JK Tyre plans rerouting export shipments to meet domestic demand | The Financial Express

JK Tyre plans rerouting export shipments to meet domestic demand

JK Tyre has an installed capacity of 33 million tyres annually across 12 manufacturing sites, of which nine are in India.

JK Tyre plans rerouting export shipments to meet domestic demand
The company hopes that at least for the next couple of quarters, the demand will remain within the supply range.

With no further room for increasing production, tyremaker JK Tyre & Industries will have to readjust export shipments if tyre demand continues to grow at the current pace. The Delhi-based company is operating its plants at 100% utilisation levels and a planned capacity addition will come on stream only in the second half of next year.

While exports contributed 16% of the company’s revenues during the recently concluded September quarter at Rs 458 crore, company officials declined to divulge the volume share of export in total sales.

JK Tyre has an installed capacity of 33 million tyres annually across 12 manufacturing sites, of which nine are in India. The company is spending Rs 1,100 crore in FY23 and FY24 on expansion of capacities for passenger car radials, truck and bus radials and routine maintenance.

Also read: Epsilon Advanced Materials to invest Rs 9000 crore for multiple battery material facilities in Karnataka

Anuj Khaturia, president – India, JK Tyre & Industries, said: “Our radial tyre capacity is running at 100%. We won’t be handicapped (for supplies) as far as the domestic market is concerned because some of this capacity is going to the export market, which we can moderate as per requirement.”

The Rs 530-crore expansion of the passenger car radial capacity, which generates 44% of JK Tyre’s total sales, will be complete by the end of the second quarter of next year with its coming on stream in the ensuing third quarter.

The company hopes that at least for the next couple of quarters, the demand will remain within the supply range. About 59% of the company’s revenue at the standalone level came from the replacement market, while 25% rose from supplies to the vehicle makers. Exports made up the balance 16%.

JK Tyre recorded a 34% decline in standalone net profit for the quarter ended September on account of increased raw material prices and loss on foreign exchange currency. While the company hiked prices during the year to mitigate the jump in costs, more such hikes will follow in the coming months.

Also read: Blow to European Banks in India: EU regulator set to disqualify six clearing bodies

“We have been increasing our prices steadily and demand right now is stable which should help us. We hiked our prices in July, August and September. In the first half, we took a weighted average increase of 8%, which is almost similar to the cost hike. We would be definitely looking for the opportunities to pass on the residual hike in cost to the consumer,” Khaturia added.

With regards to tyres for electric vehicles, JK Tyre’s products are at a validation stage with a number of vehicle makers across categories. The company is a supplier to JBM’s electric buses. Tyres for electric passenger cars of the company are under testing, while supplies are underway to several electric two- and three-wheeler makers.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.