With 2017's hurdles behind it, JK Tyre to invest close to Rs 5 bn in 2018

Amid a revival in demand and the government's push for 'Make in India', tyre major JK Tyre is planning to invest around Rs 5 billion to increase its capacity. 

JK Tyre & Industries Ltd Director & President (International Operations) Arun Bajoria said that the year 2017 was full of challenges, including the lingering effects of demonetisation and high raw material prices, that impacted the industry in the January-March quarter and the following two quarters, followed by GST-affected production of OEMs, particularly commercial vehicle makers. 

However, things are looking better now as the company looks forward and as most of the economic parameters are looking better. 

"The upcoming scenario for Q4 looks positive and the economy is predicted to grow. The automobile industry and tyres, which we mainly deal in, will grow," said Bajoria.

He added that the Centre's other initiatives, like anti-dumping duty on import of cheap Chinese tyres, has helped domestic manufacturers increase their capacity. 

JK Tyre registered a capacity utilisation of more than 85 per cent in Q3, as against 80 per cent overall during the first quarter.

As the road ahead looks positive, JK Tyre plans to invest around Rs 5 billion to increase its capacity. Around 60 per cent of the investment will be in the recently acquired Laksar-based Cavendish Industries. The balance will be spread over across its facilities. The company has 12 facilities -- nine in India and three in Mexico -- and produces around 32 million tyres a year.

The company has already undertaken around 12 per cent capacity expansion in the truck & bus radial (TBR) segment and is hoping to enhance output in the next five-six months to around 10,000 units a day from the current 9,000 units daily capacity across its three facilities.

JK Tyre is also working on increasing its presence in the two- and three-wheeler segment, which it entered in 2016-17. The company has already managed to grab around 9-10 per cent market share, while it claims around one-fourth share in the tyre industry and it is now looking to consolidate this and double it in 2018-19.

"Today, JK Tyre is among the top 20-22 tyre firms in the world, depending on the dollar. Even during challenging times, we have been able to maintain a robust compound annual growth rate of seven-eight per cent. Going forward, we have plans of growing our business to the tune of higher double digits across segments," said Bajoria.