On High Road to Success
By Raghav Varma
The JK Group is looking at doubling revenue to $8 billion by 2020, which it hopes to achieve primarily driven by growth in the automotive tyres & tubes, auto components, defense & aerospace, papermaking and other space. JK Tyre, a flagship company of JK Group, is also playing a major role in Group’s growth, Dr Raghupati Singhania, Chairman & Managing Director, proudly says
JK Tyre recently rolled out its 10 millionth truck-bus radial from your Mysuru plant – the first tyre maker in India to do so. How significant is this mile stone in the company’s future plans?
JK Tyre pioneered radial technology for Passenger Car Tyres in India way back in 1977. In 1999, the company, yet again revolutionised the tyre Industry by introducing Truck/Bus All Steel Radial Tyres in India, for Commercial Tyre segments. Since then, JK Tyre has been a leader of Radials in the domestic market and is the No. 1 player in this segment. We are a preferred partner to the large number of leading Commercial Vehicle Original Equipment Manufacturers including Tata Motors, Ashok Leyland, Eicher, Bharat Benz, AMW, Volvo, etc. JK Tyre and Industries Ltd is the only tyre company in India, having three plants of truck and bus radial tyres in India. These plants are strategically located at Mysore, Karnataka Chennai, Tamil Nadu, and Laksar Uttarakhand with a capacity of 3.5 million Truck/Bus tyres per annum. JK Tyre is also the first company in India to export all steel truck radials (both – tube and tubeless radials) to more than 100 countries across six continents – including to the sophisticated markets like, Americas, Africa, Australia, Middle East and South East Asia . We have in place aggressive marketing plans to further widen our presence across the globe.
JK Tyre, understands the Truck Radial market and customer needs better than other tyre manufacturer in India. We have made huge investments to develop infrastructure, educate end users and channel partners, and have driven the Commercial Radial Tyre revolution in India. When we started this journey, we developed Truck Radial Tyre Care Centres strategically located along highways to provide basic tyre care facilities which were then hard to come by.
It is therefore, a matter of great pride, when JK Tyre’s 10 Millionth Truck/Bus Radial Tyre rolled out from our Mysore facility recently, a landmark milestone achieved only by JK Tyre, which firmly establishes our market leadership and the superiority and acceptance of our products in the market.
The journey ahead has just begun for us. With our thrust on Customer First, our increased focus is on further strengthening our customer support to the next level by providing complete “cradle to grave” tyre solutions for the customers. This means that providing them with solutions not only for initial tyre mileage, but also for entire life of the tyre, including its retreaded life. Customers are benefitted by our unique Fleet Management program where we assign dedicated personnel to educate them on tyre care enabling them to reduce their “cost per kilometer.” We have established 26 ‘JK Tyre Truck Wheels’, which provide a one stop solution for all tyre maintenance needs to our esteemed customers. Because of increasing Radialisation in the country, superior technology vehicles require high quality value added products, safety and more sophisticated maintenance. Better roads and higher speeds need high degree of performance of tyres, to ensure full tyre life as well as Safety. Our centres are equipped with sophisticated equipment enabling preventive tyre maintenance enabling the customers to get better mileage and return on their investment. Total Wheel Alignment, Wheel Balancing, New Tyre Fitment/Removal, Tyre Rotation, Tyre Inflation Check Up, Nitrogen Filling, Radial Tyre Repair, Tyre Sales are some of the services that can be availed of by our customers, at these fully equipped, manned by experts, Tyre Care centres.
What are the features of the Vikrant plant’s expansion, which is a huge Rs 1.2 billion investment?
JK Tyre took over an ailing, Karnataka state Govt undertaking, Vikrant Tyres at an investment of almost Rs. 100 crores in 1996. After taking over the control of the Management, JK Tyre turned it around in the first year itself, by making not only profits, but also wiping off the accumulated losses.
JK Tyre made substantial investments and Vikrant was turned into a state-of-the-art manufacturing facility. Today, with investments of over Rs. 1,200 crore, it provides direct and indirect employment to over 12,000 people, thereby contributing significantly to the State and National Exchequer. The investment of Rs. 1, 200 crore is the highest investment by a domestic company in Karnataka till date.
Before we took over, Vikrant Tyre unit had a turnover of Rs 350 crores in 1996. Today, the plants located in Mysore are producing nearly 3 times the tonnage per day, and the turnover has gone up more than Six times to nearly Rs. 2,200 crores. Now, Vikrant is the largest manufacturing facility in Mysore, both in terms of turnover, and manpower employed both direct and indirect.
