Birla Tyres, owned by BK Birla flagship Kesoram Industries is soon to be owned by JK Tyre, who have already initiated the purchase process. JK Tyre has raised INR 1,500 crores through private and public banks as the deal is valued at INR 2,000 crores. The balance amount is being raised through internal accruals.
Though initially, three leading tyre manufacturers, MRF, Apollo and JK Tyre were in the bidding, JK Tyre emerged as the strongest contender, outbidding others. Once this deal with Birla Tyres goes through, JK Tyre will see increased market share and status in Indian markets on par with Apollo Tyres which is at No.2. Talks between JK Tyres and Birla Tyres could be finalized by the end of this week.
JK Tyre, a market leader in truck and bus radial tyres, has an annual production capacity of 20 million tyres. The company operates from 6 plants in India and 3 in Mexico.
Birla Tyres is also among leaders in the CV segment with annual capacity of 12.1 million tyres produced from its 2 plants in the country. The sale will allow Kesoram to easy its debt burden which has increased to INR 4,425 crores while also allow the company to free up working capital for other production purposes. Though the purchase is at an advanced stage, both companies abstained from commenting on the issue.