Indian tyre manufacturer JK Tyre & Industries has secured Rs 240 crore ($30 million) investment from the International Finance Corporation (IFC) in exchange for a 5.6% stake in the company through the issue of compulsorily convertible debentures on a preferential basis. Following the announcement, the shares of the stock closed at almost a 4% rise today at Rs 150 per share. 

The investment in JK Tyres is anticipated to facilitate the company’s transformation into a sustainable “green company” with sound environmental, social, and governance (ESG) practices and responsible utilisation of natural resources and energy. Moreover, the investment will aid the company’s low-carbon agenda to reduce greenhouse gas emissions and promote climate-smart initiatives through sustainability advice and decarbonisation.

JK Tyre & Industries Ltd is among the top 25 manufacturers in the world with 12 globally benchmarked ‘sustainable’ manufacturing facilities – nine in India and three in Mexico that collectively produce around 32 million tyres annually.

Through utilising resource-efficient technology, circularity, and low-carbon solutions, JK Tyre aims to amplify the production of energy-efficient radial tyres by more than 10%, from 32 million to over 35 million per annum by 2025. The investment is expected to enhance JK Tyre’s capital structure and enable the scaling up of energy-efficient radial tyre production, aligning with the rising demand in India’s automotive industry. The automobile industry contributes to nearly 49% of India’s manufacturing GDP, with tyre manufacturers accounting for 2%, and demand is projected to increase further.

JK Tyre’s Chairman and Managing Director, Raghupati Singhania, expressed enthusiasm for the company’s new partnership with IFC and said the investment would be used for growth-oriented projects that promote sustainable development and enhance societal value creation. 

Wendy Werner, IFC’s India Country Head, stated that the partnership aims to drive capacity expansion and scaled manufacturing of energy-efficient tyres through resource-efficient technology, low-carbon solutions, and circularity. IFC hopes to signal a long-term view of the industry to catalyse further investments and market competitiveness, contributing to India’s goals to become a self-reliant and global manufacturing hub.

IFC also announced an investment of Rs 600 crore ($80 million) into the NewCo of Mahindra & Mahindra at a valuation of more than Rs 6,000 crore ($804 million). IFC’s investments signify their dedication to unleashing the potential of India’s manufacturing industry to boost employment opportunities and foster sustainable development, all while supporting India’s objectives of achieving self-sufficiency in domestic manufacturing and establishing itself as a prominent global manufacturing hub.