Nanjing Kumho Tire Co Expansion

completed

Nanjing Kumho Tire Company Limited (the company or NKT) is a company based in Nanjing, China that produces tires for passenger cars, trucks and buses. Total revenues for 2002 were approximately $115 million. The Company was formed in 1994 as a joint venture between Korea Kumho Tire Co., Ltd. of Korea, local Chinese partners and a consortium of investors. IFC financed the initial green-field project and is now contemplating the financing of the expansion.The company’s current nameplate capacity is 3 million tires per annum, which is insufficient for them to meet demand. In 2002, the company produced almost 5 million tires, by increasing its working days and shifts, optimizing process flow and substituting bias tire production capacity with radial tire production. The project is to expand the company’s nameplate capacity to 8 million tires per annum, with expectations that it can produce up to 10 million tires on the equipment. The company has a 12% share in the national radial tire market share with strong penetration in the south and east regions of China. The expansion project will enable to company to meet ongoing demand for tires, and also to produce to a quality standard adequate to meet the requirements of the most advanced OEM customers in China. NKT will also continue to export a portion of its tires. The company has had strong financial results in recent years, and intends to finance a portion of the project through internally generated cash flow.