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JK Tyre reconsiders plantation acquisitions
16 August 2013
JK Tyre reconsiders plantation acquisitions
On 28 May, JK Tyre & Industries poured water on news published by Indian financial daily The Financial Express, stating it had “no firm proposal” to acquire a tyre manufacturer in Southeast Asia for Rs 1.5 billion (£15.7 million) and that it had “not made any commitment whatsoever” to this effect. Yet at the time the company was still committed to investing in the region, specifically in rubber plantations. Now it appears this project has been shelved, or even dropped entirely.
Speaking with DNA India, company chairman and managing director Raghupati Singhania said “we are having a second thought as to whether we should at all enter” into any deal to acquire natural rubber plantations in countries such as Malaysia, Vietnam or Indonesia. This change of mind has come about due to declining natural rubber prices, and Singhania says alternative strategies are now being explored.
“The issue is the wisdom of getting into plantation,” shared Singhania. “It’s only quantity that I would be securing while prices would have to be market-led as each plantation has to be a profit centre. No business unit would subsidise another business. So, the question before us is if I can secure supplies by some other long-term contact why should I bother to get into plantation.”
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