JK Tyre eyes buyout in South East Asia

In a major product blitz, JK Tyre & Industries launched 10 new products across various vehicle segments on November 18. The tyremaker is also looking at an acquisition in South East Asia to further boost its passenger car radial capacity, company officials told Autocar Professional. As recovery in the Indian automotive industry picks up by Q2 of next year, a lot of potential for growth is visualised in the sector to meet growing capacity needs.

“The automotive market in India continues to offer promising opportunity for growth to all and with the launch of this new range, we are hopeful of increasing our market share in high-performance tyre segment significantly. The new range also comes as an aggressive move towards our expansion plans for India which has an earmarked capex of Rs 1,430 crore to increase our truck and bus radial capacity by additional 8 lakh tyres per annum and car radial capacity by another 20 lakh tyres per year at the Chennai plant,” said A K Bajoria, president and director, JK Tyre & Industries.

The funding for the upcoming Chennai plant will be sourced through internal accruals and from financial institutions and will produce an additional 20 lakh capacity by Q1 of 2015 with the truck radial ramp-up programme to begin from end-2014 or early 2015. The overall expansion programme will be completed within 12-15 months, latest by Q1 of 2015.

According to Vikram Malhotra, vice-president (marketing and sales), the tyremaker has added the Honda Amaze as a customer and is in talks with Hyundai Motor India for supplying to a new vehicle that will come into the market in 2014-15. It is also looking at a couple of more OE orders for instance, from Ford in India and also from vehicle manufacturers abroad.

JK Tyre already supplies to Nissan, Volkswagen and John Deere in India; it will also be supplying to them in Mexico and will become their worldwide partners wherever they go. Chrysler is also a customer being supplied from Mexico. Many OEMs are moving to Mexico and hence its importance as a growing automotive hub.

The 10 new tyres launched are part of the company's aggressive growth plans for India. The new tyres include the UX1 Ultra High Performance car tyre range designed for high-end luxury cars such as those from Audi, BMW and Mercedes and a new Ultima NEO range for hatchbacks claimed to offer fuel savings.

“In the last one-and-half years, we have doubled our exports and going forward also will continuously increase our exports. We are already present in 90 countries and will further penetrate into other countries so that we have more business,” added Bajoria. For instance, customers in Latin America are being catered to from Mexico and the company plans to start supplying from India now. Besides, North American countries, South East Asian countries, the Middle East and Africa are important export markets for JK Tyre.

“The discerning customer wants more for less and it is our endeavour to constantly innovate and develop products that cater to their requirements. For JK Tyre, customers are at the core of all R&D and we are committed to designing products that make driving a real experience for them,” said V K Misra, technical director.

Awaiting growth

Overall, the slowdown has impacted the tyre industry in the short term but in the next 4-5 years the sector is expected to grow at a CAGR of 10-12 percent. Currently it is growing at 5-7 percent. The long-term prospects of the automotive industry remain strong. The company foresees double-digit growth in the truck and bus radial, passenger car radial, LCV, SCV and tractor segments with radialisation going up from 19 percent last year to 25 percent till date, and further up to 50 percent by 2015-16 in the truck and bus segments.

In the commercial segment, JK Tyre says it aims to enhance the customer value proposition by offering next-generation products which will help in reducing truck and bus operators’ operating costs. With these new product launches, JK Tyre says it plans to increase its turnover by Rs 300 crore. All in all, it is ready for the uptick when it happens.