JK Tyre & Industries Ltd. negotiated headwinds faced by the tyre industry as a whole. It continues to tread carefully to attain sustainable growth and even higher profitability.
Story by: Ashish Bhatia and Deven Lad
K Tyre & Industries Ltd. continues to take measured steps to attain sustainable growth and improved profitability. The company is claimed to have well-negotiated the headwinds faced by the tyre industry as a whole in the quarter and the year ended March 31, 2020, and will continue to tread carefully. Averred Dr Raghupati Singhania Chairman and Managing Director, JK Tyre & Industries Ltd., “The tyre industry have faced a downturn prior to the current pandemic, which further aggravated the situation posing unprecedented challenges. As a consequence, both the commercial vehicle and the passenger vehicle segments have been severely impacted. Despite this, the company has posted higher sales in the passenger car and two and three-wheeler segments.” Added Dr Singhania that the company with a renewed focus was also able to register a 37 per cent growth on the exports front.
Financial snapshot FY2020
The company has evaluated and factored in, to the extent possible, the likely impact that may result from the Covid-19 pandemic known to have caused serious disruptions on the global economic and business environment. As per the consolidated results for the quarter and the year ending March 31, 2020, the net operating revenue of the company stood at Rs.1803.09 crores in Q42020 and Rs.8,753 crores in FY2020 compared to Rs.2715.95 crores in the same quarter the previous year (March 31, 2019) and the annual revenue of Rs.10367.76 crores (FY2019). This included segment revenue from India at Rs.1634.75 crores for Q42020 and Rs.Rs.7649.11 crores for FY2020. Mexico contributed Rs.199.50 crores for Q42020 and 1191.07 crores for FY2020. Notably, inventories of furnished goods, work-in-progress and stock-in-trade for Q42020 was a negative (156.06) compared to 3262, the quarter a year ago. For the entire year, the unsold inventory was proportionately lower at negative (14.46). This was also significantly lower than the negative (294.90) levels for FY2019.
The company registered a profit/loss after tax of negative Rs.46.95 crores in Q42020 compared to the Rs.35.88 crores registered in the Q42019. For FY2020, the company registered a profit of Rs.149.01 crores compared to Rs.176.29 crores recorded in FY2019. Dr Singhania also drew attention to the headwinds encountered on the currency front with the Indian rupee weakening significantly towards the end of the FY2020. “The US Dollar liability of the company along with its subsidiaries Cavendish and JK Tornel, Mexico had to be recorded at the exchange rates prevailing on the last day of the Financial Year, which though exceptional and notional in nature, impacted the Profit Before Tax,” he explained. As per the audited financial results, under the head ‘Items to be reclassified as profit or loss,’ exchange differences on translating the financial statements of its foreign operations stood at (50.67) compared to (3.11) in Q42019. For the year, it stood at (47.51) compared to 0.89 for FY2019. The total equity and liabilities of the company are pegged at Rs.11290.17 crores compared to Rs.11316.41 crores as in FY2019.
Banking on goodwill
The company according to Dr Singhania is banking on the long-standing relationships and the goodwill with customers, suppliers and the stakeholders including its employees. Going forward, the company is confident of sustaining business operations, cash flows, future revenue, assets and liabilities with measures like reduction of fixed costs across all activities as it restarts plants and continues to streamline operations and sales.
TBR milestone
JK Tyres rolled out its 20 millionth Truck/Bus Radial (TBR) tyre recently deemed as the first and the only Indian company to achieve the milestone. Commenting on the milestone, Dr Raghupati Singhania, Chairman & Managing Director said, “This is a landmark achievement, not only for JK Tyre but for all its stakeholders, especially the customers who have shown their unwavering trust in our engineering prowess and technological capabilities.” “As a pioneer and market leader, we remain committed to driving innovation and bringing products for our fleet customers that are high on efficiency, safety and cost-effectiveness,” he mentioned. The company according to Dr Singhania will continue to work towards strengthening its position through technology and revolutionary sustainable mobility solutions. JK Tyres achieved the distinction of rolling out 10 million TBRs in August 2016.
JK Tyre furthers commitment to the United States
In a boost to its global expansion strategy, JK Tyre & Industries Ltd. has commenced operations in the United States. The company has set up a new entity – ‘Western Tires INC’ based at Houston, in Texas. As part of the expansion plans, Western Tires INC will act as a marketing arm for the U.S market and will focus on sales, service and network expansion. “With our own sales and marketing channel, we are furthering our commitment towards the US market to provide an enhanced delivery and service experience to our customers backed by a team of technical experts from India and Mexico,” stated Dr. Raghupati Singhania, Chairman & Managing Director, JK Tyre & Industries Ltd. With an over two decades exports exposure to the United States through a network of local partners, the company in a brand acquisition exercise had acquired Mexican brand Tornel in 2008, now JK Tornel. The capacity enhancement at JK Tyre is said to have played a major role, contributing to the steady growth of the company in the global markets including the US. “The United States has been an important export market for us. The fact that we are now setting-up our operations here goes to show the significance of this country in our larger global expansion plans,” mentioned Dr Singhania. The focus at the company continues to be on further driving the sales in Truck and Bus Radials, passenger car segment besides on the light commercial vehicles segment through the introduction of new products and further enhancement of the sales channels.
