Interview with Vikram Malhotra, Vice President, Marketing & Sales, JK Tyre & Industries Limited

Company Description: JK Tyre & Industries Ltd, a part of JK Organisation, is a leading four wheeler tyre manufacturer in India and 19th largest manufacturer in the world with a wide range of products catering to diverse business segments in the four wheeler automobile industry. The homegrown tyremaking firm has a global presence in 80 countries across six continents with eight plants in India and Mexico. With the commissioning of the greenfield project in Chennai, the capacity across 9 plants will cross the 20 million tyres per annum milestone. JK Tyre offers a wide range of four wheeler tyres for the entire range- truck/bus, LCV, cars, MUV and tractors.

You have more than 3 decades experience in tyre industry.  You started your career with Ceat and then moved on to Bridgestone and later you joined JK Tyre. How has the journey been for you?

Yes, the journey has been very enriching for me. My 30 years experience is very varied. When I was with Ceat, the company was the market leader. And later, when I joined Bridgestone, it was a sunrise industry at that point of time. It was totally a new experience for me starting from the grassroots level. When I joined JK Tyres, I started looking after the truck and bus radial tyres segment. This was again a different experience for me. And now I am heading the sales and marketing department of this company. So it was a continuous learning experience for me. Exploring new frontiers have always been an interesting part of my career.

JK Tyre and Industries is nearing completion of the 1,700-crore capacity expansion by setting up a new radial tyre plant in Sriperumbudur near Chennai from fiscal 2012-13 onwards. So what kind of products will be rolled out from this plant? Will it also be catering to the domestic aftermarket and foreign markets? And how much is it expected to add to your turnover?

With this expansion going on at Sriperumbudur, our production capacity will be added by 30pc. The products will be specifically Passenger Car Radials (PCR) and Truck and Bus Radials (TBRs). Both the segments are on a growth trajectory. The PCR products will cater to the OE market comprising clients like Ford, Hyundai, Maruti, etc in the domestic market. Our TBRs will serve the domestic CV replacement market as well as OEMs like Ashok Leyland and MAN.  Going forward, we will ship out these products to overseas nations.

Did the acquisition of Tornel in Mexico (2008) help you in accessing technology?

In fact, it is the other way round. Tornel’s technology has been improved by JK Tyre. Our technology has been shared by our Mexican subsidiary. As a result, the ‘Tornel’ brand has grown much stronger.

Is the TBR segment something which you are eyeing aggressively?

We were the first company to roll out TBRs and are now the market leaders of the same. This segment is very dear to us and we have the largest marketshare in the country. Furthermore, the 1,700-1,800 crore capacity expansion at Chennai and other plants only shows the seriousness we have in expanding our presence in CV radial tyres. In fact, 35pc of our total output for CV is contributed by TBR. Whereas it is only 22pc when it comes to the CV tyre industry per se. So you can well imagine that TBR accounts for a sizeable chunk of our total sales unlike our peers. So we will definitely look forward to hold on to our marketshare.

JK Tyre & Industries Limited has announced the launch of ‘fix-a-tyre’- India’s first-ever dedicated tyre related service by a tyre manufacturer. Could you talk a little bit about it?  And does the programme cater to the residents of Delhi and NCR region and moving forward will extend to different cities of the country?

We had earlier launched a fix-a-tyre programme, which is India’s first-ever dedicated tyre related service by a tyre manufacturer. At present, it caters to Delhi and NCR only. We were running a pilot project on this and the response has been tremendous. Therefore, you will soon see us offering these services in other metropolitan cities.

You have been running a nationwide franchisee chain of exclusive one-stop tyre shops branded as JK Tyre Steel Wheels. How is it different from your other stores like Truck Wheels and how much does it account for your total distribution base?

‘JK Tyre Steel Wheels’ is a one-stop complete tyre solution. It is different from other dealerships because it is not a multi-branded outlet. It is an exclusive dealership network run by JK Tyre. It is the face of our company.  Nearly 130-odd JK Tyre Steel Wheels are redefining tyre retailing by providing a wide range of JK Tyre passenger car tyres and tyre care solutions in an ambient environment. These showrooms are equipped with high-technology wheel servicing equipment providing value added services like computerised wheel alignment, Nitrogen Filling, Wheel Balancing, Automated Tyre Changing, Tyre Rotation, Air Care all under one roof. Well trained personnel provide guidance on tyre care & maintenance. This is something we want to replicate further and by the end of the year we should have at least 200 such outlets. It looks after 30pc of our sales in PCR. And as far as JK Truck Wheels is concerned, it provides a one stop solution for the entire tyre and wheel related service needs of Trucks and Buses. The centre, which is like a cradle-to-grave solution for CVs, is equipped with state of the art facilities including a computerised truck tyre alignment machine, wheel balancing machine, automatic tyre changer, nitrogen Inflator and truck tyre repair tools and offers end-to-end tyre-related services for trucks and buses. It is in Transport Nagar (at various highway points) on the outskirts of the city. We have 7 such outlets and intend to have 20 by the end of this year. Overall, we are running a chain of 2,000+ outlets and should touch about 3,000 by 2012-13.

