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JK Tyre to focus more on expansion, overseas market

Published: 10th June 2013 07:54 AM  |   Last Updated: 10th June 2013 07:54 AM   |  A+A-

Tyre major JK Tyre and Industries is planning to invest `800 crore to scale up the capacity of its Chennai plant and expand its reach. Chairman Raghupati Singhania says: “The company plans to invest over `800 crore to double the capacity of the Chennai facility to around 5 million tyres per annum over two years. We are emphasising on markets and facilities in the American and European region.”

The Chennai plant was commissioned in 2012 and is the youngest of the company’s six plants in the country. It will fund the expansion through a mix of internal accrual and debt. As a part of its overseas expansion plan, it has made inroads into the Latin American, US, European and South African markets. In 2008, the company had acquired Tornel, a Mexican tyre maker to meet its overseas demand.

Singhania said, “The year was tough but our decision to explore alternate markets in different geographic locations well in time has helped us counter adverse situations and post an overall positive annual growth.”

About a decade back, the company started scouting for hubs in the emerging economies to cushion the adverse economic impact in the existing markets. Regarding the acquisition of Tornel, Singhania said: “We plan to expand Tornel’s capacity by 25 per cent at an investment of $25 million. The additional capacity will come in 12 months.” Tornel’s annual capacity stands at 3.6 million tyres, which will go up to 4.5 million after expansion, he added.

“Mexican operations have performed exceedingly well with a turnover of 3859 million pesos  (Rs 1,572 crore) and a PBT of 271 million pesos (`116 crore) for the year. JK Tornel continues to make new inroads into various markets. Plans are afoot to enhance capacity to meet the growing demand for its tyres,” Singhania said.

Supported by a robust combined annual turnover of Rs 7570 crore (JK Tyre and JK Tornel Mexico) in the last financial year with an operating profit of Rs 632 crore, almost 90  per cent growth over last, the  company is looking to expand its footprint in multiple pockets of the world.



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