Jks Moves On Vikrant Help It Reduce Costs

JK Industries Ltd has worked out synergies between JK Tyres and Vikrant Tyres which has helped the company in substantially reducing costs.

JK Industries had acquired Vikrant Tyres two years back. According to A K Kinra, finance director, JK Industries Ltd, the company has closed down 50 depots in a matter of 18 months, in order to avoid duplication.

"While some depots belonged to Vikrant, there were also many depots of JK Tyres which have been closed down in order to avoid duplication," Kinra said.

The company has been working on synergies between the two companies in three areas: procurement, marketing and logistics. "We have also reduced our sales workforce substantially since there was duplication in sales too," Kinra said,

"Synergies in procurement have given us economies of scale," he said, adding that both the combined workforce and the selling points have been reduced substantially as a result of this exercise.

Asked if this is a precursor of a merger of JK Tyres and Vikrant Tyres, Kinra declined to comment.

Meanwhile, the sales turnover of JK Industries grew by marginal 3.53 per cent to Rs 326.30 crore for the second quarter ended September 30 this year even as its net profit declined by about 12 per cent during the period.

Profit after tax (pat) dipped by 11.64 per cent to 6.07 crore as against Rs 6.87 crore for the corresponding period in 1999 due to a hike in petro product prices.

Net profit for the half-year ended September 30 improved slightly by 0.73 per cent and stood at Rs 16.54 crore, as against Rs 16.42 crore posted in the corresponding period last fiscal.