JK Group to buy Kesoram’s Haridwar tyre unit for Rs 2,200 crore

JK Group will acquire BK
Birla flagship firm Kesoram Industries’
tyre manufacturing plant at Haridwar for
up to Rs 2,200 crore.
JK Tyre and JK Asia Pacific Singapore Pte
Ltd , a wholly- owned subsidiary of the
company, have signed a binding term
sheet with Kesoram Industries Ltd (KIL) to
acquire 100 per cent equity in Cavendish
Industries Ltd (CIL), JK Tyre said in a
statement.
CIL houses a tyre business undertaking
located at Haridwar (Laksar) which
manufactures a range of tyres, tubes and
flaps.
“JK Group has agreed for this acquisition
at an enterprise value not exceeding Rs
2,200 crore, subject to conditions,
wherein JK Tyre will hold the largest
shareholding block and shall have
substantial management control of CIL
with an option to place up to 55 per cent
with its associates/group companies,” the
tyre maker said.
In a separate statement Kesoram
Industries said that it will divest its
subsidiary Cavendish Industries Limited
where it holds 99 per cent shareholding.
The company added the deal would
strengthen the balance sheet of the
company and it also remained committed
to tyre business.
For JK Tyre, the acquisition will provide
further impetus towards ready expansion
in the truck and bus radials segment as
well as its entry into the fast growing two-
and three- wheeler tyre market.
“The transaction is a reflection of the
inherent strength of the company in
undertaking acquisitions with turnaround
potential and successfully delivering
results to all the stakeholders in the
business,” JK Tyre Chairman Raghupati
Singhania said.
The acquisition is proposed to be funded
by a combination of debt and internal
accruals raised by JK Tyre and its other
group entities.
“The financial exposure of JK Tyre in the
acquisition is expected to be of the order
of Rs 450 crore. The final transaction is
expected to consummate over next few
months (subject to various approvals)
with definitive documentation expected to
be executed between the parties in due
course of time,” it added.
JK Group, is one of the leading
conglomerates in India with business
interests in automotive tyres, cement,
paper, auto-components and other
businesses.
The group’s flagship firm, JK Tyre is
among the top three automotive tyre
manufacturers in India with presence in
truck, bus, passenger cars and other
vehicles, having nine manufacturing
plants all over the world.
In 2008, JK Tyre and Industries had
acquired Mexican tyre company Tornel for
Rs 270 crore.