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Ramesh Sharma

New buy: Mr Raghupati Singhania (right), Vice-Chairman & Managing Director, JK Tyre & Industries Ltd, and Mr Hari Shankar Singhania, Chairman, at a press conference in the Capital on Friday. —

Our Bureau

New Delhi, April 11 JK Tyre & Industries Ltd on Friday announced the acquisition of a $200 million Mexican tyre-producing company Tornel for Rs 270 crore.

Tornel, which specialises in passenger car radials, has a total capacity of 6.6 million tyres at its three plants located in Mexico. With this acquisition, JK’s annual capacity of 8.7 million tyres would increase to approximately 15.3 million units. “The acquisition would be for 100 per cent shareholding in the company and is made through a special purpose vehicle. The buy out is expected to close by the end of May 2008,” said Mr Raghupati Singhania, Vice-Chairman and Managing Director, JK Tyre.

He said that the acquisition was part of the company’s strategy to cater to the North and the South American market. Currently, 48 per cent of the company’s export turnover is accrued from these markets. JK Tyre is seeking to leverage Mexico’s Free Trade Agreements with various countries and plans to export to these regions through Tornel’s production facility.

Last year, JK Tyre export turnover stood at around Rs 500 crore. The company plans to reduce exports from India as the buyout would reduce its dependence on its capacity in the domestic market. “There will be re-alignment in our capacity. And with the additional capacity available for the domestic market, we would be able to participate more in the domestic market,” said Mr Singhania.

Tornel, that produces the entire range including trucks, LCVs and high speed passenger car tyres , has three plants and employs 2,000 people. While Tornel has a dominant presence in the after-sales market, JK is seeking to boost its share in the local OE market too. Tornel has 241 distributors and 282 sales outlets.

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