Rise in fuel costs affecting everything: JK Tyre

New Delhi, April 8

One of the leading automotive tyre manufacturers, JK Tyre has said the tyre industry is suffering a lot as fuel costs and rubber prices have been rising over the last one year, and it is also not been able to pass on properly because of market conditions.

“Everything that you do, you need fuel, whether it is petrol or diesel. Everything right now is in such a state of flux...for example, natural rubber in India is more than double right now...we are buying natural rubber at ₹185- 195 and someday it shoots up beyond ₹200 a kilo. And, natural rubber for us is absolutely lifeline,” Arun Kumar Bajoria, Director and President, JK Tyre, told BusinessLine recently.

Since the existence of JK Tyre, which is over four decades, the raw material has never showed up the way it has in the recent past. It was already 34 per cent higher than what we have seen in March and now another four or five per cent by March-end. So, all together not only me but all the veterans in the tyre manufacturing have never seen 39, 40, 41 per cent raw material price increase, he said.

Bajoria said converting in terms of percentage to the sales price would be around 25 per cent, but the company is not been able to pass on by even 50 per cent – neither for original equipment manufacturers (OEMs) nor after market – because the market has just started recovering post Covid.

He said from the demand side, the industry is improving and from February onwards, the OEMs in terms of commercial trucks have been working well and the demand in February and March was better. “We are hoping that April, May, June quarter will be better both OEM in passenger vehicle and in commercial vehicle,” he said.

On global business

Talking about the international business, Bajoria said JK Tyre’s international subsidiaries Cavendish Industries and JK Tornel, Mexico have taken a lot of actions and that a lot of demand – domestic and the export are fully able to cater.

“We have huge exports to the US and Latin America, and even our domestic sales. Further, JK Tornel, we got focusing on further reducing costs to shore up our margins, our operating margins and so I am optimistic that JK Tornel is all set to achieve newer benchmarks going forward,” he said.

JK Tyre is present in 105 countries with over 180 gdistributors. It has 12 manufacturing facilities – nine in India and three in Mexico – that collectively produce around 35 million tyres annually.

Bajoria added that the company’s plan of investing ₹500 crore is on track, and will be completed in the phased manner in the next two years, including the plant in Chennai to expand the capacities of passenger and commercial radial tyres.