Balkrishna Industries Shares Rise As Pirelli Signs Framework Deal For 50:50 Passenger Car Tyre Joint Venture In India

Balkrishna Industries (BKT) has signed a framework agreement with Pirelli Tyre to explore a joint venture for passenger car radial (PCR) tyre manufacturing in India. The proposed tie-up goes beyond production. Separate offtake and service agreements are also planned, covering procurement and technical support.

The companies plan to establish a new manufacturing facility, subject to specified conditions. They intend to execute the definitive joint venture agreement at a later stage, with incorporation targeted by 31 December 2030. The proposed venture will have a four-member board, with each partner nominating two directors and the chairperson rotating between them.

The agreement is intended to help BKT enter the passenger car tyre segment more extensively, while giving Pirelli a stronger foothold in India’s higher-value tyre market. Manufacturing capacity under the proposed venture will be shared equally between the partners.

Balkrishna Industries Share Price Movement

Balkrishna Industries shares rose more than 2% following the announcement. The stock traded 1.9% higher at the day’s peak of ₹2,077.90. Despite the latest movement, the shares have declined nearly 12% over the past 12 months.

Pirelli Tyres To Be Manufactured At Gujarat Plant

Under the offtake agreement, BKT will manufacture Pirelli-branded passenger car radial tyres at its facility in Bhuj, Gujarat, following Pirelli’s specifications. Pirelli and its affiliates will purchase the tyres under a minimum annual offtake commitment, matched by a corresponding capacity commitment from BKT.

The arrangement will remain in force until the proposed joint venture becomes operational and can meet Pirelli’s requirements. If that does not happen earlier, the agreement will continue until 31 December 2031, with an extension possible by mutual consent.

Pricing will be based on actual raw material costs plus conversion costs. Payments for domestic supplies will be made in Indian rupees, while exports will be settled in euros.

Technical Support And Strategic Restrictions

Pirelli will provide tyre-testing and technical services for BKT-branded sport utility vehicle (SUV), passenger car and two-wheeler tyres. Support will draw on facilities outside India, including proving grounds, simulation systems and testing equipment.

The framework agreement also includes an exclusivity clause restricting both companies from entering comparable arrangements with third parties in India for car, light truck, motorcycle or bicycle tyres. Wholly owned manufacturing plants are excluded from this restriction.

BKT will be barred from producing competing passenger car radial tyres for third parties but can continue developing and selling its own BKT-branded products. The companies expect the arrangement to create opportunities in domestic and overseas markets while strengthening their respective positions in passenger car tyres.

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