JK Tyres acquires Mexican tyre co Tornel for Rs 270 cr

In its first overseas acquisition, JK Tyre & Industries has bought the privately-held Mexican tyre company Tornel for Rs 270 crore. The buyout is expected to close by May end. Earlier, in 1997, JK Tyres had acquired 51% stake in the domestic tyre company, Vikrant Tyres.

This acquisition will take JK Tyres’ annual capacity to 153 lakh tyres, of which Tornel will contribute 66 lakh. This will also make JK Tyres the largest tyre manufacturer in India. The four plants of JK Tyres together have a combined production capacity of 650 metric tonnes a day, while Tornel’s three plants have a production capacity of 290 metric tonnes a day from its 2,000 employees. Tornel’s annual turnover is around Rs 800 crore ($202 million in 2007), while JK Tyres turnover was in excess of Rs 3,200 crore in the last fiscal, of which Rs 500 crore was from exports. Tornel will be a fully-owned subsidiary of JK Tyres. JK Tyres will raise the money through internal accruals and debt, which will be structured though a SPV. JK Tyre shall bring a rights issue in the next few months, which will be in the ratio of 3:1, to help bridge the funds for the acquisition. The price of the issue will be determined at the time of offer.


This 100% acquisition will allow JK Tyre to gain access to North American markets through a range of free trade agreements (FTAs) that Mexico has with these countries. The company plans to continue the Tornel brand in Mexico, Brazil and other American markets, which will co-exist with its own JK Tyres. It will also utilise Tornel’s 241 distributors and 282 sales outlets to distribute its own brand.