JK Expansion Plans Include 2-Wheeler Market Comeback
Sales of cars in India are booming – in August alone, sales figures rose one-third to a record high. Tyre makers are benefitting from these buoyant conditions, and to accommodate growing demand JK Tyre & Industries is planning to effectively double its passenger car radial capacity by the first quarter of the 2014 financial year. To reach this target, JK Tyre has earmarked some Rs 15 billion (£209.3 million), a large portion of which will go towards erecting the company’s greenfield plant in Sriperumbudur, near Chennai.
A Memorandum of Understanding to build this new facility was signed on August 4. During the ceremony JK Tyre’s vice chairman and managing director Dr. Raghupati Singhania commented that “with this upcoming greenfield project, which is being set-up by incorporating the global best manufacturing practices, we will set newer benchmarks for the industry by having the most efficient, modern and productive tyre plant in the world and hope to cater to a large market, both domestic and international.” In a press statement released that day, the company articulates its aim for the Sriperumbudur facility to be “the most efficient, modern and productive tyre plant in world.”
JK Tyre’s marketing director A S Mehta explains that capacity expansion will occur in two stages. When the new plant goes on-stream late next year an additional 2.5 million passenger car tyres and 200,000 truck tyres will be added to the tyre maker’s capacity, and the balance will be added by the first quarter of 2014. In addition to this, the company is also spending Rs 1.5 billion (£20.9 million) to expand truck radial capacity at its Mysore plant by 200,000 units to a million pieces. This project is scheduled to be completed in early 2011. Total capacity at JK Tyre by the start of 2014 is anticipated to be 10 million passenger car radials and 1.6 million commercial vehicle radials.
On top of this, the Indian tyre maker is considering a re-entry into the fast-growing two-wheeler market. JK Tyres has not participated in this segment for more than 20 years, when it stopped production of tyres for two-wheeled vehicles. It is likely that the company would source tyres from another manufacturer rather than produce them itself.