During the year 2009, JK Tyre has launched the next generation of tyres called the ‘Ultima NXT’ tubeless range. What is the USP of this product? So what has been the response to it? And which specific segment does it cater to?

Nearly three years back, we had launched a new range of tyres in the Indian market. The new range called the ‘Ultima NXT’ comes with SGT (Stabiliser Groove Technology) which claims to provide precise handling and vehicle stability on sharp curves and at high speeds. The tyres feature special hydro planning channels for better wet handling and anti-aquaplaning and Unique Split Wing (USW) for excellent dry and wet traction and also ensure a higher mileage for the car. This has been tailor-made for A and B segment cars and has been well accepted in the aftermarket.

There has been a lot of buzz that JK Tyre will focus more on the rural markets, and also Tier-II and Tier-III markets in India. Could you shed some light on that?

For the last two-three years, the real growth is coming from the rural markets. Somehow, they have been able to insulate themselves from so-called ‘Slowdown’. And you can clearly see that most of the automobile companies are witnessing a positive growth there. And we are definitely betting big on such cities and we aim to speak the local language. Since each market has its own sensitivity and way of dealing. And we have something called ‘Sona Singh’ campaign that has been rolled out for truck radials. Under this campaign, rural brand ambassadors designated as “Sona Singh` have been appointed to promote JK Farm Tyres, which has been well appreciated by the farming community. In the same way, we have reached out to the farm community by active participation in a number of Kisan Melas at various locations. So basically we are looking at rural marketing in an unconventional way of handling it.

Beyond the development of passenger car and truck tyres, the company has developed special performance rated tyres for the national racing and rally championships. Where have these tyres been developed?

These are basically Z-rated tyres that are capable of running in excess of 240km/hr. These are developed in-house at our technical centre in Faridabad. They are manufactured at our plant at Banmore in Madhya Pradesh. Currently, it is only meant for domestic motorsport activities.

What is the investment outlay that JK Tyre has earmarked for the next few years? Out of that, how much has been set aside for your marketing and sales activities?

As I just mentioned, we have earmarked 1,700-1,800 crore for capacity expansion for our Chennai and Rajasthan plants. Our marketing expenditure is also increasing on a yearly basis. We are spending at least 2-3 times the amount that we have pumped in last year for advertisement and promotional activities. I would also like to mention that we be investing a sizable sum in the aftermarket space as well as consumer-related activities. We would also be the most written-about company as far as vernacular and print media are concerned. After the ‘Sona Singh’ campaign during April-June quarter, we were running a JK Ne Bana Di Jodi’ light truck campaign during the July-September quarter. Now we have something called ‘Back se Trip/ Tyre Se Trip’ campaign for our customers.

Very recently, you have been quoted as saying that rubber prices have softened and the company has benefited from it. However, you maintained that other costs have been rising and this has neutralised the impact of softening rubber prices. Could you run us through it?

The rubber prices have indeed softened and we took an advantage of it. However, we also witnessed a surge in crude oil prices from US$ 89/barrel in May’12 to US$ 116-119/ barrel recently. As you are aware, barring rubber all other raw materials of a tyre are downstream petroleum products. While carbon black’s price increased by 11pc, synthetic rubber saw a price hike of 7pc. Moreover, the devaluation of rupee has compounded our woes. Although we are not raising prices of our products, we are not able to pass on the entire burden to our end customers.

Of late, there has been an influx of foreign tyre manufacturers in the country. Is it a matter of concern for you?

We do not have any issues with competition. We are open to it because it benefits our customers. However, we are averse to unfair competition. It’s a known fact that the surging import of tyres from China is badly tormenting the domestic tyre industry. A lot of domestic tyre manufacturers are facing a drop in demand due to cheaper tyres imported from China especially for cars. The availability of cheap Chinese tyres is a matter of serious concern. This is more so in the commercial taxi segment where consumers have switched brands. Chinese car tyres have taken nearly 20-25pc of market share in some sizes.  We are taking this matter up with the government for the imposition of anti-dumping duties on car tyres. Earlier, this was imposed on Chinese TBRs.

 In the past, OTR (off-the-road) market space did not grow as expected due to slow growth in mining sector. Any hope of the segment doing better?

The last one year has been terrible for the OTR industry owing to numerous factors like mining scam, monsoon, etc. It not only impacts the volumes of our mining-centric tyres but also heavy haulage truck tyres. But it is a very important segment for us and beginning October’12 we are expecting a revival in numbers.

How strong is your presence in the LCV segment? Are you betting big on it?

We are a formidable player in the LCV space. And there is another segment called Small Commercial Vehicles (SCV) emerging out of it. The sub one-tonner products like Tata Ace, Mahindra Maxximo, Piaggio Ape Plus, etc are witnessing an unprecedented growth. So we are very bullish on that segment. 

What is your vision for the company? Where do you want to see the company in the next 5-10 years?

We aspire to clock a turnover of 13,000-16,000 crore in the medium term. We also intend to continue to be the market leader both in the passenger vehicle and commercial vehicle segments. In fact, I would like to see the company grow and grab additional marketshare.