Balkrishna Industries Limited (BKT) has entered into a strategic framework agreement with Pirelli Tyre S.p.A. The agreement includes plans for a joint venture to manufacture passenger car radial tyres in India, where both companies will hold a 50% stake. BKT will also manufacture Pirelli-branded tyres and provide technical support services, marking a significant expansion into the PCR segment.
Strategic Expansion into Passenger Car Tyre Market
Balkrishna Industries Limited (BKT) announced on October 22, 2026, the execution of a comprehensive set of agreements with Pirelli Tyre S.p.A. These include a Framework Agreement, an Offtake Agreement, and a Service Agreement, signaling a significant strategic move into the passenger car radial (PCR) tyre market.
Joint Venture for PCR Tyre Manufacturing
The core of the agreement is the Framework Agreement, which outlines the structure and key terms for a future joint venture (JV) between BKT and Pirelli. This JV aims to establish a manufacturing company in India to produce passenger car radial tyres under both Pirelli and BKT brands. The proposed JV structure will see an equal 50% shareholding for both Balkrishna Industries and Pirelli. The JV is targeted for incorporation by December 31, 2030.
Offtake and Service Agreements
Complementing the JV plans, BKT has also entered into an Offtake Agreement. Under this agreement, BKT will manufacture Pirelli-branded passenger car radial tyres at its PCR plant in Bhuj, Gujarat, according to Pirelli’s specifications. These tyres will then be sold to Pirelli and its affiliates. Additionally, a Service Agreement is in place, through which Pirelli will provide BKT with technical support services, including tyre testing utilizing Pirelli’s facilities, for BKT-branded tyres.
Key Terms and Benefits
The Framework Agreement establishes timelines and key terms for the overall transaction. Key terms for the proposed JV include a 50:50 shareholding, a four-member board with equal nominations, and shared JV manufacturing capacity. A 5-year lock-in period for JV shares is stipulated, followed by right of first refusal and tag-along rights. For Pirelli, this agreement reinforces its position in the Indian market, while for BKT, it supports expansion into the passenger car tyre segment, creating new domestic and international opportunities.
Source: BSE
