BUSINESS
JK Tyre & Industries is doubling its radial tyre manufacturing capacity for both commercial vehicles and passenger cars by 2012 in order to meet the growing domestic demand.
JK Tyre & Industries is doubling its radial tyre manufacturing capacity for both commercial vehicles and passenger cars by 2012 in order to meet the growing domestic demand.
The company currently manufactures 8 lakh commercial vehicle radial tyres, which will be doubled to 16 lakh tyres.
Out of the total production post expansion, 4 lakh commercial vehicle radial tyres will be manufactured at its Mysore plant, while remaining will be made at a new plant in Chennai.
The company has similar plans for increasing the production of passenger car radial tyres.
It currently produces 45 lakh radial tyres in the passenger car segment and plans to add 55 lakh tyres.
Out of this, 5 lakh tyres will be produced at the company’s Gwalior plant and 50 lakh tyres at the Chennai plant.
“There is a huge demand for radial tyres. The market for radial tyres within the commercial vehicles segment is around 18-20% and is expected to reach to 35-40% within a couple of years. The demand in the passenger car segment is already robust,” said Raghupati Singhania, vice chairman and managing director of JK Tyre.
The expansion is a part of company’s already announced Rs1,500 crore investment plan till 2012 and majority of it will be made in setting up a new plant in Chennai, which would be its ninth.
JK Tyre currently produces 16.3 million tyres per annum, 9.7 million units in India and the remaining in Mexico.
Singhania also indicated a hike in tyre prices in the coming
month. The company might go for 4-5% hike.
“The prices of natural rubber are going haywire. Even the prices of raw materials have gone up by 35% in the last 18 months. However, we could only pass 18% of it. This is further increasing pressure on the margins. Hence a price hike is necessary,” said Singhania.
Raw materials constitute 70% of the tyre cost, out of which 30% is the natural rubber.
The prices of natural rubber have almost doubled this year.
Domestic tyre manufacturers are in talks with the Union government to allow duty-free imports of rubber during high demand.
Currently, there is 20% import duty on natural rubber.
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