Companies

Future outlook is positive for automotive and allied industries: JK Tyres MD

S Ronendra Singh New Delhi | Updated on October 27, 2020

Most segments are already on the path to recovery, says Anshuman Singhania

Anshuman Singhania, Managing Director of JK Tyre & Industries, may be one of the youngest MDs in the family business, but he is clear on how he wants to take the company forward even at a time when the global market is facing challenges because of the Covid-19 pandemic.

During the lockdown, the company’s 12 global manufacturing plants had to be shut and incurred some losses. However, in the new norms, the company is growing rapidly and shown quarter-on-quarter growth, he told BusinessLine in his first-ever media interaction. Edited excerpts:

What will be your priorities for the company?

I joined JK Tyre & Industries as an executive almost 15 years ago and I have witnessed the journey of the company from (valuing) around ₹3,000 crore to over ₹10,000 crore and emerging as one of the leading tyre brands in India and globally. JK Tyre has a customer-first approach and we have always focussed on bringing disruptive tyre solutions for our customers across the world. This continues to be a priority along with our efforts around augmenting our market leadership and growing our presence across the world.

Your appointment comes at a juncture when the market is not good. Are you ready for the challenges?

We are indeed dealing with unprecedented circumstances, but I believe the worst is behind us and the future outlook is certainly positive for the automotive and allied industries. Every adversity comes with an opportunity and new possibilities, which we see in the sector today. Sales is a critical aspect too, but with the consumer sentiment making a steady comeback, I am hopeful that the road ahead is going to be towards sustained recovery. To me, it is the ideal scenario to be taking up this position.

As a young MD, what kind of new technologies or innovations do you plan to introduce at JK?

We have already introduced revolutionary technologies like the cloud-based Tyre Pressure Monitoring System — smart tyres, steering robots, skid trailers, virtual proving grounds and simulation lab. We invest a substantial amount in our R&D efforts along with new product development. There are a host of innovations that are launched or being worked upon at our global R&D hub, the Raghupati Singhania Centre of Excellence in Mysore, including puncture-proof tyres and fuel-saver technology. Smart tyres are already being accepted well in the market and surely going to be the new way forward for the tyres.

When is the market expected to be normal again?

Most of the segments are on the path to recovery, be it passenger radials, farm tyres or two/three-wheelers, and we are witnessing double-digit growth in these categories. The commercial OEM (original equipment manufacturer) segment is still under stress and once that recovers, we do expect the sentiment to further improve. However, replacement demand is going strong even on the commercial side. Given this backdrop, we expect the ongoing months to be better, on the back of the festive season, emerging mobility trends and recent import restrictions among others. JK Tyre capped the second quarter with 12 per cent growth in the domestic market and are aiming to continue with our momentum in the coming quarters.

India has seen some improvement in wholesale of the passenger vehicles, but the commercial segment is still under pressure. How is JK Tyre doing in that segment?

We have witnessed a strong double-digit growth in the truck and bus replacement segment in the second quarter. Commercial vehicle purchase is usually a big decision for transporters, which comes only after seeing sustained economic activities for some time. Economic indicators are showing a strong revival of the manufacturing sector and the goods movement as well. I believe if this momentum continues in the manufacturing sector, within one or two quarters, we might look at improving commercial vehicle sales also. Early announcement to encourage the scrappage policy can improve this sector quickly. We expect that turbulence caused due to factors such as BS-VI and High Axle Load norms is over and there is availability of finance at lower rates which should help in improvement in OEM as well as replacement demand.

What is the ratio between OEM tyre sales and the after-market right now, especially for commercial vehicles?

The sentiment in the OEM segment is still a little bleak when compared to the replacement market. Overall, in the domestic segment in the second quarter, our revenues in replacements were about 70 per cent, our OEM sales stood at close to 15 per cent and exports were nearly 15 per cent.

Are all your factories functional at this point in time? Is the workforce in full force, or has there been some attrition?

All our 12 manufacturing facilities — nine in India and three in Mexico — are currently operational at a consolidated capacity utilisation of over 80 per cent. Currently, we aren’t facing any challenges with regard to manpower requirements at the plant. We have improved manpower productivity by gradually increasing capacity utilisation across our plants in addition to employing the appropriate number of workers required along this ongoing process.

Have you held back on investments or hirings because of the pandemic? If not, then what is the plan?

We are currently optimising our capacities in all product lines which is also helping in reduction of costs. We still have scope for improving our available utilisation and are watching the markets very carefully; we will continue to review our investments in a judicious manner.

Published on October 27, 2020

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