JK Tyre has planned to invest Rs. 1,430 crores in its Chennai facility as a move to increase its existing capacity of TBR tyres from four lakh to 12 lakh units and PCR tyres from 30 lakh to 45 lakh units in order to meet the long-term demand for these tyres.
“The long-term prospects of the Indian economy, and particularly the automotive industry, remain strong. It is expected that despite the current slowdown, demand and growth are likely to bounce back in the next couple of quarters. Keeping in view the long-term demand growth, we are undertaking expansion of our Chennai facility for both truck/bus and passenger car radials”, said Dr. Raghupati Singhania, Chairman & Managing Director, JK Tyre, at a press conference held in Chennai to announce the company working results for the quarter ended September 30, 2013.
The global tyre major reported a consolidated turnover of Rs. 1,956 crores and a PBT of Rs. 107 crores in the quarter as compared to Rs. 60 crores in the corresponding quarter last year, an increase of 78 per cent.
“The slowdown in the automotive industry continued during Q2 as well. All vehicle manufacturers faced slower demand in view of lower economic activity and higher interest costs for auto financing. JK Tyre has weathered these difficult conditions by reinforcing its leadership in truck/bus radials and introducing several new tyres across all categories offering customers a much larger basket”, he added.
The Indian market for radial tyres has been growing rapidly, with major OEMs relying mostly on radial tyres owing to their performance and cost effectiveness. There is 26 per cent radialization in the TBR segment at present. This is likely to increase to 30 per cent by March 2014 and to 55 per cent in the next five years.
Dr. Singhania further observed that JK Tyre has achieved its highest-ever export of Rs. 450 crores in the quarter. It plans to export 30 per cent of the tyres produced at its Chennai facility to markets like Australia, South America, etc., JK Tornel, the company’s Mexican operation, continues to perform very well, with an investment of $25 million being planned for its expansion to enhance its capacity by 25 per cent.