would be able to sell the other type of tires under Camso brand, which could be manufactured in plants outside of Sri Lanka. Is that correct? Some items could be manufactured in the Sri Lankan plant from the other categories. We have to look at that. We think some more categories can be manufactured, and some could be manufactured outside Sri Lanka. Okay. Got it. And in terms of the addition of the brand, is the new category the only benefit you are seeing, or are there some more synergies, quantitative synergies that you are looking to invoke with this acquisition? There will be synergies in the plant operation and raw material procurement, in supply chain, logistics. There's a cost structure which we have seen is being incurred today. When we get in, we will realize what we can do with it, but we would not be able to quantify it right now because the deal has not closed. There'll be five, six months of aftermarket use. But intuitively, we feel in terms of channel, there is synergy. The CEAT brand and Camso brand will play a value play. Camso will be a position play. So across the OEM and distribution channels, there'll be cross-selling possibilities which are there. And the new categories, of course, is a completely new opportunity. Sir, finally, just one last thing. In terms of fungibility of capacity, you're talking about 50-50% of capacity being utilized for tires and tracks. Would there be fungibility if one segment were to grow faster than the other, and you had to utilize more of the other plants for this change? I think, sir, now as we varied the capacity, it is not fungible. Okay. So if one segment were to grow faster, then you might need to invest more in a particular segment, maybe in Sri Lanka or India, whatever the case may be. In downstream only. The upstream is common. Like in all tire plants, the upstream has no difference. In downstream capacities, we have to create something if one category grows faster. Or we can shift it to India. That is a separate thing. Or we can invest in Sri Lanka itself. Wonderful. And just one clarification. You said you will just be acquiring assets, so there will not be any debt that will be absorbed, so it is your pure cash being that you are doing? Yeah, true. No, because it's around asset sale basis the seller is selling. So we will be acquiring assets. We'll be acquiring stocks, others. And we will take it in another entity. Okay. We already have a presence in Sri Lanka. So we are evaluating how, but we will move to another entity which will be owned 100% by CEAT India. So we are not inheriting any other past liabilities, including payables. Everything will be afresh from the day that we take over the business. Understood. I think the things that you talked about between CEAT and Camso brand currently, that difference should go away as and when you start manufacturing or supplies from the country? So So would that assume that the difference will go away completely? Sorry, can you repeat your question, please? What I'm asking is, there is a fairly significant difference between the Camso brand and the CEAT brand, right? And once you get hold of the licenses, you own those licenses, you would be able to sell the CEAT-manufactured products also under Camso brand. So the pricing difference between those two should go away completely. And the $3 you talked about would go up to $4.5, $5. Would that be a fair difference? No, it is not because the customer pays for the brand irrespective of where it is manufactured. So Camso will always be a premium play at similar levels to which it is selling today. And CEAT will be a value play at similar levels that CEAT is selling today. So there may be a dual brand play in some categories, for example, in tires. In tracks, we may not introduce CEAT at all because the market doesn't have any dual brand play at all. So we will play only with Camso at the current level. The CEAT brand will continue to be a category in the brand where we play in the categories where Camso is already? In the premium segment. Camso is in the premium segment. CEAT, if at all, will be in the value segment where a value segment exists. We may not be willing to create a value segment on our own initially. Mr. Kumar, please return to the queue for more questions. The next question comes from the line of Jinesh Gandhi,. Please go ahead. Yeah, hi sir. A couple of clarifications. One is with respect to the Camso brand, you mentioned revenues are $1.2 billion across various categories of 200 and something from tracks and construction tires. So what happens to the branded revenues post three years in brand terms because it balanced $1 billion of revenue which Michelin had not sold? So do they move to other brands, or they will pay a sub-brand royalty, or how it will work after three years for those billion dollars of revenue which is not acquired by CEAT? CEAT will get access to all those categories after three years because the brand is going to be assigned to us. In the meanwhile, Michelin may migrate some of those from some of those categories to some other brand in their own stable. That is how the deal will work. So they may migrate to some other brand. Finally, just a second. Just to clarify, in compact construction and tracks, Michelin will completely exit. They are not going to compete in these categories in any brand of their own. Right. Right. And finally, you mentioned margins were close to 20%. But if you go by the basis of Michelin and go by that EV multiple because it's 16x, EBITDA margins are about 20%. So is that primarily the difference between the way they're calculating EV, which will include debt as well, and hence the difference, or are you primarily rounding it out