Word is out that JK Tyre is all set to buy Birla Tyres for a sum of Rs 2,000 crore. Sources close to the matter suggest that talks between JK Group and Kesoram Industries – owner of Birla Tyres – have reached an advanced stage and the former is currently leading the race for the buyout. It is being speculated that JK Tyre has initiated a fund raise of Rs 1,500 crore from public and private banks in order to seal the deal. It is being said the remaining amount will be generated through internal accruals at a later stage.
JK Tyre is currently the country’s third-largest tyre manufacturer after MRF and Apollo Tyres. If JK Tyre manages to close the aforementioned deal, its market share in India will reach 13 per cent from the current 5 per cent. This will help it be on par with Apollo Tyres, which currently is the second largest tyre manufacturer in India.
Birla Tyres is a strong player in the CV segment and has a capacity of 12.1 million tyres a year from its two plants in the country. Since JK Tyre is one of the leaders in truck/bus radial tyre segment, the acquisition of Birla Tyres will help the group’s sales and market share grow significantly. As of present, JK Tyre has an annual capacity of producing 20 million tyres. The group has six plants in India and three in Mexico.
While Birla Tyres and JK Tyre have both declined to comment on the matter, it is understood the former has been under massive debt burden of Rs 4,400 crore (approx) for a very long time now. In the last 6 months, Birla Tyres has been reportedly in talks with other industry leaders like Apollo and MRF. However, it seems JK Tyre has been able to outbid its rivals and will be acquiring Birla Tyres in a little over Rs 2,000 crore deal.