JK Tyre III

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JK Tyre & Industries Limited (“JK Tyre” or the “Company”) is a leading tire manufacturer in India and the Company was established in 1976. JK Tyre manufactures a wide range of tires catering to commercial vehicles, passenger vehicles, 2/3 wheelers as well as tractors. The Company markets its products globally in over 100 countries through 180 global distributors under various brand names. The Company has 9 tire manufacturing plants at 5 locations in India and 3 tire manufacturing plants in Mexico (under the brand name “JK Tornel”). In India, 6 plants are operated under JK Tyre & Industries Limited (JKTIL) and 3 Plants at Laksar are operated under JK Tyre’s subsidiary Cavendish Industries Limited (CIL). Overall, the Company produces around 32 million tires annually out of which the Indian plants contribute around 82% while the balance comes from Mexican plants. Besides, JK Tyre has established research & development facilities in Mysuru (Karnataka, India). In India, the Company has a network of over 6000 dealers and 650+ dedicated brand shops (Refer: https://www.jktyre.com/). In Mexico, the Company has a network of 97 dealers and 144 third party dealer/ distributors.IFC has provided an investment of up to US$30mn in the form of equity securities in JK Tyre. In FY23, the Company is implementing capital expenditure of U$68 million along with resource efficiency projects for an amount of US$10 million (the “Project) in India and the IFC investment will support the Company in implementing the Project. These activities include but may not be limited to are planned brownfield expansions proposed in two plants in India including resource efficiency and climate linked interventions.  Given that this is an equity investment, IFCs E&S requirements will be applied to company operations covering its Indian and Mexican Plants. JK Tyre’s brownfield expansion plan consists of: (a) debottlenecking and expansion of its existing passenger car radials (PCR) manufacturing capacity in Banmore plant, Madhya Pradesh and (b) expansion of truck & bus radials (TBR) tire manufacturing capacity at Laksar plant. The Project also includes a climate finance portion which comprise of nine (9) climate linked interventions and the key ones include: a) installation of a six mega-watt (MW) solar plant at Laksar; b) boiler retrofits to increase the proportion of biomass use (biomass briquette, saw dust, rice husk) up to 50 percent at some locations based on availability; c) complete the conversion of the tire curing process to nitrogen-based technology to reduce the need for steam; d) replacement of existing steam-based chillers with more energy efficient equipment; e) trials with concentrated solar thermal (CST) for boiler feed water heating; and f) waste water recycling through zero liquid discharge facility in the last remaining plant.  IFC has long standing relationship with JK Group since 2006 through both investment and advisory projects with JK Paper Limited, where JK Group holds significant stake.  The proposed investment is IFC’s first engagement with the JK Tyre.