What would you call a businessman who, way back in 1980, airlifted generators from the US to prevent blackout at his facility in Rajasthan? Crazy? Well, some really did. But in business as in life, JK Tyre & Industries vice-chairman and managing director Raghupati Singhania is a man ready to take risks. When he introduced the truck radial technology in the country, which promised a 100% more mileage and 6-8% more fuel efficiency, scepticism loomed large. ?Oh you are putting steel in the tyre,? critics scoffed. But soon after its success, many players charted the same path. Today it has a 70% market share in the segment. ?That?s what leadership is all about. It may not be the popular view but you have to have your own understanding and judgment,? says the 60-year-old veteran.
But what is it that sets his tyres apart from the rest? ?We offer value for money, quality, and we have built a brand goodwill over the years,? he says. JK Tyre?s first quarter results, announced recently, throw up impressive figures. Its net profit has jumped by 166% to Rs 21.74 crore against Rs 8.17 crore a year ago. The company board has also recommended a 27% dividend for shareholders.
So what has been his success formula? ?If you have mastered the technology, that is going to be the winning formula, particularly in this era,? he quips. Rightly so. The company boasts of a state-of-the art R&D centre in Rajasthan and has a technical collaboration with Continental AG of Germany, the fourth largest tyre manufacturer in the world. For JK Tyres, acquiring new technology made it necessary to gain volume. And the bigger volumes spurred the urge to lead. The figures say it all. From a production capacity of 5 lakh tyres in 1977 to about 87 million now, the journey has been noteworthy, though, at times, rough.
After gaining a strong presence in the country, JK Tyre is now looking at acquiring a foothold in the Chinese market through a strategic partnership with a manufacturing firm. But bumps remain. ?Most of these companies are owned by provincial governments,? Singhania says. At present, JK Tyre exports to 75 countries across six continents and has been outsourcing from China for the last three and a half years, through tie-ups with five/ six companies. Since infrastructure cost of handling?internal and external?makes the biggest hole in its export kitty, the company is looking at reducing exports from India.
But there is more to China than just a big market and low cost, feels Singhania. ?The Chinese are quite disciplined and have certainly been able to safeguard their industry and economy better. We, as a nation, have become highly undisciplined,? he comments.
Advocates of globalisation may frown upon him, but he minces no words in saying that India got the timing wrong in opening up the economy. ?It?s a question of timing. We should opt for a market economy; there is no question about it,? he says. For instance, he argues, India?s infrastructure is its Achilles heel. Though the country has started building the core sector, our competitiveness will be very much affected till the time it?s built. He substantiates his point with the China example. ?The cost of production in China is much lower and infrastructure is outstanding. The Chinese have regulated the import regime to suit their needs and have supported industry,? he says.
Talking about regulation and the much-debated issue of whether a private sector CEO?s salary should be capped, he says, ?If the government sector is not catching up because of inefficiency, why should the efficient be penalised? Why should you want to take away entrepreneurship from the country? That is our backbone. Despite the government, the private sector has grown for 50 years, with all the tangles,? he thumps.
Today the biggest challenge for a tyre maker in India is the manufacturing cost. But Singhania is well equipped. His company is re-engineering the products and making efforts to keep costs low. It has created two sets of products: regular and low-cost ones. Though he is not selling them as cheap as the Chinese do, he says the customer buys them because of their quality.
Challenges notwithstanding, the company plans to invest Rs 1,180 crore for expanding capacity in the next three years. About Rs 320 crore of the investments, says Singhania, will be aimed at increasing its truck radial manufacturing capacity to about 8 lakh a year from the present 3.67 lakh. That apart, there will also be marginal capacity expansion of other types of tyres. Some portions of the investments may be utilised for funding acquisitions, too. The company is also eyeing markets in at least two global locations in the next five years, with Southeast Asia and China on the top of its priority list.
Though J K Industries is a unit of JK Organisation, which spans companies across various sectors, including paper, cement, woollens and cotton textiles, hybrid seeds, sugar, dairy and food products, cosmetics and power transmission systems, Singhania rules out JK Tyre?s diversification into more sectors in the near future. ?We want to remain focussed. We are widening our base in the already-present segments,? he says.
Singhania graduated from St Xavier?s college in Kolkata in science and went on to do a doctorate from Udaipur University. A former president of the PHD Chamber of Commerce and Industry, he has led several business delegations to different parts of the world. The best part about leading a team, he says, is that if you do your homework well, you can always make an impression. ?People respect leadership and somebody has to provide it. And when you put up a good presentation, the world appreciates you.?
Talking about himself, he says, ?I am a simple man. I believe in God, honesty and hard work.? The man has a flair for photography. Though, for long, he hasn?t had time to indulge in it. He also loves gardening. In fact, his garden has been adjudged as the best in the city for a number of years.
Owner of a Jaguar, he loves this machine. In fact, he also has a passion for motor racing. Back in 1980s, his company became the sponsor of the Himalayan rallies. He has been organising national racing championships followed by rallying and go-carting championship since 1992. The idea was to attract youth to motor racing, which was considered a rich man?s luxury.
His wife Sunanda is also lending a helping hand to expand his business. At the present, she is busy handling the task of setting up a multi-speciality hospital in the posh South Delhi locality of Saket. They have a number of trusts and foundations in education and healthcare, which often carry out programmes in adult literacy, population control, AIDS assistance, etc. But Singhania would like to call it ?service to humanity? instead of philanthropy.Singhania wants to see his company touch the $1.5-billion mark, with a much wider base of production and good standing in the automotive sector in the next five years. He also wishes to be remembered as a successful businessman. Well, some might see it as one of those aspirational themes that any corporate giant wafts skyward every now and then. But a man like him can very well afford to put a wager on it.
Fact File
* Raghupati Singhania is vice- chairman and managing director of J K Industries Limited.
* He ushered the radial technology in tyres in India way back in 1977.
* He is a science graduate from St Xavier?s College in Kolkata and PhD from the Udaipur University.
* He is passionate about motor racing, and has sponsored many events.
