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JK Tyre Quarter Profits Hit by Increased Costs

Third quarter profits for JK Tyre & Industries Ltd were dented by rising material costs. Although sales in the three months to June 30,2008 were 17.7 per cent up on the previous year, between April and June the company recorded a net profit of Rs 202.4 million (£2.37 million), an increase of just 0.25 per cent on the previous year’s third quarter. Net sales for the quarter were Rs 8.49 billion (£99.57 million), as opposed to 7.22 billion (£84.68 million) a year earlier.

25th July 2008/by Tyrepress Editors

Indian Tyre Shares Boosted in Wake of Hikes

As promised, the price hikes across some of India’s premier tyre manufacturers have been implemented. JK Tyre raised its truck tyre prices by 6 per cent, while Ceat raised non-commercial vehicle tyres by the same quantity. Meanwhile, Apollo has raised prices across segments by 7 per cent.

Following the hikes, shares in each of the companies went up in value, JK Tyres the leaders with a rise of 1.86 percent, closing in Mumbai at 96.05 rupees.

10th July 2008/by Tyrepress Editors

Tyre Prices Continue to Rise in Developing Economies

Next month will see the rapid upward trend of tyre prices in eastern nations continue, as manufacturers and dealers in the United Arab Emirates have agreed to a uniform rise of six per cent across the board.

Head of the Bridgestone Tyre Centre in Dubai, Abdul Hayee, told journalists that the price increase – to be implemented on 1 July – has been necessitated by raw material costs spiralling upwards, a statement confirmed by Babu Karunanandan of Abu Dhabi Tyres. He added that “the UAE is a place where automobiles are an integral part of life and motorists have no other option but to accept the revised prices.

Meanwhile, in India tyre companies are plumping for another hike only two months after the last increase in May. JK Tyre has told domestic journalists that it plans a growth in prices of around six per cent in August, further to the two increases of 2.5 per cent each in January and June. In addition Apollo Tyres have already raised prices by five per cent in the current month.

24th June 2008/by Tyrepress Editors

JK Tyre Acquires Mexican Firm Tornel

Indian tyre firm JK Tyre & Industries has completed the purchase of a 100 per cent stake in Mexican manufacturer Tornel. The company reportedly spent 2.7 billion Rupees in bringing Tornel under its control. The move adds a 290 tonne production capacity in Mexico to JK’s domestic capacity of 650 tonnes.

In a statement from JK Tyre, the reasons cited behind the acquisition included the desire to increase the global impact of the firm, while the location of Mexico was particularly important in opening access to the North American Free Trade Agreement and the developing territories in Central and South America.

24th June 2008/by Tyrepress Editors

Indian Tyremakers Raise Prices with Rubber Soaring

Tyre manufacturers in India are responding to the sustained, near-record input cost of rubber by raising product prices.

Having already raised prices on truck tyres by 2 per cent on 1 June, Ceat Ltd plans to raise prices on other tyres by between 2 and 5 per cent on 10 June. Natural rubber costs are blamed for the hikes, having risen 31 per cent this year. Other companies to have raised prices in recent months include MRF Ltd and Apollo Tyres. In addition, AS Mehta, Marketing Director for JK Tyre told news agencies that the company is considering a further increase in June, following a cross-segment hike in April.

6th June 2008/by Tyrepress Editors

Apollo & JK to Supply OTR Tyres for BEML/Coal India JV

Indian mining equipment manufacturer BEML Limited has reported details of the agreement it has entered for the production of OTR tyres to meet its requirements. The 12-year deal it has signed with major customer Coal India Limited will assure both parties’ continued supply of tyres, which will be manufactured in an exclusive facility being created with funding provided by BEML and Coal India.

The tyres at this new facility will be produced by Apollo Tyres and JK Tyre. Coal India will provide BEML with Rs 2 billion (£24.3 million) in funds, which is to be equally invested in each tyre manufacturer for the project.

14th May 2008/by Tyrepress Editors

JK Tyre Quarter Figures

Results for JK Tyre’s quarter ended March 31, 2008 show a net profit of Rs 230.2 million (£2.87 million), an increase of 67.4 per cent over the corresponding quarter last year. This profit came through net sales of Rs 8.29 billion (£103.2 million).

