JK Tyres to Supply BEML by March 2010

JK Tyres continues moving closer towards establishing an OTR tyre facility through which it will supply earthmoving equipment manufacturer Bharat Earth Movers Ltd (BEML). It is more than two years since the tyremaker was first named as a potential supplier for BEML, yet in late April JK Tyres reaffirmed its intention remains to establish a factory in the south-western city of Mysore for this purpose.

According to reports published by Indian news sources, the company will invest a total of Rs 2.7 billion (£36.8 million) in the project, 1.2 billion (£16.3 million) in an initial phase scheduled to be completed in March 2010. This stage one operation will provide a capacity of 4,000 OTR tyres a year; output will primarily benefit BEML, who has contributed Rs 1 billion in loans towards the project.

“With this expansion, our OTR production capacity will grow from 35,000 units to 39,000 units by March 2010. We are expecting the segment to grow at 10 per cent over the next two years,” said Raghupati Singhania, JK Tyres vice chairman and managing director.

“We will be investing a total of Rs270 crore in expanding our OTR capacity by March 2011. Apart from Indian market, we are also looking at exporting to other countries,” Singhania continued, commenting that in addition to the stage one production JK Tyres will be “adding another 5,000 units by 2011 to cater to the overseas markets.”

JK Tyres has, like most companies, been hit by the global slowdown. For this reason an Rs 250 million (£3.4 million) speciality tyre expansion programme at its existing Mysore facility has been put on hold. “We are waiting for the market to recover, which at the moment we are not sure when will it happen,” Singhania said. Commenting on overall industry outlook, he added “there is an improvement in the industry. Truck production, which had declined by 70-75 per cent in November-December last year, is now lower by 30-35 per cent. Passenger car numbers also seem to be reviving.”

The Rs 500 million (£6.8 million) passenger car radial capacity expansion project earmarked for its Gwalior (Madhya Pradesh) facility is however once again bubbling away on the company’s stovetop, and will result in capacity souffléing from 4.4 to 5 million tyres.

“Also we are scouting for location for a greenfield plant that will have a capacity of 2.5 million tyres per annum that will entail an investment of Rs300 crore (£40.9 million),” Singhania said, adding it could be finalised within a couple of months. JK Tyre has already completed expansion at its Mysore truck radial tyre facility, boosting capacity from 360,000 to 800,000 units.