JK Tyre and Industries has announced an investment of Rs 1,400 crore in Truck and Bus Radials (TBR), Passenger Car Radials (PCR) and All Steel Light Truck Radial (ASLTR) tyres in a phased manner over the next two years to meet the sustained growth in demand from automakers in the coming quarters.
The project will be funded by Rs 730 crore debt and the rest through equity and internal accruals. In FY24, JK Tyre did a Qualified Institutional Placement (QIP) issue in January 2024 for Rs 500 crore for the upcoming capex.
“The investments of Rs 1,400 crore will be completed in the next 18-20 months,” Raghupati Singhania, Chairman and Managing Director (CMD), JK Tyre told reporters in a post earnings conference.
“Once deployed, our PCR capacity be increased by another 16 percent over and above our current capacity. TBR are very marginally,” he added.
Currently, the homegrown tyremaker’s total capacity is nearly 34 million units of tyres per annum, out of which PCR is about 15 million, TBR 4 million and the balance comprises Truck Bus Bias (TBB), two/three wheelers, etc.
Fund deployment
Singhania said the company will deploy around Rs 1,000 crore in expanding its PCR capacity while another Rs 380-390 crore will be spent on ramping up the output of OTR (Off The Road) and TBRs. He also hinted that the company will roll out tyres tailormade for Sports Utility Vehicles (SUV) in the aftermaket.
When asked if the company will also be spending on building capacities for Electric Vehicle (EV) tyres, Singhania noted, “We are constantly upgrading our equipment wherever required and there is no separate investment being made or earmarked for EVs. We are already supplying EV tyres for (battery-driven) buses and have the technological capabilities to roll out such products.”
During the last fiscal, the homegrown tyremaker invested Rs 800 crore for capacity enhancement and product development.
“We have completed that project and started deriving production out of it earlier than we even planned. And as far as the capacities are concerned, we have been able to increase our PCRs’ capacity by 16 percent itself and TBR capacity marginally by 10 percent,” Singhania added.
Q4 show
Meanwhile, the firm's revenue from operations saw a modest increase of 1.8 percent at Rs 3,698.45 crore in Q4 of FY24, up from Rs 3,632.47 crore a year ago, while its net profit rose 2X to Rs 811 crore. In addition, the company announced a final dividend of Rs 3.50 per equity share for FY24.
Singhania attributed this performance to continued focus on "product premiumisation", widening market reach, "tech-enabled manufacturing" and "digitalisation" across operations achieving better efficiencies.
“Moreover, our strategic initiatives to fortify our balance sheet through equity infusion yielded fruitful results, reinforcing our financial resilience,” he added.
JK Tyre said its exports were flat during the year because of geopolitical disruptions that also led to freight hikes and a rise in container costs. The company expects to improve its export volumes in the next few quarters.
FY25 outlook
Talking about the outlook for FY25, Singhania said, “While the passenger vehicles and two-wheeler segments are seeing good traction, commercial vehicles, which are flattish, may see marginal growth. On the other hand, exports are likely to catch on, helping us in generating demand. On the whole, the automotive sector may see around 6 percent growth during the same period.”
He revealed that the company expects a 9-10 percent growth in its topline in FY25, buoyed by government infrastructure spending, rising domestic auto demand and a recovery in exports.
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