Upon releasing the quarter results on April 29, vice chairman and managing director Raghupati Singhania commented that the company’s Board of Directors had approved the takeover of Tornel in Mexico, and that the company’s combined capacity post-takeover would be 940 tons per day.

2nd May 2008/by Tyrepress Editors

MRF Tops J.D. Power India Customer Satisfaction Survey

A study into India’s tyre market reveals that MRF leads the field in terms of OE tyre customer satisfaction. The J.D. Power and Associates 2008 India Original Equipment Tire Customer Satisfaction Index (CSI) Study, released April 22, shows that, from a field of five leading manufacturers, MRF ranks highest with an overall CSI score of 836 out of a possible 1,000.

The manufacturers’ products were evaluated by 3,381 new vehicle owners, following 12 to 18 months of ownership, in five key areas: appearance, durability, traction, ride quality and handling. The 2008 survey, the eighth conducted, was also the third consecutive occasion in which MRF has topped the customer satisfaction list. Close behind in second place was Apollo Tyres, who achieved an overall ranking of 816 points.

J.D. Power and Associates reports the study’s findings reveal a strong link between the ownership experience and intent to repurchase. Amongst customers reporting a high level of satisfaction with their tyres, nearly 80 per cent said they “definitely would” repurchase their original brand. The factors for which owners reported the highest levels of satisfaction were tyre appearance and ride quality at highway speeds.

Repurchase intent, however, drops by nearly 40 per cent among customers who are highly dissatisfied with their original tyre brand. For customers who say they “definitely would not” or “probably would not” repurchase their original brand, tyre noise is the most commonly cited reason for their decision.

“Consumers may not have much choice in which tyres come standard with their new vehicle, but they definitely have a choice when it comes time to replace those tyres,” said Mohit Arora, senior director at J.D. Power and Associates, Singapore. “Having a satisfying tyre ownership experience will certainly strengthen a customer’s decision to purchase the same brand that came on their vehicle. Hence, it is vital for manufacturers to increase product quality to achieve high levels of customer satisfaction in order to foster higher loyalty and advocacy levels.”

According to the results, almost 20 per cent of new vehicle owners report problems with their tyres, the most common of these being puncture damage, an issue reported by 65 per cent of these owners. It is thus unsurprising that the second most important consideration for owners when purchasing new tyres, behind brand name, is a tyre’s self-sealing qualities. “While puncture damage is typically beyond the control of manufacturers, and considering that self-sealing tyres have the second strongest impact on vehicle purchase, having this feature on their tyres may prove advantageous for manufacturers,” commented Arora.

The average score amongst the five manufacturers was 818. Individual scores are as follows: MRF 836, Apollo 816, JK Tyre 798, Bridgestone 795, Goodyear 783.

23rd April 2008/by Tyrepress Editors

Tornel Takeover to Give JK 15.3 Million Unit Capacity

The 100 per cent acquisition of Mexico’s Tornel by JK Tyre, announced on April 11, sees the Indian tyre manufacturer become the country’s fourth-largest. The £34.19 million acquisition, which is expected to close by the end of May, will be funded through a special purpose vehicle (SPV) – a company created solely for this particular transaction – based in Mexico.

“We will raise the money through internal accruals and debt, which will be structured though a SPV,” commented JK Tyres & Industries’ vice-chairman & managing director Raghupati Singhania. “Tornel will be a fully-owned subsidiary of JK Tyres and there will be no dilution of the existing shareholding in the company. We shall also bring a rights issue in the next few months, which will be in the ratio of 3:1, to help bridge the funds for the acquisition. The price of the issue will be determined at the time of offer.”

14th April 2008/by Tyrepress Editors

JK Tyre Gains Access to NAFTA Markets Through Tornel Acquisition

India’s JK Tyre & Industries has gained a channel through which it can access the NAFTA markets following the purchase of Mexican tyre manufacturer Tornel. The Rs 2.7 billion (£34.19 million) acquisition was announced on April 11, and will give JK Tyre the scope to expand in the Americas thanks to the free trade agreement in place between Mexico, Canada and the US.