We are continuing our thrust on Radialisation, and are now focusing on producing increased volumes of tubeless radial tyres to cater to the needs of both domestic and international markets. Today, in India, more than 40% Commercial vehicles are radialised and it is expected to go up to 65% in next 2-3 year.
The Mysuru plant seems to be getting big time attention. A state-of-the-art R&D centre has also been announced. Please elaborate on the highlights of this focus and the plans for the R&D centre
Tyre Industry is highly competitive, where offering of innovative & technologically advanced products to the customers is backbone of any successful Company. Innovation is achieved on the back of a well equipped R & D facility and talented manpower. With this view in mind, JK Tyre, was the first to establish HASETRI (Hari Shankar Singhania Elastomer and Tyre Research Institute), India’s first and Asia’s foremost independent Research and Testing Centre, way back in 1991, to fulfill the nation’s need for developing newer and better technologies for elastomer technology & tyre research.
We have not looked back since, and went on to establish various Technology & Product Development Centres strategically located in various parts of the country, including “Raghupati Singhania Centre of Excellence in collaboration with IIT Madras, which is one of its kind, a unique testimony of Industry-Academia partnership.
Currently, JK Tyre undertakes R&D at several locations. With an emphasis on an integrated R&D hub under one roof, we decided to shift all R&D facilities from different locations to Mysuru and have set up a world-class Research and Development facility at Mysuru, to cater to the global auto majors. This 1-lakh sq.ft R&D facility in Mysuru, houses the most advanced testing and evaluating equipment for Elastomer & Tyre Research and Development, which is manned by highly experienced engineers and scientists with deep insight into material resource, designs and development.
Keeping pace with this, JK Tyre in line with its objective of providing world class advanced high performance products to its customers, will continue to increase focus on technology up-gradation and continuous innovation as we partner our OEM customers from the vehicle design board itself.
JK Tyre has entered the two and three-wheeler tyre market with the acquisition of Cavendish Industries. How big is the growth the company foresees in this segment?
In April 2016, we took yet another major step towards further consolidating JK Tyre, an enduring Company, by acquiring Cavendish Industries Ltd, which houses three plants located in Laksar (Haridwar) for manufacturing a range of tyres, tubes and flaps. The acquisition of CIL is a strategic move which has helped us to position the Company strongly, in the rapidly growing 2-3 wheelers segment, apart from strengthening our Truck/Bus Radials capability. This acquisition is in line with the strategic vision of JK Tyre, to emerge as one of the leading global tyre companies.
The domestic two and three-wheeler tyre market size is nearly 7 million tyres per month and expected to grow at 10-12% per annum. We have recently launched a premium range of 2 wheeler tyres branded as ‘BLAZE’ for the Indian Market, which has the best in class performance, and in short time, will surely be well accepted in the market place. These new technologically advanced tyres will fuel our growth in this segment substantially.
With this acquisition, besides two-three wheeler tyres, now, JK Tyre offers complete range of tyres, right from 3 kilo scooter tyre to the 3.7 tonnes Ultra Large OTR tyres. This has been greatly appreciated by customers and channel partners as the JK Tyre’s bouquet of entire product range is available to them.
How do you assess the two-wheeler market in India, which is now fiercely competitive? Do you plan to export two-wheeler tyres?
India has a huge population of two-three wheelers on road. Increasing disposable income and capacity to spend more has given rise to the aspirations of young Indians both in urban & rural areas. With the huge demographic tilt towards youth in India, particularly in semi-urban and rural areas, demand for two wheelers is increasing, and is further expected to grow at a faster pace. This has created huge opportunity for both, Original Equipment Manufacturers (OEMs) and in the replacement market.
No doubt, all businesses are competitive but we are sure of our capabilities. Competition is good and helps us to strive towards serving our customers with better quality products. JK Tyre is aggressive in its approach, and having state-of-the-art manufacturing facility, we are certain of achieving/making a strong presence in this segment.
With our strong distribution network across the country and presence in over 100 countries globally, we are bound to make in road in the 2/3 wheeler segment.
What role will JK Tyre play in JK Group’s drive towards doubling the revenue to $8 billion by 2020? Will the tyre segment be the biggest contributor to this effort?
