JK Tyre profits up, capacity to grow in India & Mexico
India’s JK Tyre and Industries Ltd attributes much of its improved profitability in the three months to 31 December 2012 to its strong performance in the truck and bus radial sector. Despite an overall slowdown in the Indian market and a slump in orders from OEM customers, the tyre maker recorded a net profit of Rs 211.4 million (£2.5 million) in its 2012-13 third quarter. This compares with a net loss of Rs 213.1 million (£2.6 million) a year earlier. Net sales between 1 October and 31 December 2012 amounted to Rs 12.7 billion (£152.4 million), down 7.6 per cent year-on-year.
“It was indeed a challenging quarter for the auto industry with depressed demand, particularly by the OEMs, which impacted demand for tyres,” commented JK Tyre vice-chairman and managing director, Dr. Raghupati Singhania. “In the face of this, the company has recorded an improved profitability for the quarter as compared to the corresponding period. This was possible due to deeper penetration in the marketplace, particularly in truck/bus radials, despite the overall slowdown. Additional radial tyre capacities recently created, both for truck/bus as well as passenger tyres, will further cement JK Tyre’s radial leadership position.
“JK Tyre’s pioneering efforts in introducing truck/bus radials in India and educating customers have paid rich dividends,” Singhania continued. “By now, 4.5 million JK truck/bus radial tyres are already on Indian roads – yet another landmark.”
The manufacturer of the JK Tyre, Vikrant and Tornel tyre brands now operates a total of nine plants worldwide. Six of these are located in India, the newest of which is the greenfield facility built in Chennai. The remaining three are situated in Mexico. Global JK Tyre production capacity is now said to exceed 20 million tyres per annum. In addition to the aforementioned, already-implemented capacity increases, the tyre maker’s Board of Directors has approved a Rs 1.6 billion (£19.1 million) investment to increase production in India by one million units, with Rs 600 million (£7.2 million) being invested “immediately” to increase domestic passenger car radial capacity by 500,000 units. The remaining Rs 1 billion will go towards increasing capacity of light commercial vehicle and agricultural tyres in India.
During 2012 the company’s subsidiary in Mexico, JK Tornel, achieved net sales of Rs 15.4 billion (£184.7 million) and after tax profit of Rs 870 million (£10.4 million). Capacity expansion is also planned in the Americas. According to JK Tyre president and director Arun Bajoria, US$15 million will be invested to boost JK Tornel passenger car radial capacity from 3.6 million units to 4.2 million units per annum over the coming 15 months. “We are falling short of capacity in Mexico since we have started supply to original equipment manufacturers such as Volkswagen, Nissan and Chrysler,” he said, adding that total capacity in Mexico would reach 7.2 million a year after the expansion.