Interesting Facts about Tyre Industry and, where JK Tyre is Positioned.
"Indian tyre Industry poised to grow at early double digit for the coming few year"
Source: From Business Indian Magazine
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"Indian tyre Industry poised to grow at early double digit for the coming few year"
Source: From Business Indian Magazine
Do like and retweet to spread knowledge with maximum 🧵👇
India has prominent place in Tyre industry.
Out of top 25 global tyre business, India has 4 prominent players
- Apollo tyre: Ranks 14
- MRF rRanks 15
- JK Tyre Ranks 24
- Ceat Tyre Ranks 25
In India, 41 tyre companies operate in India with 66 tyre plants spread across country.
Out of top 25 global tyre business, India has 4 prominent players
- Apollo tyre: Ranks 14
- MRF rRanks 15
- JK Tyre Ranks 24
- Ceat Tyre Ranks 25
In India, 41 tyre companies operate in India with 66 tyre plants spread across country.
Production:
• Avg growth rate over a decade is close to 9%. First half had high growth of 15%, which fell to 4% in the 2nd half.
• From 2014-20, tyre production shot up from 146.1Mil units to 176.7Mil units.
• Peak production happened in 2019. Total output touched 192mil unit
• Avg growth rate over a decade is close to 9%. First half had high growth of 15%, which fell to 4% in the 2nd half.
• From 2014-20, tyre production shot up from 146.1Mil units to 176.7Mil units.
• Peak production happened in 2019. Total output touched 192mil unit
Industry Mix:
2 & 3 Wheeler dominate the tyre segment, close to 100Mil units, but in value terms tyres for commercial vehicles have highest share of 50%.
2 & 3 Wheeler dominate the tyre segment, close to 100Mil units, but in value terms tyres for commercial vehicles have highest share of 50%.
What impacted the industry?
Automobile production, slipped to negative growth in 2018-19, which rubbed off tyre industry.
While export market also fainted off during 2018-19.
Covid impacted the industry a lot. However post covid, there was pent up demand of replacement market
Automobile production, slipped to negative growth in 2018-19, which rubbed off tyre industry.
While export market also fainted off during 2018-19.
Covid impacted the industry a lot. However post covid, there was pent up demand of replacement market
What has changed?
♂ Threat to domestic market was cheap import from China. Government now has imposed series of anti-dumping restrictions.
♂ India has now sizable scale, which is close to about 35Mil unit. In 2020, India had export of total 32.91 mil unit worth 1.74Bil$.
♂ Threat to domestic market was cheap import from China. Government now has imposed series of anti-dumping restrictions.
♂ India has now sizable scale, which is close to about 35Mil unit. In 2020, India had export of total 32.91 mil unit worth 1.74Bil$.
Growth Driver:
🚀Replacement demand (biggest growth driver). Post Covid, Replacement demand is very high majorly from the commercial vehicle front.
🚀China + Policy
🚀Increasing OEM Consumption.
🚀Exports market are seeing growth now due to China+ policy, and pent up demand.
🚀Replacement demand (biggest growth driver). Post Covid, Replacement demand is very high majorly from the commercial vehicle front.
🚀China + Policy
🚀Increasing OEM Consumption.
🚀Exports market are seeing growth now due to China+ policy, and pent up demand.
🚀Scrappage Policy: Growth driver for near mid-term.
🚀New Technology Initiative Server (Both in terms for Internal Operation & Customer) leading to operational efficiency & margin increment.
- Tyre as a Service Model
- Pay-per Km Model
- Contactless Tyre Servicing Platform
🚀New Technology Initiative Server (Both in terms for Internal Operation & Customer) leading to operational efficiency & margin increment.
- Tyre as a Service Model
- Pay-per Km Model
- Contactless Tyre Servicing Platform
Current Positioning:
• Pent up demand from June onward.
• Surge in demand from commercial vehicle.
• Easing of Raw Material price (linked to oil prices) attributed to exceptional financial results.
