JK Tyre aiming for 20% export share in 5 years: CMD Raghupati Singhania

Company eyes growth in Europe, South America and Africa as Mexico output offsets US trade curbs

JK Tyre & Industries was aiming to raise the share of exports in its total sales revenue to around 20 per cent over the next five years from the current 14 per cent by expanding its presence in relatively untapped markets such as Europe, its Chairman and Managing Director Raghupati Singhania said on Monday.

 

Moreover, he said the recent 50 per cent tariff imposed by the US government on Indian tyre exports is ‘causing a disaster’, but noted that JK Tyre has mitigated the impact by routing a large part of its US-bound shipments through its plants in Mexico. He added that the company has also diversified the remaining exports from India to other global markets.

 

The company has 11 manufacturing plants -- nine in India and two in Mexico. “The US tariff on Indian exports, at the moment, is causing disaster. I wish some kind of a trade agreement materialises sooner than later. Therefore, the exports from India to the US have become very uncompetitive. But, we have -- as a company -- adopted a strategy of sending more tires from Mexico plants to the US. Our exports from India have been diverted to other markets, including Europe,” Singhania mentioned.

 

He said a ‘good chunk’ of the company’s exports that earlier went from India to the US has now been replaced by shipments from its plants in Mexico.

 

Singhania was speaking to Business Standard on the sidelines of the launch of the company’s ‘embedded smart tyres’ for the passenger vehicle segment, which feature built-in sensors that monitor air pressure, temperature, and potential air leaks in real time. The tyres have been developed in-house and are manufactured at the company’s Banmore facility in Madhya Pradesh.

 

On export expansion, he said, “We are aiming for the export’s share in total revenue to reach 20 per cent in the next five years...We are setting up some capacities dedicated for exports.”

 

“We are looking at three areas. One is Europe -- we are working hard on it. We have developed special products for Europe; the European tyre is different, so we have to redesign the tyre and make a completely different product for that market. The second big market, where we are present but want to expand further, is South America. The third is the Middle East and Africa,” he noted.

 

Singhania said raw material prices have remained largely stable in recent months and are expected to stay range-bound in the near future. He attributed this to the stability in global crude oil prices, noting that more than 60 per cent of the company’s raw materials are derived from oil. With crude prices holding steady, he added, JK Tyre does not anticipate any major volatility in input costs.

 

From September 22, the GST on new tyres for cars, two-wheelers, three-wheelers, trucks and buses was cut from 28 per cent to 18 per cent, and on tractor tyres and tubes from 18 per cent to five per cent.

 

When asked about the impact of this cut, Singhania said the move had led to a sharp rise in demand immediately after the announcement. “Certainly, on September 22, there was a huge spurt of demand, no doubt. But that is pent-up demand, which lasts 10-15 days,” he said.

 

He added that both September and October witnessed strong tyre sales following the reduction in GST. However, he cautioned that it remains to be seen “how it peters out going forward”.

 

According to him, the broader impact of the rate cut could be positive over the longer term. He said that “overall demand for various products, including tyres, will go up,” as people’s purchasing power improves and affordability increases across consumer goods due to price adjustments. While some industries may currently be experiencing a dip in demand, Singhania expressed optimism that “overall economic activity will improve” over the next six months.