Recovery in automotive sector took place only in Q2 (July-September) which resulted in JK Tyre achieving higher sales. The company believes that the Indian economy will sustain its growth momentum in the coming quarters and the festive season will help the auto sector to grow.
Also, export sales grew which resulted in the company posting sales of Rs3.77bn ($50.99mn) from exporting tyres. The company is focusing on recovering sales in replacement and exports markets. About 70pc of the company’s revenues comes from sales to the replacement market. Going ahead, the low interest rates, good monsoons and the festive season could help sustain the demand growth in the auto sector.
Tyre and rubber companies are the largest consumer of zinc oxide and many oxide manufacturers informed Davis Index that demand from tyre manufacturers were healthy in the September quarter. JK Tyre is currently operating at 80pc capacity which is higher than pre-COVID levels of 70-75pc. The company is not facing challenges from the supply chain or the availability of manpower.
JK Tyre had the opportunity to benefit from the auto sector’s recovery and has done better in the replacement market. The company’s overseas subsidiaries also improved in terms of sales and profitability, said JK Tyre. The company reported a net profit of Rs1.09bn in Q2 down 34pc from the prior year.