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MANTRA OF EXPANSION

The long-term vision of Dr Raghupati Singhania, Vice Chairman and Managing Director of JK Tyre & Industries Ltd, is to see his firm evolve into “the most admired company in India, committed to excellence.”

He told Polymers & Tyre Asia that the customer is at the core of JK Tyre’s mission. The mantra that his company follows is “Customer First – 24 x 7.”

He also wants to see the company expand and reach the target of being a US$2billion-plus conglomerate in the next five years.

“Technology leadership and translating that into benefi ts for our customers is what Team JK Tyre has set out to achieve,” he proudly says.

Dr Singhania is giving leadership to the company to face the fi ercely competitive global market and has framed many critical strategies to enlarge the market

share of JK Tyre and sustain its growth through powerful marketing. One of his strategies is continuous expansion in order to keep the company’s market leadership.

“We have recently completed various expansion projects,” he explains.

The major expansion it has undertaken includes JK Tyre’s state-of-the-art OTR facility at Mysore in the southern Indian state of Karnataka. For the first time in the country, the plant has started producing Ultra Large Off-the-Road Tyres (OTR), the largest being 12-foot in diameter and weighing 3.7 tonnes.

Apart from this, JK Tyre has been expanding its Passenger Radial capacity (PCR) from 4.52 million to 5.06 million per year. It has also further expanded the capacity of its Truck/Bus Radial (TBR) capacity from 800,000 to 1 million tyres per annum at Mysore. All these have become fully operational.

JK Tyre has also set up a plant at a new site at Chennai to produce 400,000 TBRs and 2.5 million PCRs in the fi rst phase. The production at this plant has gone on stream.

“With these expansions, our capacity will go up to 20 million tyres per annum by mid 2012. This of course includes the capacity at JK Tyre’s five manufacturing facilities in India and three JK Tornel Plants in Mexico,” Dr Singhania elaborates.

In India, JK Tyre has renewed its focus on smaller cities and semi-urban and rural areas, which Dr Singhania says hold a huge potential for growth. “We expect to gain substantial volumes from these markets in the next few years.”

On the export front also the company is pushing forward with its strategy of growth. JK Tyre exports its products to over 80 countries across six

continents. Apart from shipping tyres from its Indian plants, it also ships tyres from its subsidiary JK Tornel in Mexico.

“In addition we also outsource tyres from low-cost countries for our various international markets,” he explains.

“We are strengthening our outsourcing capabilities to have a larger presence in the world market,” he asserts.

The large investments that JK Tyre has been making in R&D and its strong product development capabilities have given it the opportunity to become suppliers to several global Original Equipment Manufacturers (OEMs). “We are strengthening this effort to reach out to more such OEMs.”

What is serious concern for JK Tyre are the uncertainties facing natural rubber supplies and its prices.

“Tyre manufacturing is a highly raw materialintensive industry which comprises almost 70% of the total cost. Natural rubber is 40-50%. The industry has seen unprecedented rise in natural rubber prices over the last one year, affecting profit margins,” Dr Singhania points out.

JK Tyre has undertaken price increases from time to time, but they are not commensurate with the increases in cost of inputs. Cost compression is an on going exercise, across the company’s operations. Product re-engineering is continuously evaluated with the objective of achieving savings, yet offering a more value added product to the customer.

“We are also pursuing acquisition of rubber plantations in South East Asia to achieve a degree of raw material security,” Dr Singhania has revealed.

Commenting on the major consumer perceptions that he sees evolving which will have a defining impact on the tyre industry, he has spoken about customer expectations that are continuously rising.

“The challenge is to anticipate and exceed them and maintain the satisfactions levels. It is extremely important to offer latest hi-tech, trouble-free products on a continuous basis,” he averred.

Product presentation, durability, noise, braking, apart from mileage, are becoming important attributes in consumer preferences. These product performance parameters, backed by value added services, will continue to make a big difference in the consumer minds.

Dr Singhania agrees that branding is becoming a very important and critical factor in market acceptance than price at a time when the tyre is shedding the ‘commoditisation’ image

“The Indian customer is very discerning and with the changing psychographic profi le of the Indian consumer it has become very important and critical to enter the mind-space of the customer and remain

in his purchase consideration as and when he exercises his buying decision. With larger exposure to global brands he expects nothing but the best,” Dr Singhania says.

Branding has become all the more important in this scenario. A good brand communicates strongly about its strength and of greater importance is to deliver on its promise, he said.

In this age of experiential marketing, customers would like to purchase a product which is commensurate with their own aspirations in life, he explains.

Brand pull is also a great enabler for channel partners while selling any product. “Superior retailing will play an increasing role in the days to come,” Dr Singhania affirms.

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