JK Tyres hopes to complete capacity expansion at Chennai plant by mid-2015

Says outlook for the tyre industry is promising both in the short and long term

JK Tyre is expecting its Rs 1,430 crore expansion plan near Chennai is expected to be completed by mid-2015. Post the expansion company would have more than doubled its capacities of truck/bus radials and passenger radials in last three years.

Raghupati Singhania, chairman and managing director, JK Tyre & Industries told Business Standard that after completion of the expansion at Chennai, company’s passenger car radial (PCR) capacity will go up from 76 lakh tyres to 98 lakh tyres per annum, and truck and bus radial tyre (TBR) capacity will go up to 2.26 million from 1.46 million tyres per annum.

First phase of Chennai project, which was setting up a Green Site All Radial Plant at an outlay of Rs 1,100 crore, was completed in early 2012. Subsequently, company’s board approved expansion of the Chennai unit at an outlay of Rs 1,430 crore.

 

Singhania said that the Chennai facility is a dedicated radial facility for truck bus radials and passenger radials car tyres. The plant will also contribute towards exports, he added.

JK Tyre currently has a domestic capacity of nearly 14 million tyres per annum from its six plants in India and 6.5 million tyres in Mexico, making a total of 20 million tyres per annum. The company's overall capacity will go upto 25 million tyres in the next few months.

"We have recently expanded the capacity for farm tyres as well as small commercial vehicle tyres at our Rajasthan plant. Going forward, keeping a close watch on the pattern of demand growth, investments to increase capacities will be undertaken," he said.

Singhania said JK Tyre has sustained and improved its market share across product categories and market segments. 

"It has definitely been a challenging period considering the economic scenario and aggressive competition from both domestic and global players, who are looking at the long term growth potential of the economy," he said.

On the outlook for Indian tyre industry, Singhania said, it is promising both in the short term and the long term. 

"With the emphasis on infrastructure development, the commercial tyre segment will improve. This will also apply to the earthmover segment, which is dependent on construction and mining . In the passenger car segment, which has registered degrowth for two consecutive years, the withdrawal of excise benefits is a speed breaker but with overall improvement of consumer sentiment and drop in interest rates, this segment will pick up . The easing up of fuel prices should also have an overall positive impact," he said.

He added that the company's emphasis on the truck bus radial segment is yielding results. 

"We entered the market when radialisation in the commercial segment was negligible and today the OEM segment has been radialised to a level of 70% and overall domestic level is around 33%. With many economic sectors showing signs of revival, the economy is likely to grow at 6%. We are sanguine of our performance and this fiscal we should be a little ahead," said Singhania.