JK Tyre to invest Rs 800 crore to increase capacity by 2 million units per annum by 2023-24
JK Tyre and Industries is set to increase its current capacity by 2 million units per annum by the end of the financial year 2023-24 in response to growing demand from automakers. To achieve this, the Indian tyremaker will be investing Rs 800 crore in a scaling-up exercise, according to a senior company official who spoke to Moneycontrol.
JK Tyre and Industries has already spent Rs 300 crore on a debottlenecking program, part of a Rs 1,100 crore earmarked for capacity expansion. The remaining Rs 800 crore will be used to increase the company’s overall capacity to 34 million units by the end of the fiscal year.
JK Tyre and Industries operates nine plants in India and three in Mexico, producing a wide range of tyres, including those for trucks and buses, passenger cars, two and three-wheelers, light and small commercial vehicles, as well as off-highway tyres for farming and other industries. Among its customers in India are Maruti Suzuki, Tata Motors, Ashok Leyland, Mahindra & Mahindra, VE Commercial Vehicles, Volkswagen, Fiat Chrysler, Nissan, and TAFE.
Anshuman Singhania stated that the company plans to invest Rs 530 crore in ramping up the output of passenger car radials (PCR) and the remaining Rs 270 crore towards increasing the capacity of truck and bus radials (TBRs). However, the company has no immediate plans to establish a new facility, and instead will focus on maximizing the capacity of its existing plants.
JK Tyre and Industries plans to raise Rs 800 crore to fund its expansion plans, with a debt-to-equity ratio of 1.5:1. The company will raise Rs 500 crore through debt and another Rs 300 crore through equity. Recently, the company sold a 5.6 percent stake to IFC by issuing compulsorily convertible debentures (CCDs) on a preferential basis for $30 million (about Rs 240 crore), with the funds raised to be used for manufacturing capacity expansion and product development.
JK Tyre and Industries gears up for electric vehicle and SUV tyre production
JK Tyre and Industries is investing heavily in research and development to develop tyres for electric cars, bikes, and commercial vehicles. The company has started supplying tyres to electric bus manufacturers such as JBM Auto, Olectra, and Tata Motors, and is in active discussions with other original equipment manufacturers (OEMs).
While the company has no immediate plans to build dedicated production lines or facilities for electric vehicles, it believes that existing capacities for internal combustion engine vehicles can be revamped to produce EV-specific tyres.
Additionally, JK Tyre and Industries sees significant business opportunities in the SUV segment and is already supplying to Hyundai and Kia for the Creta and Seltos SUVs, respectively. The company is in advanced discussions with other carmakers that are planning to introduce SUVs.
JK Tyre and Industries bullish on domestic automobile market growth
JK Tyre and Industries Managing Director, Anshuman Singhania, is optimistic about the current demand for automobiles in the domestic market and expects the tyre industry to see 10-12 percent growth.
Singhania sees a resurgence in the commercial vehicle segment, fuelled by infrastructure spending by the Indian government, and believes that the passenger vehicle segment, which was previously impacted by the semiconductor crisis, will see sustained growth.
The company is seeing strong demand across various applications and sectors in the tyre industry and anticipates a robust demand for its tyres with multiple car launches lined up by OEMs.
Tyre company expects sustained growth in financials
The BSE-listed tyre company has reported a 24 percent growth in profit and a 17 percent jump in net income during the third quarter of FY23, with a turnover of Rs 11,000 crore in the first nine months of the fiscal year.
The company expects to see sustained growth of 20-25 percent in its bottom line for the fourth quarter, continuing the momentum from the previous year. The company’s CEO, Singhania, notes that the raw material prices are softening and the supply chain is stabilizing, which makes the outlook for the next fiscal year very positive.
About JK Tyre:
JK Tyre has been leading the way in introducing radial tyres to the Indian market, making them a pioneer in the industry. Currently, they hold the top spot in the domestic market for Truck/Bus radials. With a total of nine plants situated in India and three in Mexico, the company covers all segments, ranging from farm to off-roaders. Furthermore, JK Tyre has expanded its reach globally, exporting its products to over 100 countries worldwide.
For More Latest News Click Here