Balkrishna Industries and Pirelli plan a 50:50 car tyre venture in India

Balkrishna Industries, the Mumbai-based maker of tyres for tractors, mining trucks and other off-highway vehicles, has signed a framework agreement with Italy’s Pirelli to explore a joint venture making passenger car tyres in India.

The two companies plan an equal partnership. The venture’s board would have four directors, two from each side, with the chair rotating between them, and manufacturing capacity would be split equally.

Before any joint company exists, Pirelli-branded passenger car radial tyres will be made at BKT’s factory in Bhuj, Gujarat, to Pirelli’s specifications. Pirelli and its affiliates will buy them under a minimum annual offtake commitment, matched by a capacity commitment from BKT. Prices will be set on actual raw material costs plus a conversion charge, paid in rupees for domestic sales and in euros for exports. A new plant is planned, subject to conditions.

Pirelli will also test and provide technical services for BKT’s own SUV, car and two-wheeler tyres at facilities outside India. Both companies have agreed not to enter similar arrangements with other partners in India for car, light truck, motorcycle or bicycle tyres, although BKT can keep selling its own brand.

The definitive joint venture agreement is to be signed later, with the company to be incorporated by 31 December 2030. Until it is running, the offtake deal continues, up to 31 December 2031 unless extended. No investment figure or capacity has been disclosed. The companies said they expect the arrangement to create opportunities in domestic and overseas markets.

The deal gives BKT a foothold in the car tyre market, where it has had little presence. Its shares rose about 2% to a day’s high of ₹2,077.90, recovering a little of a fall of nearly 12% over the past year.