JK Tyre announces €22m investment in facility upgrades

New Delhi – Indian tire maker JK Tyre is investing Rs2 billion (€22 million) in debottlenecking its plants over the next two years, according to managing director Anshuman Singhania.

The company was operating at a utilisation rate of 95% during the six months to end of March and it has now prioritised to ‘sweat its assets fully’ through increasing operational efficiency and debottlenecking, he said during a 21 May conference call.

The investment, he said, will go towards acquiring ‘certain equipment for certain processes that are missing’ and will increase the current capacity of 32 million tires per year by roughly 10%.

The move is part of JK Tyre’s focus on premiumisation of its products and increasing volumes, according to Singhania.

JK Tyre posted a healthy growth for the financial year ended 31 March, particularly lifted by its fourth quarter performance. 

Over the three months to end of March, the company reported sales of Rs29.4 billion, up 63% compared to the year before. 

The company linked the growth to increased demand from both replacement and OEM segments.

Fourth quarter operating profitability increased by 119% to Rs47 billion, while earnings (EBITDA) margins expanded substantially by 410 basis points to 16%.

The company said it increased profitability through higher volumes, higher operational efficiencies and strict cost control measures.

For the full year, earnings were up 33% at Rs13.5 billion on 4.5% higher sales of Rs91.4 billion.