JK Tyre had the foresight to introduce radial tyres in India three decades ago in response to evolving marketplace realities. This introduction was followed by proactive investments in brand-building that helped a nascent radial market grow into a vibrant one, making radialization a preferred trend in India. With timely investments in modern radial capacities, these tyres constituted 52 per cent of the company’s revenues in 2014-15.
“India’s automobile sector appears poised for a speedy recovery. As one of India’s premier tyre manufacturers, we are pursuing a multi-pronged strategic approach to address emerging challenges. JK Tyre possesses one of India’s largest tyre capacities (1.87 million truck and bus radials per annum). The company will continue to capitalize on this growing segment to enhance margins, maintain leadership, enhance market presence and ensure that products reach new customers”, said Mr. Raghupati Singhania, Chairman & Managing Director, in the company FY14-15 annual report.
JK Tyre products manufactured in India and Mexico are marketed in 100 countries, with exports, from India and Mexico, accounting for 16 per cent of its revenues in 2014-15. The manufacturer enjoys long-term relationships with OE partners and dealers leading to product development in line with market needs. Over 60 per cent of its 4,000 dealers have been associated with the company for more than 10 years. The company’s product range covers tyres for truck and bus bias, truck and bus radial, farm, industrial and speciality vehicle passenger car radials, off-the-road tyres for earth-moving and construction equipment, racing cars, military and defence, light commercial vehicle radial and LCV/SCV bias.
The company’s manufacturing units have been assessed by CII Green Business Centre (GBC), Hyderabad, on the Greenco rating system and are successfully declared as ‘Green Units’, zero effluent discharge units. The company has been assessed by BSI Group India (British Standards Institution) for Carbon Footprint Verification as per ISO-14064 (Scope 1 and 2) and its carbon emission per tonne of production is comparable with global tyre companies. It has progressively moderated its carbon footprint with the objective of manufacturing ‘green’ tyres. It is also working with BSI Group India for water footprint verification as per ISO-14046.
Key achievements in 2014-15
JK Tyre reported a growth in each tyre segment of the domestic market for the second successive year and recorded a 24 per cent growth in the domestic TBR and a 14 per cent growth in the domestic PCR. It launched nine passenger car radial products and two truck and bus radial products, plugging market gaps and enhancing dealer confidence. It launched products and sizes in the farm, LCV and SCV categories as well. It also launched 20 JK Tyre Steel Wheels outlets in urban and semi-urban India and five JK Tyre Truck Wheels outlets in Transport Nagars for sales, buy-back and service arrangements.
The company’s motorsport engagement represented a product testing opportunity, evolving its R&D to address the challenges posed by Indian road conditions. It invested over Rs. 100 crores in building motor sport infrastructure. It partnered Tata Motors for ‘Tata T1 Prima Truck Racing Championship’, showcasing its Jetracing product, the first truck racing tyre in India. The latest tyre, developed using the new ‘tapered tread profile’ technique (‘HE wire’ and ‘special wire wrap’), made it possible for these tyres to sustain a 160 km/hr speed. This is a perfect example of JK’s superior research and product development capabilities (measuring 315/80R22.5, designed with special low heat and high traction compound) addressing the gruelling braking requirements of a racing circuit.
Impressive performance
The company recorded an impressive performance during the year under review. Its turnover (standalone basis) was Rs. 6,799 crores. Operating profit at Rs. 766 crores was higher by 14 per cent while profit before tax at Rs. 377 crores grew 93 per cent over the previous year. This performance is considered satisfactory, given the challenges of all-round low growth in the year gone by.
On a consolidated basis, JK Tyre, (including its wholly-owned subsidiary JK Tornel, Mexico) reported a turnover of Rs. 8,060 crores during the year under review. Operating profit at Rs. 948 crores increased by 13 per cent over the previous year while consolidated profit before tax at Rs. 486 crores grew 49 per cent. In the export markets, the company achieved a turnover of Rs. 844 crores (standalone) during the year despite geopolitical turmoil in some key international markets.
