JK group on prowl for overseas acquisitions
20 Apr 2011
Buoyed by the successful turnaround of a Mexican tyre company acquired by it, the JK group is now looking for more opportunities elsewhere in the world including South East Asia.
''We have a team comprising top executives working for strengthening our brand and company abroad,'' says Raghupati Singhania, director, JK Organisation, and vice-chairman and managing director of JK Tyre & Industries. ''There are new verticals that we are exploring. The team continuously explores opportunities that come our way.''
But Singhania refused to reveal the size of the corpus meant for overseas acquisitions. The $2.5-billion group, with interests spanning tyres, cement and paper, acquired Tornel, a Mexican tyre company, in 2008 for Rs270 crore. It succeeded in turning it around within a year of the acquisition.
The company recently entered into sourcing arrangements with tyre companies in China, Vietnam and Sri Lanka for products such as truck radial tyres and bias tyres for trucks, buses and LCVs.
JK Tyres will also invest about Rs1,500 crore to expand capacities at Chennai and Mysore. The Chennai plant will have an initial annual capacity of 2.5 million passenger car tyres and 400,000 truck and bus radial tyres. The plant is expected to become operational by the end of this year.
The group also plans to get into the footwear and accessories business, producing shoes, sandals, belts and bags from used tyres. ''We want to enter the lifestyle products segment, and such an initiative could become a business proposition for the tyre industry in India by way of utilising what is a hazardous waste,'' said Singhania. The initiative has been called Soles with Souls.
It has tied up with the Footwear Design and Development Institute and students from the institute are being trained on using rubber from used tyres to create these products. According to him, nearly 90 million tyres were sold in India over the last three years and every year 11 million tyres are scrapped.
And in a major diversification, the group aims to enter the thermal power generation business, with plans to set up a 1,360 MW plant in Madhya Pradesh. It will invest about Rs1,300 crore in the project; the first phase would see the commissioning of a 660-MW plant within two years. The group will set up a special purpose vehicle to manage its foray into the power sector, added Singhania.
