JK Tyre acquires Kesoram’s Cavendish Industries Ltd. for Rs 2200 crore

JK Tyre acquires Kesoram's Cavendish Industries Ltd.

JK Tyre & Industries has confirmed to acquire the Cavendish Industries Ltd. (CIL) tyre unit of Kesoram Industries. The company disclosed that JK Tyre & Industries Ltd. and JK Asia Pacific Singapore Pvt. Ltd. (subsidiary of JK Tyre) have signed a binding term sheet with Kesoram Industries Ltd. to take over 100 per cent stake in Cavendish Industries Ltd (CIL). CIL’s manufacturing unit is located in Haridwar where a wide range of tyres, tubes and flaps are manufactured.

Earlier in March, BK Birla Group company Kesoram Industries transferred its Haridwar unit to its subsidiary Cavendish Industries Ltd. at a cost of Rs 2,800 crore. Kesoram Industries’ tyre business was operated under Birla Tyres brand.

The Haridwar plant was one of the two units operated under KIL, another one being in Odisha that has a daily capacity of 600 tonnes. Kesoram Industries was established in 1919 as Kesoram Cotton Mills. Today, the group has 3 businesses: Tyres, Cement and Rayon. However, tyres contribute around 60 per cent to the turnover, followed by cement.

JK Tyre has valued the business at Rs 2200 crore on a condition to be the majority shareholder and have substantial management control over CIL with an option to take 55 per cent holding in its Group companies in future. The financial exposure of JK Tyre in this deal is expected to be in tune of Rs 450 crore, JK Tyre stated.

This deal will be funded with a combination of debt and internal accruals raised by JK Tyre and other JK entities. This acquisition will help JK Tyre to expand its Truck and Bus radial business and also help the company to enter the steadily growing 2/3-wheeler tyre market.

Dr Raghupati Singhania, Chairman of JK Tyre, stated, “The transaction is a reflection of the inherent strength of the company in undertaking acquisitions with turnaround potential and successfully delivering results to all the stakeholders in the business. This was recently evidenced by a similar success story in JK Tyre’s acquisition of Tornel, Mexico.”

RELATED TAGS
You might also be interested in

Popular Recent

Check which tyre fits your vehicle

Locate Tyre Dealers in your area