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Ceat Buys Its Name Back from Pirelli

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India’s Ceat Ltd. now holds global ownership of the Ceat brand name after purchasing the rights from Pirelli SpA for 9 million euros.

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The company is said to have made an upfront payment of 4.5 million euros to Pirelli with a bank guarantee for the balance. The purchase allows Ceat to export tires under the eponymous brand anywhere in the world, and Ceat shares jumped 7.4% to 138.85 rupees as details of the deal became known.

Prior to the acquisition, Ceat Ltd. only possessed the Ceat trademark for nine countries, namely India, Sri Lanka, Bangladesh, Myanmar, Pakistan, Bhutan, Nepal, Afghanistan and Vietnam. Outside of these markets the company has been required to employ other brand names and thus European and South American consumers know the Indian manufacturer’s products under the Altura name. Post acquisition, all rights, title and interest in the Ceat brand pass to Ceat Ltd. and the Indian firm will also be free to outsource tires from any country under the Ceat brand. Company representatives said they were going to push exports from this quarter, following the purchase.

The deal between the tiremakers includes a two-stage transition period; until Dec. 31, 2011, Pirelli will continue to hold exclusive license to use the Ceat brand on radials sold in Europe, Latin America, Turkey and Mexico and cross-ply tires in the latter three markets. A non-exclusive license will enable Pirelli to continue selling Ceat brand tires (outside the nine markets already wholly owned by Ceat) for a further year, with the Ceat brand name becoming the exclusive property of Ceat Ltd. on Jan. 1, 2013.

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Speaking to Reuters, Ceat managing director Paras Chowdhary said the deal will enable Ceat to double export revenues to over $217,959 million in three years. Total sales are also expected to double to $1.22 billion in that period on higher exports and capacities, he said.

Ceat’s newest six billion-rupee plant at Halol in Gujarat is expected to start production in January. According to Reuters, the firm has also increased production capacity at its Nashik plant in Maharashtra by 1,000 tons per month. (Tyres & Accessories)

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