BKT's car-tyre push gets Pirelli: Bhuj offtake signed, 50-50 India JV planned by end-2030

Balkrishna Industries — the Mumbai-headquartered off-highway tyre maker that sells as BKT — told the exchanges on October 22 that it has signed three agreements with Pirelli Tyre S.p.A. of Italy: a Framework Agreement, an Offtake Agreement and a Service Agreement. The board meeting that approved them ran from 9:45 a.m. to 10:30 a.m.; the outcome reached the exchange at 10:48 IST, mid-session, and the accompanying press release followed at 11:38. The stock closed the session at ₹2,106.00, up 3.3% on the previous close.

The offtake economics, as disclosed, are those of contract manufacture: the price Pirelli pays is raw material at actuals plus conversion costs, payable in rupees for domestic supplies and euros for exports. Pirelli grants BKT a limited, non-exclusive right to use its know-how and trademark to make the tyres at Bhuj; each side keeps its own intellectual property. The agreement runs until December 31, 2031 — unless the JV becomes operational and can meet Pirelli's demand earlier, or the parties mutually extend it. What the filings do not quantify: the minimum offtake volume, per-year production, capex, or expected revenue. That makes the per-tyre conversion spread, and the volumes behind the 800,000 headline number, the open variables.

1. 1

   Offtake Agreement

   Signed Oct 22, 2026

   BKT manufactures Pirelli-branded PCR tyres at its Bhuj plant and supplies Pirelli and/or affiliates against purchase orders. Pricing is raw material at actuals plus conversion cost; minimum annual offtake commitment from Pirelli, capacity commitment from BKT. In effect until Dec 31, 2031, subject to mutual extension, or until the JV is operational and able to meet Pirelli's demand.

2. 2

   Service Agreement

   Signed Oct 22, 2026

   Pirelli provides tyre-testing and technical support for BKT-branded SUV, passenger-car and two-wheeler tyres at its facilities outside India, against service requests from BKT. Fees payable in euros, at arm's length, per an agreed price schedule. Terminates automatically if the Framework or Offtake Agreement ends before the JV Agreement is executed.

3. 3

   JV Agreement

   JV to be incorporated by Dec 31, 2030

   To be executed in the future, subject to conditions precedent. Key agreed terms: 50:50 shareholding; a four-member board with each party nominating two directors and a rotating chairperson; JV manufacturing capacity shared equally; a 5-year lock-in on JV shares, after which each party gets a right of first refusal and tag-along rights, with restrictions on transfers to competitors.

The exclusivity terms bind both sides. While the Framework Agreement is in force, neither party may enter a joint venture or similar arrangement in India with a third party for manufacturing car, light-truck, motorcycle or bicycle tyres — wholly owned plants excluded. Pirelli commits not to sign another offtake with any third party in India for Pirelli-branded PCR tyres. BKT, in turn, may not manufacture tyres for third parties that are comparable to or compete with Pirelli's PCR tyres — but it remains free to develop, make and sell its own BKT-branded PCR tyres.

BKT's core business is off-highway tyres — agriculture, industrial, construction, mining, earthmoving and material handling, a portfolio its own press release puts at over 3,600 products sold in more than 160 countries. The passenger-car entry itself is not new: the same release notes that BKT had recently announced its entry into the two-wheeler, passenger-car and commercial-vehicle segments for the Indian market, and the Bhuj PCR plant named in the Offtake Agreement already exists in the company's description of the deal. What is new on October 22 is the named global partner, a committed buyer with a minimum offtake obligation, a headline volume and dates. The counterparty brings scale: Pirelli group reported consolidated revenue of approximately €6.78 billion for the year ended December 31, 2025, with 18 plants in 12 countries per the press release — and, until now, only a commercial presence in India.

The deal lands on a strong quarter. Q1 FY27 consolidated revenue was ₹3,455.3 crore, up 25.2% year on year (Q1 FY26: ₹2,760.0 crore), with net profit of ₹450.8 crore, up 56.4%, at a 21.5% operating margin. Promoter holding has been steady at 58.29% across the March and June 2026 quarters. Separately — and without any stated link to the Pirelli transaction — the board's finance committee approved on September 3 the issuance of 55,000 unsecured, redeemable non-convertible debentures of ₹1,00,000 face value each, an aggregate principal of up to ₹550 crore.

The announcement interrupts a long slide. From an early-August close of ₹2,501.60 (Aug 5), the stock drifted down through September, with the 52-week adjusted low of ₹1,964.7 recorded intraday on October 13 (that session closed at ₹1,998.70), before recovering to close at ₹2,039.60 on October 21. The announcement-day close of ₹2,106.00 still leaves the stock 24.1% below its February 10 adjusted high of ₹2,775 — the +3.3% session is a move off a depressed base, not a return to the range the stock traded in earlier this year.