Financial Daily from THE HINDU group of publications
Wednesday, May 31, 2006
Financial Daily from THE HINDU group of publications Wednesday, May 31, 2006 |
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Corporate
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Interview Hike in tyre prices necessary: JK Tyre
According to the CFO of JK Tyre, Mr A.K. Kinra, 7-8 per cent price increase in tyres should offset the increase in costs of rubber. Excerpts from CNBC - TV18's exclusive interview with Mr Kinra Will the 7-8 per cent rise in tyre prices take care of the rubber price spike? Rubber prices have gone up as high as about Rs 100 per kg. The increase in the cost is very high. There is no way the tyre industry can sustain on its own, so to take care of that cost increase, it has to go for a price increase. That has compelled us to increase tyre prices also. In Malaysia, rubber prices have gone up as much as about 85 per cent in one year. I think the same phenomenon is happening in India. Rubber constitutes as much as one-third of the cost of raw materials. If that is the component of rubber in a cost of a tyre, and if this is the cost increase, then the impact on the selling prices will have to be there correspondingly. Will the 8 per cent price hike be net neutral for your margins, or do you think you will still have lower margins this quarter? Rubber prices have gone up in the last two months. They have moved from almost about Rs 80-100, which is about 25 per cent of the price increase. So this 7-8 per cent price increase in the end product should take care of the increase in the rubber cost.
More Stories on : Interview | Tyres
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