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JK Tyre & Industries plans to enter two-wheeler segment; may take trading route |
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NEW DELHI: K Tyre & Industries, the country's third-largest tyre maker, plans to enter the twowheeler segment through the trading route as it steers clear of investing afresh in manufacturing facilities in a slowing auto market. "We are planning to outsource and sell two-wheeler tyres for the time being," Raghupati Singhania, CMD of JK Tyre, told ET in an exclusive interview. "We are working on signing up with vendors and we are exploring both local and international vendors. We will service both the aftermarket and OEM (original equipment manufacturer) segment."
The New Delhi-based company currently makes tyres for four-wheelers, buses and trucks and will take on giants MRF, Ceat and TVS in the two-wheeler category. JK Tyre is taking a prudent approach amid uneven growth in the auto industry. "We have to be more careful in making any fresh investment. As of now, no fresh announcements have been made. Therefore, going forward, we will have to wait and watch how the markets grow, then we will think of investment," Singhania said in the interview in New Delhi recently.
Domestic two-wheeler sales have increased every year since 2009-10 and crossed 16 million in 2014-15, while passenger vehicle sales haven't exceeded the 2.66 million mark since 2012-13. Sales of commercial vehicles tumbled to 6,14,961 from 8,09,499 units in 2011-12, according to data on the website of the Society of Indian Automobile Manufacturers.
Currently, over 80% of the tyres imported in India's replacement market are from China and a majority of them don't comply with norms specified by the Bureau of Indian Standards.
Under the free-trade agreement with South Asian countries, finished tyres can be imported at 6 to 10%, while raw material, which is natural rubber, attracts a 25% duty. "It makes a lot of sense to import tyres instead of manufacturing because of the inverted duty structure.
The only catch is if the government imposes anti-dumping duty on the tyre segment, which is one of the demands being made by local tyre manufactures. Then, the trading route might become unviable," said Abdul Majeed, a partner and automotive expert at PricewaterhouseCoopers. JK Tyre expects revenue to grow by about 10% in the short term and is looking to cater to industrial customers and sell off-the-road category of tyres.
Source : economictimes.indiatimes.com
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