According to CMD Raghupati Singhania, the business would invest around Rs 1,000 crore to increase the capacity of its passenger car radiators, and another Rs 80–90 crore to increase the production of its truck and bus radiators and off-road capabilities.
JK Tyre & Industries Ltd.'s Chairman and MD, Dr. Raghupati Singhania, made a suggestion that the business would be introducing aftermarket tires specifically designed for SUVs.
To accommodate the consistent rise in demand from automakers in the next quarters, JK Tyre & Industries has planned a phased investment of Rs 1,400 crore in Truck and Bus Radials (TBR), Passenger Car Radials (PCR), including All Steel Light Truck Radials (ASLTR) tyres over the next two years.
Debt of Rs 730 crore will finance the project; equity and internal accruals will cover the remaining amount. For the impending capital expenditure (capex), JK Tyre conducted a Qualified Institutional Placement (QIP) issuance in January 2024 for Rs 500 crore in FY24.
In a press conference after the company's results, Raghupati Singhania, Chairman and Managing Director (CMD), JK Tyre, said, "The investments of Rs 1,400 crore will be completed in the next 18-20 months."
"Once implemented, we will have a 16 percent increase in PCR capacity over what we now have. TBR are really few," he continued.
The domestic tiremaker's current annual production capacity is close to 34 million tires, of which around 15 million are PCR, 4 million are TBR, and the remaining amount is made up of two- and three-wheelers, truck bus bias, etc.
Money distribution
According to Singhania, the business would invest around Rs 1,000 crore in PCR capacity expansion and additional Rs 80–90 crore in increasing OTR (Off The Road) and TBR production. Additionally, he offered hints about the company's impending release of aftermarket tires designed specifically for SUVs.
In response to a question about whether the business will also be investing in expanding its capacity for Electric Vehicle (EV) tires, Singhania said, "There is no separate investment being made or budgeted for EVs. We are constantly upgrading our equipment wherever required." We now provide electric vehicle tires for buses that run on batteries, and we possess the technical capacity to introduce more items of this kind.
The domestic tire manufacturer spent Rs 800 crore in capacity expansion and product development during the previous fiscal year.
"That project is now finished, and we are beginning to derive production from it sooner than anticipated. Furthermore, we were able to enhance the capabilities of our PCRs by 16 percent and the TBR capacity by a little 10 percent, according to Singhania.
Q4 display
In Q4 of FY24, the company's operating revenue increased by 1.8 percent to Rs 3,698.45 crore from Rs 3,632.47 crore the previous year. Meanwhile, its net profit increased by 2X to Rs 811 crore. The business has declared a final dividend for FY24 of Rs 3.50 per equity share.
Singhania credited this success to the ongoing emphasis on "product premiumization," "market expansion," "tech-enabled manufacturing," and "digitalization" across the whole organization to improve efficiency.
"In addition, we achieved positive outcomes from our strategic efforts to strengthen our balance sheet through equity infusion, which strengthened our financial resilience," he said.
Geopolitical issues, according to JK Tyre, caused its exports to remain stagnant throughout the year and resulted in higher freight and container costs. In the next quarters, the firm hopes to increase its export quantities.
FY25 forecast
"While the passenger vehicle and two-wheeler segments have noticed good traction, commercial vehicles, which have become flattish, may see marginal growth," Singhania said while discussing the prospects for FY25. However, exports are probably going to take off and help us create demand. During the same time frame, the automobile industry might increase by around 6% overall.
He said that the business anticipates a 9–10% increase in its top line in FY25, driven by increased local vehicle demand, government infrastructure expenditure, and a rebound in exports.
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