NEW DELHI, India — JK Tyre & Industries Ltd. has secured a $30 million investment from the International Finance Corp. (IFC) to help finance the expansion of manufacturing capacities and integrate "resource-efficient" technologies that will lead to enhanced safety and longevity.
The IFC's investment represents a 5.6% shareholding in JK Tyre, India's third largest and the world's No. 21 tire maker.
JK said the investment will help it boost production of energy-efficient radial tires by more than 10% to over 35 million tires a year by 2025. This aligns with the national vision of a self-reliant India and strong focus on industrial job creation, JK Tyre said.
Raghupati Singhania, chairman and managing director of JK Tyre, said the IFC's investment will be used for the expansion of projects, "which are not only growth-oriented but also committed to promoting sustainable development and enhancing societal value creation."
"Innovation and technology are at the core of each of our products," he said, "which keeps us ahead of the curve to meet the needs of our customers."
According to the IFC, the Indian automotive industry — which accounts for 49% of India's manufacturing GNP — is witnessing huge tailwinds on the back of the government's push towards infrastructure development, higher GDP growth and large allocation of funds towards capital expenditure in India. Improved vehicle utilization, due to last-mile connectivity and vehicle- scrappage policy, is leading to a cyclical uptrend in the automobile and tire industries.
Wendy Werner, India country head at the IFC, called JK Tyre a "leading green tire manufacturer with a demonstrated focus on sustainability" and investments such as this one will "contribute to India's goals to become both self-reliant in domestic manufacturing, and a global manufacturing hub. We are unlocking the potential of India's manufacturing sector to drive job creation and sustainable growth."
The IFC's ownership stake in JK Tyre was made possible through the issue of compulsorily convertible debentures on preferential basis.
On a broader basis, JK Tyre said it aims to "up the ante" as a green company with sustainable use of energy and natural resources and robust environmental, social and governance (ESG) practices. The investment will support the company's low-carbon strategy, further strengthen its ESG frameworks, reduce greenhouse gas emissions, and spur climate-smart initiatives through decarbonization and sustainability advisory.
The IFC, a member of the World Bank Group, is considered the largest global development institution focused on the private sector in emerging markets.