JK Tyre and JK Asia Pacific Singapore Pte Ltd have entered into an INR 2,200 crore deal with Kesoram Industries Limited for the purchase of 100 percent equity in Cavendish Industries Limited (CIL). Cavendish Industries is the company’s tyre manufacturing plant located at Haridwar from where a range of tyres, tubes and flaps are produced.
With this new acquisition, JK Tyre will be able to expand their truck and bus radial segment in the country and enter into a two and three wheeler tyre market that is growing by leaps and bounds. This acquisition will also allow JK Tyre to add around 5 million to production capacity which as on date is set to touch the 30 million mark.
As a part of the agreement, JK Tyre will receive total management control of CIL and will also hold largest block of shares and will be funded by debt and internal accruals raised by JK Tyre and JK Tyre Group.
Dr. Raghupati Singhania, CMD, JK Tyre & Industries Ltd.
Though handing over the CIL manufacturing business to JK Tyre, Kesoram will continue in the tyre manufacturing business and conduct operations from their unit in Balasore providing tyres to all segments while the company will also enter the passenger car radial segment in due course.
The entire deal between JK Tyre and Kesoram Industries, which has been under process for the past many months, is set to be completed by December 2015, even while other tyre manufacturers like MRF and Apollo were also vying for an association with Kesoram Industries.
JK Tyre is a leading tyre manufacture in India with a presence in the truck, bus, passenger car and other vehicle segments. The company has 9 manufacturing units across the globe and in 2008 had entered into a similar agreement with Mexican tyre company Tornel for INR 270 crore.