to 20% and the margins are close to 23%? No, see, look, in their public statement, they used the word Adjusted EBITDA. Okay. So we relied on actual EBITDA when we arrived at the valuation. So therefore, that is always subjective in terms of what you want to adjust to arrive at Adjusted EBITDA. So before that, they come to a number of whatever they have agreed. Okay. Got it. And last. Adjusted EBITDA or not actual EBITDA. Okay. Got it. And lastly, what would be the current overlap in terms of the category of CEAT specialty tire revenues with Camso's brand? I'm guessing it would be largely on the construction tires. So what percentage of our specialty revenues comes from construction tires? So we are highly focused on the AG segment today. And most of our revenues come from the AG segment in the international market. So construction is a very small percentage of our revenues in the specialty play today. With Camso, we get an access to the construction segment. We have a huge portfolio there. Right. And in terms of how to use Camso brand in AG category, would it be relevant or I mean, I'm just trying to understand if the use of Camso brand in AG can enable us to improve our realization? The channel is the same. The customers are the same. The distribution is the same. The OEMs are the same. So there is a definite possibility for us to use the Camso category in the AG play as well. Got it. Thanks for the question. I'll come back and see. Thank you. Next question comes from the line of Mitul Shah. Please go ahead. Thank you for the opportunity and congratulations. My first question is on SKUs, how we are placed in terms of we have pooled rank or there is a potential to further expand the SKUs vis-à-vis competition, and how the competitive landscape in terms of SKU as well as network, any further potential for penetration in new geographies? In the compact construction category, as Camso is the market leader, they have a complete range of SKU and customer offering. We see that the range is completely complete. There are certain projects also that they are doing with various OEMs, which is industry-first phases that come in, and that is also something in the pipeline. From a range point of view, it is more or less complete. Since they are market leaders, they have the adequate range. Even on the tracks side and on the network side, when I say construction includes both tracks as well as tires. Okay. Network-wise? So network-wise, the distribution is more than 200-plus distributors worldwide, high-quality distributors, and more than 50 OEMs that we have access to now. So very well enriched in terms of distribution as well as OEM coverage. This is the second and last question on plant-wise efficiency. Is there any further scope for improvement in plant efficiency with respect to the utilization if we assume utilization to remain more or less stable at present? And whether it's more efficient compared to India plant or India plant is a relatively better productivity? The plants are very well-run, very well-maintained, and we are aware of some of the efficiency figures. They're absolutely world-class, very, very well-run plants. With, of course, further utilization of capacity, efficiencies will be enhanced to the extent of fixed cost coverage. But as it is, even today, the plant efficiencies are very good. Thanks and also Rishi. Thank you. Next question comes from the line of Rishi Vora with Kotak Securities. Please go ahead. Hello. Thank you for the opportunity and congratulations for the acquisition. Sorry, while I mentioned first, did you, by any chance, have the actual EBITDA numbers for CY23 and 9M of CY24 just for us to get some sense on the profitability despite a challenging environment at this point in time? See, look, it is not a separate company by itself. These are all called-out numbers we are unable to share at this point in time. We would be able to share an update once it becomes part of our business so that we'd be able to have more hold on those numbers. Mr. Jain, can you also comment on what would be their average ROCs over the last couple of years just to get some sense on the progress? See, on the margin side, it is around mid-teens. Okay. And the ROC, if you were to set up a plant of this size, okay, we would need to incur that much amount that we are paying for the total value. So that includes other elements also. We expect ROC to be attractive. But we'll give you an update as we start operating the business. We expect it to be higher than Indian ROC, and we expect the margins to be accurate to CEAT India. So beyond that, I think we'll give you more updates in the future. Right. Of course, I saw on an expert article you mentioned once the integration difference. Would you agree that it would be initially a transition and maybe some transition onwards it will become accurate? Yeah. On the margin side, okay, look, on a financial year basis, assuming that by quarter one of next financial year this happens, maybe for nine months we will have the revenue and balance sheet consolidated. We hope margins could be accurate for the next year. From EPS point of view, maybe one to two years from then it's possible for it to be EPS accurate. That's the way we are seeing at this point in time. Thank you. Mr. Vora, please rejoin the queue for more questions. Next question comes from the line of Joseph George with IIFL Securities. Please go ahead. I have two questions. One is when we look at the business model which is in India of manufacturing it in a low-cost geography and exporting it to, say, US, Europe, etc., prices in India may be 25%-30% of the margin. So this business with a similar structure of low-cost manufacturing and higher