BUILDING A FUTURE-READY BUSINESS
The year gone by has been a year of halves. We began the year with high raw materialcosts spillover effects of demonetisation and the ban on sale of non-BS IV vehicles from1st April 2017. This impacted our sales as on one hand CV demand fell significantly andon the other hand the business environment did not permit price revision to pass on theburden of high input costs.
The disruption caused in the transitionary phase of the Goods and Services Tax (GST)could only ease out in the second half of FY 2017-18 which along with the softening ofraw material prices benefited the industry. This period also witnessed a revival ofdemand from the CV manufacturers t which along with the Government's imposition of antidumping duty on cheap TBR imports provided tailwinds to the business.
At JK Tyre we have always pursued a strategy with an eye on the future. Despite theexternal challenges we improved our sales volume by recording an impressive 11% growth inFY 2017-18 higher than the industry at large. By adopting differentiated strategies JKTyre could increase its market presence across the categories thereby furtherstrengthening its brand presence in the market.
Reinventing ourselves on a consistent basis is ingrained in our business process. Werevisited our internal efficiencies and delivery systems across the business to becomefuture ready. We undertook our first-ever labour restructuring programme at JK TornelMexico by streamlining our workforce and performance parameters which have reduced ourmanpower cost by a third. This step itself will bring in rich dividends in the comingperiod and will add to our overall profitability.
Our strategic initiatives on sustainability are fructifying as result of which 37% ofour power requirements are now met from renewable energy sources both wind and solar. Ourwater consumption levels are global benchmarks. Thus today we are placed among the topfour energy-efficient tyre manufacturers in the world.
Leveraging on our futuristic thinking we launched new products took steps todigitalise our processes across the value chain and reinforced our focus on premiumisationof the portfolio.
After our acquisition Cavendish Industries Ltd (CIL) saw the first full year ofoperations in FY 2017-18 and has been performing well. i The acquisition marked our entryinto the two and three-wheeler segments. I am happy to share that during the year severaltwo-wheeler makers expressed interest in our tyres and we are confident of expanding ourreach in this segment in the coming year.
Moreover the takeover of CIL further strengthened our market leadership in the growingTBR segment. The truck/bus radialisation which we had pioneered in 1999 increased to 47%during FY 2017-18. We are expanding our TBR capacity at CIL to meet the rising demand forJK Tyres in this category.
Emerging technologies are modifying the automotive space. At JK Tyre we believe inremaining ahead of the curve; hence we are readying our products for the new era inmobility to be future ready. To give further boost to our R&D endeavours we haverecently set up the Raghupati Singhania Center of Excellence (RPSCOE) at Mysuru. ThisR&D Centre is equipped with advanced testing and evaluation infrastructure. It isengaged in developing global-level tyres that are fit for future and at the same time inline with our mission to be 'Customer Obsessed' and a 'Green' company.
We believe in investing in people development and have built internal pipelines oftalent which enable us to deliver superior and distinct values to our customers. Team JKTyre's dedicated efforts and commitment have established us as one of India's most trustedtyre brands.
Our inherent value systems drive our commitment towards the society. We have touchedthe lives of more than 120000 people in one way or the other through our CorporateSocial Responsibility (CSR) initiatives focused on the areas of healthcare educationlivelihood enhancement and environment.
Motorsport has been an integral part of JK Tyre. FY 2017-18 was a landmark year with JKTyre FMSCI National Racing Championship completing 20 years. We have been very active inthe motorsport segment as it reinforces our brand positioning of youthfulness technologyleadership and adventure.
The recent structural reforms have put India on a growth momentum making it theworld's 6th largest economy. It has opened up a plethora of opportunities forbusinesses to grow and also contribute towards national progress.
I would like to mention that the automotive industry is keeping pace with the economicgrowth and this augurs well for the tyre industry. At JK Tyre we are committed to growthdriven by our brand strength manufacturing prowess and continuous innovation. We arefuture-ready to cater to the tyre demand that has the potential to increase sharply in thecoming years. We remain committed to enhance shareholder value as we keep making progressin our endeavours.
Dr. Raghupati Singhania
Chairman and Managing Director