Aggressive expansion is what JK Tyre & Industries plans to follow in the coming years. As the first step towards this expansion, the company on Monday launched 10 new products for its domestic market. Along with that the tyre manufacture also announced that it plans to invest Rs 1,430 crore in expanding the production capacity of its Chennai plant.
The newly launched products include three passenger car radials, two light commercial vehicle (lCV) and truck/ bus bias tyres and three truck/ bus radials. The company plans to increase its turnover by Rs 300 crore from these new products. Talking about the capex plan, company’s President and Director AK Bajoria, “We have earmarked capex of Rs 1,430 crore to increase our truck and bus radial capacity by additional eight lakh tyre per annum and car radial capacity by another 20 lakh tyre per annum at the Chennai plant.”As far as financing this expansion goes, Bajoria added, “Financing would be done partly by internal accruals and partly through raising debt.” The company expects all the expansions to be completed by the next financial year.
Moreover, the company is also spending Rs 140 crore at its Mexican subsidiary Tornel to increase capacity by 18 per cent from its present capacity of 3.2 million tyres. “In the first phase of expansion in our Mexican subsidiary Tornel, we are investing Rs 140 crore in next 10 months,” he added. Bajoria further added that JK Tyre has also started suppling tyres to Volkswagen group from India. “We are going to be their global partner. Wherever they have a plant, we are going to get a slice of that,” he said. Indian tyre market is estimated to be between Rs 46,000-50,000 crore. In the passenger vehicle tyre segment, the company has a share between 18-20 per cent.
Of the ten new products, JK Tyre launched a fuel saver trye Ultima Neo. Talking about this new product, company’s Technical Director VK Misra said, “Ultima Neo would help saving up to 20 per cent on fuel bills in the lifetime of the tyre. The tyre has less rolling drag which enables better efficiency.” Apart from that the company also launched ultra high performance car tyres designed for the premium high end luxury cars such as Audi, BMW and Mercedes.
Amid turbulent market condition, input costs of raw materials have gone up and demand has fallen but the company is expecting demand to again pick up soon. Rupee depreciation has also been a cause of worry for the company in the past as it imports 18- 22 per cent of total required natural rubber from overseas markets .”last two and a half years were very tough but we are expecting the scenario to improve from the end of second quarter of the current fiscal. Expansions are being done just to prepare ourselves for the future when demand picks up again.”