JK Tyre acquires Tornel 100% shareholding for Rs 2700mn

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JK Tyre acquires Tornel 100% shareholding for Rs 2700mn

JK Tyre & Industries Ltd., has acquired 100% shares of Tornel, the Mexican Tyre company, along with its subsidiaries, for Rs 2700 mn.

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JK Tyre & Industries Ltd., has acquired 100% shares of Tornel, the Mexican Tyre company, along with its subsidiaries, for Rs. 2700 million. The acquisition has been made through Special Purpose Vehicle (SPV) route, which has been financed through a combination of equity and debt. The Board had approved this acquisition in its meeting held on 11^th April 2008. All formalities and compliances with regard to the acquisition has been made and closing of the transaction has taken place on 13^th June 2008 in Mexico. Tornel has now become a subsidiary of JK Tyre & Industries Ltd. 

JK Tyre & Industries Ltd. will substantially increase its global foot print with this acquisition.  Strategic location of Mexico offers Tornel free access to the NAFTA trade block and emerging economies of Central and Southern America. Over the years, JK Tyre has been exporting tyres to these markets in large volumes. Tornel has a wide distribution network of 241 distributors and 282 sales outlets across Mexico. Therefore, the acquisition has strengthened JK Tyre's market positioning in these territories considerably. 

Situated in Azcapotzalco, Tultitlan and Hidalgo, the 3 plants of Tornel employ 2000 people. Tornel has state-of-the-art laboratories and Technology Development Center to develop and manufacture competitive products for demanding North and South American markets.  The company manufactures wide range of Bias and Radial Tyres - from Truck, LCV, Farm and Industrial tyres in Bias category to LCV and High performance Passenger Car tyres in Radial category. It also sells Truck Radials by outsourcing. JK Tyre plans to enhance and improve the operations of Tornel by providing technological and managerial inputs. 

Post Acquisition collective capacity of JK Tyre has risen to 940 tons per day with Tornel's production capacity of 290 tons per day along with JK Tyre's capacity of 650 tons per day, at its four plants in India. This makes JK Tyre, India's largest four wheeler  tyre company. 

Dr. R.P. Singhania, Vice Chairman & Managing Director, said, "This is our first international acquisition and there are multi-facet synergies between JK Tyre and Tornel. Economies of scale, technological expertise and wider understanding of different markets will propel the company to higher level of growth. We take pride in our operational practices at JK Tyre and are confident of implementing them in Mexico. Imminent forays into newer markets will not only drive our growth but also provide us sustainable competitive advantage." 

He further added, "We are glad that JK Tyre & Industries Ltd. continues to sustain its pace of growth. This acquisition has further strengthened our leadership in India.  JK Tyre already exports tyres to 75 countries across 6 continents. Our export turnover last year was Rs. 500 crore. This acquisition adds substantial value to our existing tyre operations and strengthens "JK Tyre" brand positioning across the markets." 

The turnover of Tornel is USD 202 million which together with JK Tyre's turnover of Rs. 32 billion i.e USD 800 million will make JK Tyre a leading tyre company of India, with combined turnover exceeding USD 1 billion.  With this acquisition, JK Tyre would be ranked 14th if not 13th globally with an annual capacity of 15.3 Million tyres per annum- 6.6 million tyres per annum of Tornel and 8.7 million tyres per annum of JK Tyre.  

The takeover of Tornel will also enable JK Tyre to optimize on cost, product and manufacturing facilities as also realign its domestic capacities. 

Sourced From: Vaishnavi Corporate Communications Pvt Ltd