IFC takes 5.6% share in JK Tyre

International Finance Corporation (IFC), a World Bank Group member and the largest global development institution focused on the private sector in emerging markets, is investing US$30 million in JK Tyre & Industries. These funds will part-finance the expansion of manufacturing capacities and integrate advanced, resource-efficient technologies in the production of commercial and passenger car radials. IFC gains a 5.6 per cent stake in the tyre maker through the issue of compulsorily convertible debentures (CCDs) on a preferential basis.

The investment aims to bolster the company’s capital structure and increase radial tyre production by more than ten per cent – from 32 million to over 35 million tyres a year by 2025. According to JK Tyre & Industries and IFC, this growth comes at a time when the “automobile industry is witnessing huge tailwinds on the back of the government’s push towards infrastructure development, higher GDP growth and large allocation of funds towards capital expenditure in India.”

The new partners add that improved vehicle utilisation through last-mile connectivity and vehicle scrappage policy is leading to “a cyclical uptrend in the automobile and tyre industry.” The automotive industry accounts for almost 49 per cent of India’s manufacturing GDP, with tyre manufacturers contributing to two per cent. JK Tyre & Industries and IFC expect demand will further grow.

Growth-oriented & sustainable

“We recognise the trust reposed by IFC in our company and are enthused to embark upon this new partnership,” states Dr Raghupati Singhania, chairman and managing director of JK Tyre & Industries Ltd. “This investment will be utilised for the expansion of projects, which are not only growth-oriented but are also committed to promote sustainable development and enhancing societal value creation. Innovation and technology are at the core of each of our products, which keeps us ahead of the curve to meet the needs of our customers.”

Wendy Werner, India country head at IFC, adds: “A leading green tyre manufacturer with a demonstrated focus on sustainability, our partnership with JK Tyre & Industries will drive their capacity expansion and scaled manufacturing of energy-efficient tyres through resource-efficient tech, low carbon solutions, and circularity. By signalling a long-term view of the industry, IFC aims to catalyse further investments and market competitiveness, and in so doing, contribute to India’s goals to become both self-reliant in domestic manufacturing and a global manufacturing hub. We are unlocking the potential of India’s manufacturing sector to drive job creation and sustainable growth.”

Upping the ante as a green company

JK Tyre & Industries says it aims to “up the ante as a green company” with sustainable use of energy and natural resources and robust ESG practices. The tyre maker anticipates that the investment will support its low-carbon strategy, further strengthen its ESG frameworks, reduce greenhouse gas emissions, and spur climate smart initiatives through decarbonisation and sustainability advisory.