CEAT Limited has approved the partial conversion of a pre-existing inter-company loan into equity shares for its wholly owned subsidiary, CEAT OHT Lanka (Private) Limited. The transaction involves converting USD 24.5 million of the loan into equity. This move converts existing debt into equity without any fresh capital infusion, maintaining CEAT OHT Lanka’s status as a wholly owned subsidiary and impacting the group’s debt-to-equity structure.
CEAT Approves Loan-to-Equity Conversion
CEAT Limited announced today that its Finance and Banking Committee has approved the partial conversion of an inter-company loan into equity shares. This strategic move pertains to its wholly owned subsidiary, CEAT OHT Lanka (Private) Limited.
Transaction Details
The conversion will see USD 24.5 million of the outstanding inter-company loan transformed into equity. This transaction is classified as a conversion of debt into equity and does not involve any fresh infusion of capital or movement of funds. Following the conversion, CEAT OHT Lanka (Private) Limited will continue to be a wholly owned subsidiary of CEAT Limited, with its shareholding percentage remaining unchanged at 100%.
Subsidiary Overview
CEAT OHT Lanka (Private) Limited, incorporated on March 3, 2025, is based in Sri Lanka. The company is engaged in the business of selling Automotive Tyres, Tubes, Tracks, and other related ancillary products. Its turnover for FY2025-26 is projected at INR 4,206 Million.
Regulatory Approvals
The proposed conversion is subject to necessary approvals from relevant authorities, including the Board of Investment (BOI) in Sri Lanka, as per local norms.
Financial Implications
The conversion impacts the subsidiary’s capital structure by reducing its debt and increasing its equity base. The total inter-company loan was USD 80 million, with this conversion accounting for a significant portion. The specific number of ordinary shares to be issued is 12,788,094 at a subscription price of LKR 642.67 per share, amounting to LKR 8,218,525,000.
Source: BSE