• Exports in 2021 have grown by 10% in value terms and 8% in volume terms.
• Pent up demand from June onward.
• Surge in demand from commercial vehicle.
• Easing of Raw Material price (linked to oil prices) attributed to exceptional financial results.
• Exports in 2021 have grown by 10% in value terms and 8% in volume terms.
Positioning JK Tyre:
JK tyres started its journey in 1976.
- First plant in Kankroli, Rajasthan
- Second plant in Banmore Madhya Prades in 1990. Further in 1997, company acquired Vikrant Tyres and launched all-steel radial truck tyres.
- Co. current output is ~32Mil units.
JK tyres started its journey in 1976.
- First plant in Kankroli, Rajasthan
- Second plant in Banmore Madhya Prades in 1990. Further in 1997, company acquired Vikrant Tyres and launched all-steel radial truck tyres.
- Co. current output is ~32Mil units.
Product Offering:
- Jk provide end-to-end solution across segments of passenger vehicles, commercial vehicles, farming, off-road and 2/3 wheeler.
- Co. has capacity to produce tyre from a 3K scooter tyre to 3,400 kg off road tyre
- Jk provide end-to-end solution across segments of passenger vehicles, commercial vehicles, farming, off-road and 2/3 wheeler.
- Co. has capacity to produce tyre from a 3K scooter tyre to 3,400 kg off road tyre
Revenue Mix:
Company is currently comfortable in Truck & Bus segment, which contributes maximum revenue shares and expects the share to be increasing continuously.
Co. aims to increase the share of truck and bus which contributes higher margins to the business.
Company is currently comfortable in Truck & Bus segment, which contributes maximum revenue shares and expects the share to be increasing continuously.
Co. aims to increase the share of truck and bus which contributes higher margins to the business.
Cavendish Industries (CIL):
• JK commenced manufacturing 2 & 3 wheeler tyre after acquisition of CIL in 2016 (at a value of 2170 cr).
• CIL has been turnaround since 2016, growing revenue at 16% to 2571cr for 2021, with cash profit of 225cr.
• JK commenced manufacturing 2 & 3 wheeler tyre after acquisition of CIL in 2016 (at a value of 2170 cr).
• CIL has been turnaround since 2016, growing revenue at 16% to 2571cr for 2021, with cash profit of 225cr.
- Dealers: 6000+
- Brand shops: 650
- Company is also present in e-commerce platform.
- JK Tyre is carrying on de-bottlenecking in the plant worth 250cr.
- Company also have spent 1,500 cr in the new capacity
- Brand shops: 650
- Company is also present in e-commerce platform.
- JK Tyre is carrying on de-bottlenecking in the plant worth 250cr.
- Company also have spent 1,500 cr in the new capacity
Debt Reduction:
• Over years, JK tyres has plan to reduce its debt 45% over next 2-3 year and top
• In last year company has reduced net debt significantly from 5,412 cr to 4,483 cr, reducing debt by 929 cr.
• Over years, JK tyres has plan to reduce its debt 45% over next 2-3 year and top
• In last year company has reduced net debt significantly from 5,412 cr to 4,483 cr, reducing debt by 929 cr.
Recent Tie-ups of JK Tyre:
Recently, JK Tyre has tied up with JBMA, to offer end-to-end ownership of Total Tyre Management, for its city-bus application, across its 11 workshop setups. They have also tied up for Smart Radial tyre service with JBMA.
Recently, JK Tyre has tied up with JBMA, to offer end-to-end ownership of Total Tyre Management, for its city-bus application, across its 11 workshop setups. They have also tied up for Smart Radial tyre service with JBMA.
“We are quite optimistic on the outlook in the near to mid term, as we are embarking strong demand in the replacement and exports segment”
Anshuman Singhania- MD of JK Tyre.
Anshuman Singhania- MD of JK Tyre.
Disclosure:
This is just for educational purpose. We have not invested in the company. It is in our research pipeline.
This is just for educational purpose. We have not invested in the company. It is in our research pipeline.
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