JK Tyre and Industries Ltd, which had hiked prices by around 6-7 per cent since the beginning of this fiscal, is considering a further increase in price to protect its margins.

According to Anuj Kathuria, President (India), JK Tyre & Industries, on an average, the input cost impact on the company due to an unprecedented rise in commodity price was around 30-35 per cent in the last 18 months. It has been able to pass on some of the cost increase to customers.

“We have taken consistent price hikes in the last fiscal and even in this fiscal, a further price increase to the tune of 6-7 per cent has been done. However, we have not been able to pass on the entire cost increase. A further price hike is under consideration,” Kathuria told newspersons on the sidelines of the launch of its new product offerings in the radial tyre segment here on Thursday.

The company has witnessed a sequential improvement in its EBITDA margin at 8 per cent for the quarter ended June 30, 2022, compared to 7.1 per cent during the quarter ended March 31, 2022. However, on a year-on-year basis, EBITDA margins have come down from 11.1 per cent as on June 30, 2021.

“Margin recovery is improving and in Q1 of this fiscal it was better than Q4 of the previous fiscal. We expect this to improve further in the subsequent quarters due to a combination of factors including price hike, cost control initiatives and growth in volumes,” he said.

Steady demand

Backed by a steady demand for tyres both for commercial and passenger vehicles, JK Tyre is hopeful of achieving 20-25 per cent growth in turnover during the current fiscal. The company posted 39 per cent growth in revenues at ₹3,650 crore during the quarter ended June 30, 2022. While one-third of this came from the price hike, the remaining two-third has come from volume growth, he said.

The company is currently operating at around 90 per cent capacity, which stands at around 33 million tyres annually. It  has undertaken a capex of ₹1,100 crore to ramp up capacity by about 10 per cent through brownfield expansion and debottlenecking in the next 12-18 months.

According to Kathuria, demand is expected to grow further in the third and fourth quarters backed by increased vehicle sales during the festival season and thrust on infrastructure projects, among others.