While we are entering new markets, we are expanding the product categories. For example, the off highway tyres and two- and three-wheelers for which we have also hired domain experts, says Rajiv Prasad.
The slowdown in domestic vehicle sales in the past one year has impacted revenues of component makers across segments. JK Tyre & Industries, whose profit slumped 75% year-on-year in Q1FY20, is looking at different avenues to boost sales. Its India operations president Rajiv Prasad, in an interaction with Pritish Raj, says the company has been increasing exports and pushing volumes in the replacement market to compensate for the volume losses from the OEMs. Edited excerpts:
The slowdown in vehicles sales has impacted the order books of all the component makers. What measures are you taking to cope with the demand slump?
No doubt there is a demand slowdown at the OEM level, but what we have been doing is pushing stock at the replacement market and increased exports. We export to over 105 countries and are trying to ramp up there.
Has that been enough for the company to compensate for the volume losses in the domestic market from OEMs? Are you looking at new markets?
Despite the slowdown, our volumes have grown 6%. While we are entering new markets, we are expanding the product categories. For example, the off highway tyres and two- and three-wheelers for which we have also hired domain experts. We have entered several new countries in southern and eastern Europe and plan to increase our footprint further in Europe and also enhance our market coverage in Africa.
Sales of vehicles across categories have fallen to a multi-decade low, impacting major component makers. How long do you think it will take for the demand to revive?
I would say demand would improve around the festive season because pre-buying has to happen sooner or later. Especially in the truck segment, costs of a BS-VI model would go up by a good amount so the fleet operators will want to buy early. On the PV side, a little more sentiment change in the market place is required as hike in insurance and limited financing continues to be a challenge. The consumer right now is confused which is leading to postponement of sales.
Will a GST cut help as demanded by the industry for so long?
In the short term may be yes, as that will reduce the net outflow of an individual and make the product cheaper. To some extent, a GST cut can roll back the price increases that have happened in the past one year.
Regarding the recently launched Treel sensors which monitor tyre pressure digitally, do you think Indian consumers are ready to adopt and pay for it?
Firstly, we have an industry first-mover advantage. Secondly, it’s not that expensive as it comes at Rs 8,000 for a car for five years. With that amount, if there’s 5% fuel saving along with the safety quotient, I think it’s completely worth it.