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.