Kerala floods likely to impact margins of tyre makers: JK Tyre MD

MYSORE:

JK Tyre and Industries Ltd

recently launched its latest R&D centre Raghupati Singhania Centre of Excellence (RPSCOE) at Mysore. With an investment of Rs 150 crore, the company looks to increase its spend on R&D and boost hiring.

JK Tyre

MD Raghupati Singhania in an interview to TOI tells us about innovation and what would drive growth at the company.


Could you tells us how you intend on monetizing the R&D centre?

See, the primary focus of the R&D centre is to drive innovation and growth. We have filed a number of patents along the way as we look to cater to the needs of different OEMs. Today there is enormous emphasis placed on suspension, zero noise, less vibration. So we realise we have to constantly equip ourselves to meet more stringent and higher quality standards.

So that is our main focus. But yes, along the way. Some of our facilities like the anechoic chamber, which helps monitor, analyse and lower sound emitted by the engine, tyres -- can be used by other tyre makers as well. Some of them have expressed interest in collaborating with us. So the revenue stream is incidental, but not our main focus.

There are some in the industry who would say Indians are better equipped to deal with uniquely Indian problems. Like in the case of tractors, Chinese and US models don't necessarily work out as we don't have large-scale mechanised farms, but smaller farm holdings and very different land and terrain requirement. Could you comment?

That is very true. As an Indian company, we do have an edge. We know what is best suited for this market and we try to customise today based on not just the OEMs' requirements (some what more durability, some less noise, etc) but also the country's requirement.

For instance in the US, we'd need to have safeway tyres. In Europe, we are coming up with a premium range of summer and winter tyres. The winters in Northern Europe are so extreme that its part of the mandate that tyres are changed once in six months to suit the season. So we have tested our winter tyres in New Zealand.

Could you tell us about the company's progress in areas like telematics, AI, smart management of tyres?

Telematics is going to get more and more central to everything in the truck industry, because of the wealth of information it generates. AI and data aggregation help in analysing the flood of information that comes with truck performance on the road and helps us in better fleet management solutions.

So today, one doesn't have to wait for a tyre to get punctured or worn out. Our smart tyres would alert the driver when the tyre needs to be replaced or re-treaded; whether the pressure is low.

As a forerunner to smart tyres, we launched our smart management system. And of 10 million radial tyres that we service on Indian roads today, about 15,000 fleets today are on the smart management platform. For our smart tyres, we have just come up with it - and we see some interest from customers.

Could you tell us about JK Tyre's "Pay per mile" concept. Why that instead of traditional sale of tyres?

See all tyre manufactuers claim that their tyres are excellent, they can have a durability of 10,000 - 40,000 km. So we decided why not prove that claim, because we are confident of the lifespan of our tyres. So customers at JK Tyre instead of buying a truck radial tyre, by paying Rs 18,000-20,000 up front can chose to pay on the go. As they use it, the longer they use it, the more miles it travels us - then pay us. And its proved popular and received warm feedback.

What would the impact of the

Kerala floods

be for tyre manufacturers?

The Kerala tragedy affects us in many ways. It is an enormous loss of life and deeply saddens me. As a tyre maker, I feel it would take sometime for the rubber industry to get back on its feet, given the damage to top soil, erosion, etc.

India imports nearly 58% of its natural rubber requirement; only 40-42% if locally sourced. And there is a heavy 30% import duty on raw natural rubber. Now its a quirk that there's only a 6% import duty on the finished product.

So, Kerala accounts for 90% of domestic rubber production - there's a little rubber we get from Tamil Nadu and North Eastern states. But nothing significant. So with this recent calamity, our reliance on imports would increase.

Would the cost of higher raw materials be passed onto the end consumer?

It maybe. It depends to be seen how the industry reacts to it. Apart from the shortage in natural rubber, there's also the cost of acquiring petro-based products. Almost 70% of raw material for tyres is from petro-based products and the current oil crisis isn't helping us.

But on the positive side, we are seeing an uptick in commercial vehicle sales, particularly in the LCV and MHV segment. So higher sales could offset higher input costs.

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