Balkrishna eyes triple profits from Pirelli partnership

New Delhi: A stronger international brand image, access to European testing infrastructure and a steady stream of revenue from the production of 800,000 passenger car tires annually are three advantages for the Mumbai-based Italian tire maker. Balkrishna Industries Ltd expects from its partnership with the world’s fifth largest tire maker Pirelli, joint managing director Rajiv Poddar told Mint.

According to an initial supply agreement signed last month, its Bhuj plant will produce 800,000 tires a year by 2030. The two companies could later form a 50:50 joint venture to produce premium car tires if certain conditions are met.

“In that sense, it’s a marriage of equals. When they saw what we’ve done in Europe, the quality-focused approach we have, they saw the possibility of a strategic alliance.”

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Balkrishna wants to achieve income from ₹23,000 crore by FY30, with road vehicle tires contributing 20%. It is also becoming less dependent on exports, which accounted for 64% of sales in FY26, up from 82% in FY22.

For BKT, this deal is a step into a much larger market: passenger cars, trucks and buses.

The partnership also gives BKT access to Pirelli’s testing infrastructure in Europe, including simulation and testing facilities. This may come in handy as the Indian company develops its own passenger car tires and tries to push their performance in international markets.

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BKT’s expansion into road tires comes amid a broader trend for tire manufacturers to diversify their product portfolios. While BKT is looking to enter passenger car tires and build a presence in commercial vehicles, rival Ceat Ltd bought Canadian off-highway tire brand Camso in 2024 to strengthen its position in the global off-highway market. JK Tires also said it is looking for acquisition opportunities.

Known in Europe

Poddar said Pirelli’s decision to partner with BKT reflected the Indian company’s established presence in Europe, its manufacturing capabilities and its track record of building a premium brand in the off-highway segment. All-terrain tires are designed for vehicles that use uneven roads.

The company believes that a tie-up with a premium European brand will help it gain acceptance among customers as it enters a segment where it has limited experience. It will also allow BKT to accelerate its market entry without having to build each capability separately.

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“We have a large market share in agriculture in Europe, virtually a leading position, and that in itself has also translated into brand value and close perception of the premium brand,” Poddar said.

This arrangement is subject to a separate service agreement under which BKT will pay for Pirelli’s use of the equipment and technical support. However, this does not mean that BKT will adopt Pirelli’s technology for its own products. The two companies will maintain separate manufacturing specifications and technology.

“For the BKT tire brand, BKT does not have its own race track. So they will open their infrastructure in Europe,” he said.

“Whether it’s simulation technologies or verification ground technologies, we can use their facilities for consideration. They will help and support us to get quick results.”

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Rajiv Poddar represents the third generation of the family behind Balkrishna Industries. His grandfather Mahabirprasad Poddar started the business in 1954 with bicycle tires. His father, Arvind Poddar, founded Balkrishna Industries in 1987 and built it into an off-road tire manufacturer. Its market capitalization is around ₹47,000 million crowns.

Analysts are watching margins

With the contract for the purchase of tires, BKT acquires a manufacturing customer, as it enters the segment of passenger cars. Under the deal, Pirelli will buy tires from BKT and sell them under its own brand. The agreement does not include BKT’s share of Pirelli’s sales.

The proposed joint venture, if it goes ahead, will produce tires for both brands, with each company selling its products separately.

While most of the initial offtake is expected for India, some could be supplied to overseas markets, according to a top official.

Poddar said the partnership would help BKT accelerate its broader road ambitions, although it would not change the company’s stated goals or timelines.

Analysts said the strategy to expand into road tires will be closely watched as it could drag down the market.

“The foray into the PCR/TBR segments is likely to be closely watched for the pace at which it gains material traction and whether margins and revenues will be materially dilutive over the long term,” analysts at Motilal Oswal said in a note. PCR means car tires; TBR stands for Truck and Bus Tires.

The diversification is part of a wider effort to reduce its dependence on global demand for off-road tires. BKT’s international markets contributed 64% to its revenue in FY26, down from 71% in the previous year and 82% in FY22.

Key things

Balkrishna will manufacture Pirelli car tires from 2027 at its Bhuj plant.
Volumes will reach 800,000 tires per year by 2030, with a possible joint venture.
Pirelli’s European test tracks and simulators will reduce Balkrishna’s product validation time.
Balkrishna will retain his own designs and will not adopt Pirelli’s technology.
The targets remain at ₹ 23,000 crore by FY30, which is one-fifth of road tyres.