realization costs eventually have a potential to go to 20% plus kind of a margin? In a steady state when we get in and have run the full value chain to ourselves, it has the potential of duplicating those kind of margins. Understood. Thanks. And the second question that I had was you mentioned that you have access to about 200 distributors or dealers, as you call it. Now, do any of these dealers and distributors overlap with the existing network for the CEAT specialty brand, or will the entire 200 be incremental? And if incremental, does it provide you the opportunity to use these distributors for the CEAT brand as well? So the overlap is very minimal. As I said, CEAT's portfolio is more AG-focused, agriculture-focused, and this is a completely construction, compact construction and OEM space. So the overlap in terms of OEMs as well as distribution is very minimal today. And we get access to these distributors as well. Yes. Would those distributors be useful in the context of selling what CEAT makes in the specialty division today? Yes. Yes. They would be relevant and contextual with the range that we currently have. Understood. Thank you. Thank you. Next question comes from the line of Himanshu Singh with Baroda BNP Paribas. Please go ahead. Hi. Thank you so much for the opportunity. I just wanted to understand what is the revenue split by geography and segment for the Camso brand currently? 60% of the revenues come from the North American market. 70% of the revenues come from Europe. 4% comes from South America and the rest of the world. Sure. So Camso brand, they have been in very specialized markets. So are we getting anything on the R&D front also apart from the facilities in Sri Lanka? Are we getting the R&D team or anything on that? So we are getting people who have the expertise in product development. So they are coming along both from the Sri Lankan team as well as from outside Sri Lanka. We are getting all the technology. They use some proprietary technology in manufacturing the tracks, so we'll have access to that, of course. And all technologies being used in the plant to manufacture the current product portfolio servicing current customer needs are also coming to us. From here on, future development will have to be on our account. Sure. And just last question. So from our portfolio on the specialty side, how much of the remaining $1.2 billion business which Camso currently does, we can actually cover over that? So agriculture, tires, and radials, we are in that business today. So that can easily migrate. We are selling in CEAT brand, and some of that can migrate to the premium end. For others, which is tracks, and for some other segments, we'll have to develop the range and introduce into the market through a production setup, which could be internal or outsourced. Is there any indication in terms of what portion of the 1.2 billion you can service from our existing portfolio? So the tires part, some of it can be serviced. The tracks part, which is there in various segments, that is completely new to us. So you can say from our current capacity, it will be 10%-20%, maybe 30% at best. Thank you. Mr. Singh, please rejoin the queue for more questions. Next question comes from the line of Abhishek Jain with AlfAccurate Advisors. Please go ahead. Thanks for sharing your congratulations, sir. Sir, how many SKUs is the company will add upon the acquisition in the OHT segment? More than 750 SKUs would be added into the portfolio. So total SKUs would be around 900, 750, it would be around 1650, 1658 in OHT segment? Yeah. After the addition, we would be more than 1700 in terms of our portfolio. Thank you. Mr. Jain, please rejoin the queue for more questions. Next question comes from the line of Rishi Vora with Kotak Securities. Please go ahead. Yeah. Thanks for the follow-up. Just on the distributor side, for Camso brand, we have 200 distributors. And obviously, one of the reasons why they would be a distributor is also because Camso brand was linked to Michelin brand. And now with CEAT taking over, and globally, we are obviously not as renowned as Michelin. Will the margin structure change? And how easy or difficult for us it would be to retain these distributors? Camso brand existed before Michelin took over in 2018, and it was a premium brand right through its history, so the interaction during the due diligence phase that we had with OEM customers and some distributors is that the brand matters, the service matters, the product performance matters. The premiums didn't go up when Michelin took over. Therefore, the premiums may not go down when Michelin is selling it to us. Understood. Understood. Understood. Thank you. Next question comes from the line of Jatin Parashar with Parashar Estate. Please go ahead. Thank you, sir. Thank you very much for giving me the opportunity, sir. This is my first time talking to any company, sir. Sir, my question is this, sir. If you choose to purchase this company, sir, if I talk about this corporation, sir, will it handle us or not, sir? Can you please repeat your question? Thank you, sir. Thank you for giving me an opportunity. Sir, my question to you is this, sir. If you use the 30%, will come from equity, and 75% will come from this, sir. If you follow up the balance sheet, sir, sir, the equity ratio is very less, sir. So will it help us, sir, or not, sir? If we are not able to manage the current shortcomings, how will this acquisition be useful, or what will happen, sir? So this is my question. Okay. See, quick ratio is basically a better version of current ratio. Okay. Our understanding, I'm just saying, so assets which can be current assets and current liabilities which can be converted into