Net Profit Trebles for JK Tyre

The financial quarter between July and September has proven to be a healthy one for JK Tyre & Industries, who on October 23 reported that its quarterly net profit had more than trebled from a year earlier, the result of lower raw material prices and better realisations. Net profit rose from Rs 69.8 million (£863,800) to 243.9 million (£3.02 million) in spite of sales decreasing 2.8 per cent to Rs 6.9 billion (£85.4 million) since a year ago.

On top of the growth in net profit, the manufacturer forecast sales growth in the area of 20 per cent for the year ending September 2008. “We are hopeful that in the coming year new product development and tinkering with [our] market mix will continue, which will help us drive volumes and higher profit margin,” managing director Raghupati Singhania informed media. Sales of truck tyres, a product that reportedly generate four fifths of JK Tyre’s revenue, were down during the quarter, however they are anticipated to increase again in the October to December quarter, which corresponds with India’s festival season, traditionally a time for making purchases.

The manufacturer’s operating margins were at 11.5 per cent, up from 10 percent in the previous quarter, benefiting from “better pricing power, ” according to Mr. Singhania.

In July the company disclosed plans to increase capacity for OTR tyres and radials, both passenger car and commercial vehicle sizes. Capacity for PCR tyres will increase from 4.5 million to 7 million, and TBR from 400,000 to 1 million. Total tyre capacity will increase to 9.3 million units by December 2008 as a result of this part of a wider Rs 11 billion (£136.1 million) investment for JK Tyre.