International Finance Corporation (IFC) will invest $30 million (about INR 240 crore) in JK Tyre & Industries Ltd to hold 5.6 percent stake through issue of compulsorily convertible debentures (CCDs) on preferential basis. This 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.
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.
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