“The acquisition is also a strategic fit for JK Tyre as we are already the largest exporter to the North and South American markets,” chairman Hari Shankar Singhania said in a statement released by JK Tyre. The statement added that Tornel operates three tyre facilities with a combined annual capacity of 6.6 million tyres, and employs around 2,000 people.

11th April 2008/by Tyrepress Editors

Indian CV Tyre Market Will Be 20% Radialised by 2011

JK Tyres president Arun Bajoria has predicted that radialisation is the “next big thing” in the Indian tyre market. His comments came alongside an announcement that the company will almost double the Indian manufacturer’s PCR capacity thorough the construction of a Greenfield passenger car radial tyre factory. “We are falling short of capacity and we are planning a new plant,” Arun Bajoria, president, JK Tyre & Industries Ltd told the Hindu Business Line. Bajoria told the newspaper that JK Tyre is scouting out possible locations in Karnataka, Tamil Nadu and some States in the north of India.

9th April 2008/by Tyrepress Editors

Indian Tyre Companies to Cut Prices from 1 March

Some of India’s leading tyre manufacturers including MRF and Ceat will cut prices by between 1 and 2 per cent. According to local news sources, the news follows a proposal from India’s finance minister to introduce a two percentage point cut in duty as part of the 2008/09 budget in order to boost manufacturing. As a result, Indian manufacturers are queuing up to be seen to pass on the benefit to their customers.

“We will be passing on the entire duty cut,” K.J. Rao Chief Financial Officer at Ceat was quoted as saying. Koshy Verghese, MRF’s executive vice president commented also gave details of a 1 per cent-plus price cut on its truck products. In 2007 MRF Ltd. was reportedly the Indian market leader (22% market share;) followed closely by Apollo Tyres Ltd. (21%); JK Tyre & Industries Ltd (18%); and Ceat Ltd. (13%).

29th February 2008/by Tyrepress Editors

JK Tyre – Past, Present & Future

When JK Tyre & Industries vice-chairman and managing director Raghupati Singhania introduced truck radial tyres onto the Indian market in 1976, people questioned the sense of the decision. Yet more than three decades on JK Tyre has not only been vindicated through the widespread adoption of the technology by its competitors; today the manufacturer holds a 70 per cent market share in this segment.

Speaking with India’s Financial Express newspaper, Mr. Singhania expressed no doubt that decisions, such as that he made in the 1970s, are vital for a company’s well being. “That’s what leadership is all about. It may not be the popular view but you have to have your own understanding and judgment.” This understanding and judgement has aided JK Tyre during its occasionally bumpy journey from a small player with an annual capacity of 500,000 units 30 years ago to today’s tyre major with a presence in 75 national markets.

8th February 2008/by Tyrepress Editors

JK Tyre BOD Recommends 27% Dividend

Shareholders in JK Tyre & Industries look assured of a healthy return on their investment after the company’s board of directors recommended a dividend of 27 per cent on equity shares for the year 2006-07. Company net profits for the quarter ending December 31, 2007 were Rs 217.4 million (£2.8 million), an impressive increase of 166 per cent on results for the same quarter a year earlier. Net sales were Rs 7,228.8 million (£92.4 million, an increase of 9.9 per cent.

30th January 2008/by Tyrepress Editors

Conti to Invest up to 4 Billion Euros Worldwide

Continental is considering spending as much as 4 billion euros on the acquisition of other companies. This news was given to the German magazine Auto Motor und Sport by company CEO Manfred Wennemer, who said that the company could “finance acquisitions of 3 to 4 billion euro through borrowing without problems.”

According to Wennemer, Conti is considering 30 to 40 candidate companies worldwide for takeover, and the company is looking at expanding its tyre business in the growing Asia region in particular. “In tyres, we are searching in Asia, mainly in China, for takeover targets.” Also specifically named as a focus was India. “As far as our tyre business is concerned, we want to enter the Indian market. It’s the last blank on the world map of our tyres business,” he said.

14th January 2008/by Tyrepress Editors