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JK Tyre & Industries Ltd.

BSE: 530007 Sector: Auto
NSE: JKTYRE ISIN Code: INE573A01042
BSE LIVE 15:54 | 23 Aug 143.05 2.00
(1.42%)
OPEN

142.50

HIGH

145.50

LOW

140.50

NSE 15:51 | 23 Aug 143.30 1.65
(1.16%)
OPEN

144.00

HIGH

144.80

LOW

140.35

OPEN 142.50
PREVIOUS CLOSE 141.05
VOLUME 229766
52-Week high 186.55
52-Week low 106.00
P/E 32.96
Mkt Cap.(Rs cr) 3,244
Buy Price 143.05
Buy Qty 1100.00
Sell Price 0.00
Sell Qty 0.00
OPEN 142.50
CLOSE 141.05
VOLUME 229766
52-Week high 186.55
52-Week low 106.00
P/E 32.96
Mkt Cap.(Rs cr) 3,244
Buy Price 143.05
Buy Qty 1100.00
Sell Price 0.00
Sell Qty 0.00

JK Tyre & Industries Ltd. (JKTYRE) - Chairman Speech

Company chairman speech

At JK Tyre the year 2016-17 was eventful on account of a healthy growth of about 10%in our total income to Rs. 8383 crore. By most measures this represented a significantachievement considering several challenges facing the industry including rising cheapChinese imports the demonetisation-related consumer slowdown changes in emission normsthat impacted the sales of commercial and large passenger vehicles and general economicsluggishness. However despite respectable growth in our turnover and unprecedentedincrease in the cost of natural rubber and other petro-based raw materials impacted ourmargins.

The focal point of the year was the acquisition of Cavendish Industries Limited (CIL)and its operational turnaround which speaks volumes of our storied expertise in the tyrebusiness. JK Tyre & Industries Ltd. completed the acquisition of CIL in early 2016-17.Cavendish comprised three tyre manufacturing facilities of the Birla Group companyKesoram Industries Ltd. The plants located at Laskar (Haridwar) comprised a range oftyres tubes and flaps with an installed capacity of 10 million tyres per annumincreasing the number of plants owned by JK Tyre to 12 (nine in India and three in Mexico)post-acquisition.

I am pleased to state that our bold decision to acquire CIL was justified when wesuccessfully turned the plants around within the first year of acquisition. Thisturnaround was achieved through a judicious reduction in conversion costs led by workforceright-sizing waste reduction and value engineering through leveraging our manufacturingexpertise despite a sharp rise in raw material resource costs. The workforce strength wasoptimised by a third; conversion costs were moderated by 40% between the first and thefourth quarter; wastage was reduced by as much as 60% in bias tyre manufacture and truckradial manufacturing production was sharply ramped-up.

The fact that we could achieve this in a plant where we had no prior exposure and inthe 2/3 wheeler segment where we did not have any prior experience only validates what wehave always professed: that passion surmounts problems. Importantly the Cavendish unitsexpanded our product basket providing us with the access to 1.2 million units of truckradials apart from Farm and other bias capacities. Significantly we are optimistic ofenhancing our market share in the two- and three-wheeler tyre segment with the access tothis newly acquired capacity and also following the introduction of a new size of tyres.Going forward this will open our presence in the high-growth 2/3 wheeler market segments.

The acquisition also enabled us to introduce a multi-tier product strategy in the trucksegment through Cavendish's ‘Challenger' brand that represents the value end of themarket; with this we are now fully present across the three major price points of theIndian truck industry – premium (through the JK Tyre brand) mid-tier (through theVikrant brand) and value (through the Challenger brand). Being the first to launch truckradials in the country we will be able to further reinforce our leadership positionthrough a better and more comprehensive market coverage.

To this product diversification we also gave an impetus to our brand shop networkexpansion and geographic diversification by further streamlining and sharpening thevisibility of our three formats – ‘Truck Wheels' that exclusively retails trucktyres ‘Xpress Wheels' that represents a smaller shop format specific to the suburbanmarkets that showcases and retails smaller tyres and also focuses on customer educationand engagement and ‘Steel Wheels' that is a chain exclusively for passenger vehiclesand 2/3-wheeler tyres. With a thrust on 2/3 wheelers we appointed distributors for thissegment and within a short period have been able to achieve pan-India coverage.

Beyond the acquisition at JK Tyre we sought to enhance our competitiveness by seekingto work better and generate much of our gains from within. The teams collaborated acrossplants to eliminate sub-optimal processes. The research and product development teamaccelerated product introductions to the highest in our existence. The manufacturing teamsproduced more with less the most visible manifestation being a reduction in the quantumof energy and water consumed to some of the lowest levels in the world. At JK Tyrebusiness goes hand-in-hand with community responsibility and we believe one cannot be atthe cost of the other. At our Company we are engaged in those areas that can create themaximum impact and these include healthcare literacy vocational training and waterconservation. Over the past year we would have positively impacted hundreds of thousandsof lives and are happy to have emerged as active change agents. I am optimistic about thefuture of JK Tyre. The ground realities are encouraging; the Indian economy appears toshrugging off the weakness following the 2016 demonetisation; the proposed GSTimplementation is expected to have a favourable outcome on the economy which shouldamong other things catalyse cross-state logistics movement that should translate into alarge offtake of tyres; the prediction of a normal monsoon will raise rural incomes thatcould help the economy by fuelling demand for manufactured items.

At JK Tyre we are well positioned to capitalise on these developments on account of apresence in every segment of the tyre industry a competitive cost structure the abilityto capitalise on progressive radialisation on account of the largest capacity in thebroadest market segment and an enhanced consumer awareness about quality that shouldtranslate into wider product acceptance. In conclusion I would like to mention that wewill build on the initiatives of what was a good 2016-17 even as we perceive 2017-18 to bemore optimistic as we focus on creating consistent value-generating platforms for ourshareholders. With my best wishes

Dr. Raghupati Singhania

Chairman and Managing Director