The Hindu Business Line : `Centre must launch full-fledged attack on building infrastructure'

THE Centre should launch a "full-fledged attack" on building infrastructure before opening up the economy to facilitate free import of goods, said Mr Raghupati Singhania, Vice-Chairman and Managing Director, J.K. Industries Ltd.

He also cautioned against allowing import of used automobile tyres into the country since it was not only a threat to the domestic tyre manufacturers but also posed safety and environmental hazards.

Mr Singhania told a group of newspersons in Mysore in connection with the rollout of the one-millionth truck radial tyre at its plant here on Wednesday that the country was following a "distorted and confused economic policy." While the Finance Minister talks of correcting the inverted duty structure, Mr Singhania said, the country was not following it.

He drew attention to the fact that the import duty on tyres from China and the SAFTA countries was lower than that on raw materials, such as natural rubber and nylon cord, needed by domestic manufacturers. He said this was "terrible nonsense."

Mr Singhania said, while he believed in lower tariff, given the status of infrastructure development "we must moderate and deliberate" the import duty structure gradually, in line with infrastructure development.

The industry should not be burdened with high costs of power and water and interest costs. This dilemma was being faced by the entire Indian industry and not by the tyre manufacturers alone.

Mr Singhania said the country should launch a "full-fledged" attack on building infrastructure even while simultaneously moderating duty.

Expansion to push up turnover: He said J.K. Industries has taken up an expansion project at an investment of Rs 160 crore to increase the passenger car radial tyre capacity by 30 per cent and the truck radial tyre capacity by 50 per cent. The work will be completed by September.

Asked about the impact of the expansion project on the company's topline, Mr Singhania said the turnover was expected to go up to over Rs 3,000 crore during the financial year 2005-06. (The company's FY is October-September).

During the current financial year ending September 30, he is hopeful of the company notching up sales of Rs 2,500 crore compared to Rs 2,300 crore during last year. He said the company would end the year on a profitable note.

Asked whether the company was looking for acquisition of tyre manufacturing facilities abroad, the JK Industries MD said, based on proper due-diligence and a favourable outcome, the company would look at such options in China, South America and South-East Asia.

On whether the company would opt for outsourcing of tyres or pick up equity stake, Mr Singhania said the discussion will "entirely depend on the proposal, on the willingness of the partner and the nature of output we will try to take."

On tyre exports to Pakistan, he said the company was exporting tyres to Pakistan directly and through West Asia. He said, once the borders were opened, the trade volume would go up since there was a great opportunity in Pakistan. "As Indian brands we are respected tremendously there."

On whether the tyre industry would push for a fresh price increase, close on the heels of a 3-per cent hike effected in June in view of the continuous increase in raw material cost, Mr Singhania said the price of raw materials such as petro products, natural rubber and steel have seen a steep price increase.

"We are contemplating every quarter if we can afford to."

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`Centre must launch full-fledged attack on building infrastructure'