The JK Group is looking at doubling revenue to $8 billion (Rs 53,600 crore) by 2020, which it hopes to achieve primarily driven by growth in the automotive tyres & tubes, auto components, defense & aerospace, papermaking and other space. JK Tyre, a flagship company of JK Group, is also playing a major role in Group’s growth. It completed acquisition of a tyre, tube and flap manufacturer Cavendish Industries at a cost of Rs 2,195 crore in April 2016. This acquisition not only gave us access to an additional 10 million truck and bus radial bias tyres capacity but also enabled its much needed entry into the rapidly growing two-wheeler and three-wheeler segments.
JK Tyre as the country’s leading tyre manufacturer caters to the ever increasing demand of automobile and transport industry and contributes significantly to the group revenue. As a leading Indian global player, with innovative technologies and industry leading practices, the company aims to establish new and higher global standards. JK Tyre aspires to become a $3 Billion global tyre company by 2020 and be among the top 15 tyre manufacturers in the world.
How big is your presence in tyre retreading industry? What are the plans for the future in this segment?
JK Tyre strategically entered into retreading business in 2009 with the objective of providing 360° solutions to our valued tyre customers and offer a complete life package – cardle to grave, to the end users/fleet owners by providing original tread design of JK Tyre. We are in the process of expanding the chain of “JK Retread Centres,” which will have state-of-the-art equipment for retreading and well-trained manpower to deliver best in class retreads to the customers. Our franchisee network within India and Nepal is already in place, and we hope to expand our Retread Centres from present 50 to 100 in next 2 years. We are catering to various State Transport Corporations and Fleets in the domestic market, and are providing end-to-end retreading solutions to customers through a wide product range including pre-cured rubber treads and allied materials.
Do you think cheap import of tyres will remain part of the scene well into future with no effective action taken?
The Indian tyre industry continues to grapple with the challenge of the low-cost imports from China. The unabated dumping of cheap Chinese tyres in India, which at times are at prices lower than even the cost of raw materials, is causing serious injury to the domestic tyre manufacturers. Imports from China, accounting for almost 45% of the replacement truck/bus radial market, more than doubled since the last year. We are neither against imports nor competition, but dumping and unfair practices are certainly not acceptable.
The tyre industry has taken up this matter with the Government of India more than 18 months back. Unfortunately, it has still to see the outcome of its request to impose Anti Dumping Duties on these cheap imports. In an advanced country like USA, the process of anti dumping laws gets activated in 45 days.
It is ironic that while as a nation, we are propagating “Make in India” initiative, the Indian tyre industry which has invested so substantially should suffer due to indiscriminate imports.
Do you think anti-dumping duty on such imports will make as much impact as you expect?
Yes, it has already jeopardized the growth of Indian tyre industry over last couple of years.
Given significant growth in automotive space, tyre industry in India went for large scale investments to be ahead of the demand curve especially in state of the art truck & bus radial tyres (more than Rs. 45,000 crores in last 4-5 years). However, Chinese tyres are meeting a significant part of the demand for tyres and domestic capacities are lying idle. Even capacity utilization levels have taken a dip.
Therefore, imposition of suitable levels of anti dumping duties is a must, and will make a huge difference in the working of the Domestic manufacturers.
Apart from Vikrant in Mysuru, what are the plans for the other plants in India and also for the Mexico facilities?
JK Tyre has 12 plants – nine in India and three in Mexico. Our all radial tyre plant at Chennai, a state-of-the-art facility has recently completed expansion of this plant by almost doubling the capacity for both Truck/Bus radials as well as Passenger Radials. We will expand it further, based on the changing market needs.
We are planning to develop our Banmore plant in Madhya Pradesh into a radial hub for all north and east Original Equipment (OE) requirement as well as replacement market. It will also be developed into a facility for our next generation motorcycle radial tyres.
Laskar Plant in Uttarakhand has huge potential to be further developed into a truck radial manufacturing hub. We are ready to meet growth in the market and demand of the products. This acquisition along with expansion of truck/bus and passenger line radial capacity at our most modern state-of-the-art Chennai plant, has helped JK Tyre possess a comprehensive portfolio, helping better cater to the domestic as well as international markets.
At our Mexico Plant, we have already started seeding of Truck/Bus Radials, and expect to establish TBR capacities in next 2-3 years. The country has huge potential for TBR as there in no local manufacturer till date. We have already increased our PCR capacity by fifty percent, and are expanding our farm as well as Industrial tyre capacities.
We are building JK Tyre & Industries Ltd., an “Enduring Company”, which has always been ahead of the market and leveraging our facilities according to the dynamic conditions of the market. JK Tyre is “Future Ready.”