cash within a period of six months is normally we call it as quick, and current assets is, say, average about a year, so maybe C. We don't see any implications with respect to that because of the acquisition. As of now, CEAT's working capital is a little on the negative side. I do not think it will undergo any change on account of this particular acquisition. So therefore, it may not have any adverse impact. I hope I've responded to your question. Thank you. Mr. Parashar, please rejoin the queue. Congratulations, sir. Congrats for asking your first question to CEAT management team. I'm sure more such insightful questions will be addressed to your future clients. Thank you for giving us an opportunity to respond to your first question. Thank you. Mr. Parashar, please rejoin the queue for more questions. Next question comes from the line of Kumar Pankaj, Axis Capital. Please go ahead. Thanks for taking my question. My question was on the acquisition. The timeline of the acquisition, I'm not sure about having spoken to them. And in your opening remarks, you mentioned that the margin is going to be 20%. You have acquired it. Your voice is not audible. There's a noise in the background. We can't hear you from. Just a second, please. Is it good to know? Yeah. So my question is, when Michelin acquired this business, the margin that they acquired was 14%. And in your opening, you mentioned that the margin of the business that you acquired is at 20%. So is the reason for that is that you have acquired higher margins for the business, or the margins of the entire business itself have gone up over the years? Or has a leg of this margin improved? So firstly, we are not aware of the overall margin of Camso brand. We are aware of what we have seen in the construction equipment segment. Post-transition, this business has potential to have very strong margins, which we have indicated. In one of the questions, we also indicated it could track close to 20% or even above 20% in a stable situation. Thank you. Mr. Kumar, please rejoin the queue for more questions. Next question comes from the line of Ronak Mehta, with JM Financial. Please go ahead. Yeah. Thank you for the opportunity. And congratulations to the acquisition. I just want to clarify on the acquisition part. So given that now there will be some licensing fees which will be cleared, and there will be also customer contact, trademarks, which would have come along with the acquisition. Is there an understanding that if it's like three years, there will be a selective application? And And how is that application to normalize? No. See, look, the full ownership of the main brand comes after three years. So there will not be any depreciation associated with that. We can assume that it will be replaced by some licensing fee portion. So after it becomes part of our brand, it becomes clearly with us, there may not be any material change. Okay. So as we deploy the brand for larger applications, for a larger turnover, etc., we should, in fact, the total income or total revenue that this brand would generate should be able to offset more than the depreciation. And we will take a reasonable period of time with respect to the life of these intangible assets and accordingly depreciate. So overall, we do not expect any high level of depreciation in the initial period. Even post that, also, with respect to depreciation as a percentage or depreciation per kg, it may not be very different. Sure. Thank you. Thank you. The last question comes from the line of Ashutosh Tiwari with Equirus Securities. Yeah. Hi. The first question is really out of two distributors that you talked about. How many would be common between Camso and CEAT distribution is right now? Ashutosh, there would be only a few distributors that are common compared to CEAT and Camso today. So you'll be able to sell all these agri tires that are selling in the market to these distributors over time. That's the main benefit. Yes. Yes. Yes. And secondly, on the depreciation part, roughly what depreciation we expect per year on this? Because this also includes intangible plus also inventory. So what will be the depreciation per year? No, depreciation is linked to the life of the asset. The plant and machinery is sufficiently depreciated in the books. We have not applied our minds in terms of what it would be. It will be normal levels of depreciation that you're seeing even in CEAT's P&L as a percentage of value of assets. So around 5%-6%, you can say? No, plant and machinery may be a 5%-6%, but generally, the life of the plant and machinery is about 15 years. Okay. So we could assume with respect to plant and machinery, with respect to intangibles, we are in the process of working out what should be the right life for the purpose of depreciating that. Okay, and we will share more details maybe in due course. It is not likely to be more than that range, 5%-6% that you expect. Okay. Thank you so much. Thank you. Ladies and gentlemen, due to time constraints, we have reached the end of the question and answer session. I would now like to hand the conference over to the management for closing comments. Thank you very much for this special analyst call. And thanks for some of the questions, which were indeed very high quality. And we will be able to share more and more as we get closer to the completion of the deal, which will happen in quarter one of the financial year. So at that point of time, bear with us, and we will be in touch with you in the most transparent manner as we have been always. Thank you. Thank you. On behalf of Emkay Global Financial Services Limited, we conclude this conference. Thank you for joining us. You may now disconnect your line.