JK Tyre to increase passenger car tyre capacity by 50% at its Mexican facility

Consolidated net profit up by 55%

Tyre major JK Tyre & Industries Ltd. (JK Tyre) is planning to increase its passenger car tyre manufacturing capacity by 50% at its Mexican plant. The company also said this plant will start manufacturing special applications.

Addressing earning call after announcing company's results Arun K Bajoria, president - industrial operations, JK Tyre & Industries Ltd said that current capacity of the Mexican plant is 3.5 million tyres and it will be increased to five million tyres a year.

The company would invest around Rs 150 crore in the expansion. It may be noted, already the company has invested $22 million in this plant.

The expansion is expected to be completed by end of this year and half of the production will be for domestic market. The plant will also start manufacturing tyres for special applications including forklift, implements like garden equipments, construction equipments etc.

On Chennai plant expansion, Bajoria said of the Rs 1,430 crore, which is for phase-II expansion, around Rs 900 crore was spent till now and the balance will be spent before March 31, 2016.

Post phase-II expansion, the company's Chennai plant capacity for bus truck radial tyres will increase to 1.2 million per annum from 400,000. For passenger car it will be increased to 4.5 million units per annum from 2.5 million.

The expansion comes on the backdrop of increase in demand from the OEMs, the company's foray into North American markets and growing replacement markets.

Bajoria said, at present 15% of the the total produced in JK Tyres are being exported to over 100 countries. Export turnover is around Rs 1,000 crore and he is expecting higher growth from end of this year, however he didn't put any number to it.

JK Tyre has executed a binding term sheet for the acquisition of Laksar unit of Kesoram Industries Limited (KIL) and the process is expected to be completed in couple of months subject to regulatory formalities. This will further strengthen Company's leadership position including its strategic entry into the fast growing 2-3 wheeler tyre segment, he said.

"We are also doing some test marketing of both (two-wheeler and three wheeler tyres), in few months we will hit the market," said Bajoria.

JK Tyre reported a consolidated net profit of Rs 118 crore for the second quarter ended September 30 2015, up by 55% from Rs 76 crore in the corresponding quarter. The company achieved a consolidated turnover of Rs 1,986 crore.