IFC grants USD 100 mn sustainability-linked loan to JK Tyre

JK Tyre has secured a USD 100 million sustainability-linked loan (SLL) from the International Finance Corporation (IFC) to expand its tyre manufacturing capacity and promote sustainable practices. The funding will support JK Tyre & Industries and its subsidiary, Cavendish Industries Limited (CIL), focusing on passenger car radial (PCR) and truck and bus radial (TBR) tyre production. This initiative aims to enhance energy efficiency, bolster local supply chains, and generate employment opportunities.

Utilisation of funds

The loan comprises USD 30 million for JK Tyre & Industries and up to USD 70 million for CIL. These funds will be utilized to expand JK Tyre’s Banmore plant in Madhya Pradesh, specializing in PCR tyres, and CIL’s Laksar plant in Uttarakhand, focusing on TBR tyres. The project aims to increase domestic tyre production and promote sustainable manufacturing in India.

Dr Raghupati Singhania, CMD of JK Tyre said, “We are delighted to strengthen our relationship with IFC, securing a USD 100 million SLL to fund our growth plans. By aligning financing to sustainability goals, we aim to drive positive environmental and social impact while achieving our growth objectives.”

What does it indicate?

This funding represents the first SLL in India’s tyre industry. The loan is linked to predetermined sustainability performance indicators. Achievement of these targets will contribute to reduced environmental impact and enhanced social outcomes.

Riccardo Puliti, IFC’s Regional VP for Asia and the Pacific, said “Our latest investment will drive climate-smart manufacturing, enhance supply-chain integration, create quality jobs, and propel India towards self-reliance in domestic production. The SLL, a first in India’s tyre industry, aims to set a benchmark and catalyze widespread adoption across the manufacturing sector.”

The IFC anticipates that this initiative will encourage other manufacturers in India to adopt similar sustainable financing models.

The increased production of PCR and TBR tyres will contribute to meeting the growing demand for these products within India. This investment underscores the IFC’s commitment to supporting sustainable development in emerging markets. JK Tyre aims to improve its sustainability performance while expanding its business operations.