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JK Tyre’s global ride may move to faster lane on domestic woes

Monday, 24 December 2012 - 7:00am IST | Agency: dna

Tyre maker sets sights on overseas targets to stay profitable.

The country’s leading truck and bus tyre maker, JK Tyre, is seriously weighing the option of  ramping up its global imprint as the domestic market continues to pose a tough ride.

An enhanced capacity in Mexico is very much on the table, where it manufactures industrial tyres. Increasing passenger car radial output by around 25% in the central American country is also part of the road map.

It has also evinced interest in scouring emerging countries like South East Asia, Africa and Latin America. “We are looking at opportunities in emerging markets. We might look at acquiring something which is already operational,” said Raghupati Singhania (pictured), vice-chairman and managing director of JK Tyre, on the sidelines of ICOTY Awards. The tyre maker currently exports its products to 80 countries and has 3 plants in Mexico. 

The buzz about the company weighing potential acquisitions in emerging markets has been on for the past few years. “Any process of acquisition takes time. We are still working towards it,” said Singhania.

As an extension of its strategy, JK Tyre is also in the process of acquiring natural rubber plantations in one of the South Asian countries. As sluggish growth at home bites, tyre makers are increasingly turning to opportunities outside India to escape the heat and keep the growth machine humming. Apollo Tyres had previously announced an investment of Rs2,500 crore to set up two factories in East Europe and Brazil while Ceat Tyres seems to be on track for its Bangaldesh plant.

Despite a single-digit growth in the tyre industry, JK Tyre remains hopeful of a 15-16% growth rate this year. With input costs stabilising, the company expects better profitability for the December quarter. “Natural rubber prices had gone up considerably two quarters back. But now, it’s stabilising. Costs of other inputs like petro-based products are still moving up. But luckily at this moment, there is not much of cost pressure. Profits should be reasonably alright compared to the past,” said Singhania. 

Through with the expansion of its Chennai facility, the company pumped in `1,000 crore for the first phase while the second round will start from the first quarter of the next year, which can see an infusion of Rs800 crore. As part of the broader process, it’s stepping up the capacity of tractor tyres and small commercial vehicle tyres at its Rajasthan plant. 

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