Foreseeing an increasing demand for truck and bus radialization and an economic recovery, the company undertook an expansion of capacities at its all-radial Chennai plant. This Rs. 1,430-crore project progressed well and is expected to be commissioned in phases during the current year.
Segment-wise performance
JK Tyre, with its wide range of truck and bus radials, crossed yet another milestone by putting over nine million truck and bus radials on road globally in 2014-15, out of which over seven million are in India. In order to meet customer needs, two new value-added products were introduced – 10.00-R-20 16 PR JetWay JUH3+ and 10.00-R-20 16 PR JetSteel JDH3.
With the objective of encouraging its customers, a National Fleet Conference was organized which served as a dedicated interactive business platform for fleet owners wherein best practices were shared to strengthen the business relationship. The network of ‘JK Tyre Truck Wheels’, providing services for maintenance and repair of tyres, has been rapidly expanding while the company initiative of ‘Radial Baadshah’ CRM, was recognized at the Asian Customer Engagement Awards.
In the truck and bus bias segment, which although has declined, still remains a high-value one. Riding on the success of its earlier rib tyres, a super-premium mileage tyre 10.00-20 JET R Xtra Miles was introduced by the company. During the year, it also connected with its LCV/SCV customers through various attractive offers, including a national campaign held in Delhi-NCR and other high potential markets.
The OTR space, JK Tyre evolved as one of the preferred suppliers for the world’s largest off-the-road OEM, Caterpillar, of ultra large OTR tyres of size 27.00 49 for the latter’s 100 tonne rear dump trucks in India. India’s largest OTR tyre size 40.00 57 VEM045 68PR E4 TL was commercially launched at the 12th International Mining & Machinery Exhibition (IMME) in Kolkata. Standing 12 feet high and weighing 3.7 tonnes, the tyre is specifically built for the country’s biggest rigid dump-truck, having payload capacity of 240 tonnes, and also provides another example of JK’s undisputed leadership in R&D and technology.
Retread business
JK Tyre provides end-to-end retreading solutions to customers through a wide product range including pre-cured rubber treads and allied materials. JK Treads expanded its franchisee network within India and Nepal and now services various State Transport Corporation in the domestic market.
OEM and institutional business
JK Tyre has grown substantially in the OEM and STU segments during the year. While many of its new tyres have been approved by Tata Motors, Escorts, New Holland, Ashok Leyland and Maruti Suzuki, vendor recognition awards have been bestowed upon the company by General Motors and Maruti Suzuki. International commercial vehicle manufacturers including recent entrants like Scania have also approved JK Tyre as an OE supplier. It has also garnered a large share in the bus radials segment, bagging good orders from a number of State Transport Undertakings across the country.
JK Tyre has invested an aggregate Rs. 207 crores in R&D over the decade ending 2014-15. The company along with ‘Hari Shankar Singhania Elastomer and Tyre Research Institute’ (HASETRI), a premier ‘Scientific and Industrial Research Organisation’, and ‘RPS Centre of Excellence’ for Tyre and Vehicle Mechanics is working in the area of advanced and alternative materials, nanotechnology, process and product simulation, predictive technologies, advanced tyre mechanics and tyre characterisation (including material reduction, recycling and efficient use).
The company has developed an ultra-low rolling resistance tyre, which is expected to majorly contribute to CO2 emission reduction. HASETRI is also conducting research in retreading solutions to improve total retreaded tyre life and fuel efficiency to address the company’s ‘Total Control’ mission. As an extension of its commitment, JK Tyre has emerged as the first company in India to leverage silica technology to manufacture greener and safer tyres (against the widely used carbon black technology).
JK Tyre as a brand enjoys immense consumer confidence and has a strong brand recall. This has been possible due to the firm’s multi-faceted approach in its brand and building a distribution network comprising of over 4,000 dealers, 116 JK Tyre Steel Wheels and 17 JK Tyre Truck Wheels across the country which has placed it in a strong position in the market, well set for future growth.