Mar 22, 2023

IFC, JK Tyre Partner for Expansion of Energy-efficient Tyre Manufacturing to Boost Exports, Create Jobs

New Delhi, India, March 22, 2023 – A new investment will strengthen India’s efforts towards self-reliance in manufacturing, while boosting skilled job creation, exports, and sustainable growth, with IFC’s support to leading tyre manufacturer, JK Tyre & Industries Ltd.

IFC’s $30 million (about INR 240 crore) investment in JK Tyre & Industries will part-finance the expansion of manufacturing capacities and integrate advanced, resource-efficient technologies in the production of commercial and passenger car radial tyres which have better safety and longevity. IFC will hold 5.6 percent stake in the tyre major through issue of compulsorily convertible debentures (CCDs) on preferential basis.

The investment aims to bolster the company’s capital structure and increase production of energy-efficient radial tyres by more than 10 percent—from 32 million to over 35 million tyres a year by 2025. This aligns with the national vision of a self-reliant India (Aatmanirbhar Bharat), and strong focus on industrial job creation.

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. Improved vehicle utilisation, due to 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 percent of India’s manufacturing GDP, with tyre manufacturers contributing to 2 percent, and demand is expected to grow further.

Dr Raghupati Singhania, Chairman & Managing Director of JK Tyre & Industries Ltd. said, “We recognize the trust reposed by IFC in our Company and are enthused to embark upon this new partnership. 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 said, “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.”

JK Tyre & Industries aims to up the ante as a “Green Company” with sustainable use of energy and natural resources and robust ESG practices. The investment will support the company’s low-carbon strategy, further strengthen its ESG frameworks, reduce greenhouse gas emissions, and spur climate-smart initiatives through decarbonization and sustainability advisory.