Balkrishna Industries (BKT) has signed a strategic offtake agreement with Pirelli to produce Pirelli-branded premium car tires at BKT’s new PCR plant in Bhuj, India. This partnership leverages Pirelli’s technological prowess and BKT’s manufacturing capabilities. The agreement is set to commence in 2027, with a projected supply of 800,000 tires per year by 2030. The deal also paves the way for a potential 50-50 joint venture for a dedicated production plant.
Balkrishna Industries Partners with Pirelli for Premium Tire Production
Balkrishna Industries Limited (BKT) announced a significant strategic offtake agreement with Pirelli, a global leader in the tire industry. This partnership will see BKT manufacturing Pirelli-branded premium car tires at its newly constructed PCR (Passenger Car Radial) plant located in Bhuj, Gujarat. The agreement represents a key step for BKT in expanding its presence in the passenger tire segment and underscores its capability to produce world-class standard tires.
Key Deal Highlights and Future Outlook
The agreement combines Pirelli’s extensive technological and innovation expertise with BKT’s robust industrial manufacturing capabilities. The offtake is expected to commence in Calendar Year 2027, with BKT committed to scaling up production to supply 800,000 Pirelli-branded tires annually by the year 2030. This collaboration aims to serve the fast-growing Indian passenger car market, which is experiencing an annual growth rate of 6-7%, with the premium segment expected to grow even faster.
Potential Joint Venture and Market Strategy
Beyond the initial offtake agreement, the partnership includes provisions for a potential second phase: the establishment of a 50-50 joint venture. This JV would focus on constructing a dedicated production plant for high-value passenger car tires, catering to both the Pirelli and BKT brands for India and international markets. BKT’s existing PCR plant in Bhuj is equipped with advanced technology to meet Pirelli’s specific technology and quality standards. The company has stated that this partnership will accelerate its go-to-market strategy in the passenger car tire segment.
Capacity and Operational Details
The Bhuj PCR plant has an initial phase 1 capacity of 6,700 tires per day. While approximately 80% of this capacity is planned for BKT’s own products, the remaining capacity will be allocated to the Pirelli offtake. BKT has emphasized that its existing machinery and plant infrastructure are capable of producing tires to Pirelli’s specifications without requiring significant additional capex. The company also highlighted its commitment to using its own technology for BKT-branded products, maintaining a clear partition between manufacturing for Pirelli and its own brand.
Financial and Strategic Implications
BKT anticipates that this agreement will not only enhance its positioning in the Indian tire market but also accelerate the ramp-up of its investments in the on-road tire segment. The company has indicated that the pricing for the offtake will be based on raw material actuals plus conversion costs. While specific revenue and margin potential from the Pirelli deal are still under assessment, BKT expects the partnership to contribute to its long-term vision, including its 2030 targets for non-OHT (Off-Highway Tire) segment revenue.
Source: BSE
