CHENNAI: Tyre major JK Tyres is focusing on expanding its export footprint using its plant in Mexico to drive volumes in the car segment as part of which some New York cabbies are have now started using the Indian brand for the first time. The tyre market leader has been pushing after-market sales and exports in an effort to make up for the slowdown in the domestic car market, said top company officials.
“Our export focus has helped us to grow our exports 23% in financial year 2013-14,” said Arun Kumar Bajoria, president, JK Tyres. “Including our JK Tornel Mexico exports, our consolidated exports are worth Rs 1605 crore in the just ended fiscal, up 20%.” The Mexico arm has also landed JK it’s first presence in the New York cabbie market. “We have added Nissan andVolkswagen as OEM clients from our Mexican operations as a result of which New York Nissan cabs have started using made in Mexico JK tyres for the first time,” said Bajoria. “We have added five new export markets last fiscal and we now have a presence in over 100 markets,” he added.
Improved exports, a bigger share of after-market sales and a significant softening of raw material prices has helped JK turn in its highest ever profit with a 29% increase in net profit to Rs 263 crore in FY13-14. Natural rubber prices have hovered in the region of around Rs 148-149 per kg for most of last fiscal and is currently range bound at below Rs 150/kg. Other critical inputs like carbon black and synthetic rubber prices are also down though nylon fabric and crude oil are up. “The effect of raw material prices is in the range of around 3% but raw materials constitute about 70% of the net sales price so their actual impact works out to just over 2%,” said Bajoria.
The drop in car production has hit OEM demand for tyres so most tyre companies have been working on exports and replacement demand. “We have increased our share of the domestic replacement markets in each category from truck and bus radials where at 34% we are market leaders to light commercial vehicles, car radials, farm tracks and off the road tyres,” said Bajoria. The perky growth in tractor demand has also led to a renewed focus on that market. “It’s a focus area for us and we have doubled our capacity in 2013-14 to more than 230,000 units a year now,” he added.
Currently the OEM and replacement plus export market split in radial tyres is around 50:50 while in truck radials the split is 81:19 in favour of replacement/export markets. JK is currently investing Rs 1430 crore in its Sriperumbudur plant near Chennai to add 800,000 units capacity to its truck and bus radial production taking its capacity to 12 lakh units. It is also adding 15 lakh units in car radial capacity to take its total production capacity to 45 lakh units in Chennai. “Our total tyre capacity across all plants is 23 lakh truck and bus radials and 97 lakh car radials,” said Bajoria.