New Delhi: With the advancement in technology and the goal to scale its business, JK Tyre & Industries has been working on a two pronged strategy to add ‘significant relevance’ to its overall business. Along with the mainstream tyres, the Delhi-based company is also running a fleet operating management business and a mobility business vertical.
“In the fleet management business, from selling a tyre as a commodity, it becomes a kind of service. We have tied up with 1300 of the 1800 large fleets across India. We provide all the services and the customer pays for the tyre’s upfront cost,” Anuj Kathuria, India President, JK Tyre & Industries, said. Any fleet of 100 trucks/buses, or more, is considered a ‘large fleet’.
As part of the service, JK Tyre also guides them during the process, on wheel alignment requirements, wheel balancing, rotation of the tyres to get the best mileage, getting the tyres rechecked whenever needed. “In this process, we compute the cost per km metric, so although they pay upfront, they have a sharp understanding of how much is the cost per km per tire that they are incurring,” Kathuria added.
Large fleets have the ability to be competitive because of the GST regime and the forward charge that they can do, as compared to some of the smaller players. An initiative like the fleet management service also contributes to sustained relationship with customers, leading to repeat purchases of tyres by them. The customer base of 1300 fleet operators hasn’t come easily for JK Tyres, an early mover with such a business intervention in the industry. The customer base has been built over the past two decades.
Under the fleet management business, JK is also offering tyre-as-a-service. It has about 250 pit stops, and close to 100 truck wheel centers, where its services are available.
Historically, all these large fleets used to have their own workshops to maintain the vehicles because that model was considered to be cost effective. But with the change in technology, the truck manufacturers have started offering six years warranty or AMC contracts, which are sometimes extendable to eight or 10 years. Now most of fleet owners have wound up their workshops and go to the OEM dealer for vehicle servicing.
The OEM dealer will not be able to help them on tyre and related issues. They need a partner for that and JK fits well for their needs. Earlier, they had their own workshops for servicing everything including the tyre. But today, with vehicle configurations becoming complex, a lot of science is involved and specialised assistance is required.
About this second line of business, Kathuria said, “The Mobility business is manpower-intensive. With our support on service, most of the fleet operators are now easily able to compute the cost per km. They are more concerned about the overall per km cost and the per tyre per km cost. So under our mobility solutions business, we sell miles, not tyres. But that is for some marquee accounts, it has not yet been broad-based.”
The tyre major is looking to scale it up through digitalization to have better efficiencies on data management, data mining, and tracking the vehicles for servicing. It was started 8 years ago. “It is different from the fleet as in addition to whatever we do for the fleet, the tyres are not sold to them. They only pay us per km.
A market leader in TBR (Truck & Bus Radial tyre) segment in India, the company is looking to expand capacity majorly for the PCR (Passenger Car Radial tyre) category. This comes along with the rising consumer interest in SUVs over the past few years.
For the next two years, JK Tyre is looking to invest INR 1400 crore to expand capacity to meet demand for truck, bus and passenger car radial (PCR) in India. Out of this, INR 1000 crore will go for PCR.
On Tuesday, the tyre maker reported that its consolidated net profit grew by over three-fold to INR 227 crore for the October-December 2023 quarter. It had reported a net profit of INR 67 crore in the corresponding quarter of last fiscal.
Revenue from operations increased to INR 3,688 crore for the period under review as against INR 3,613 crore in the year-ago period.
JK Tyre has nine manufacturing plants in India — three in Mysore (Karnataka), three in Laksar (Uttarakhand) and one each in Kankroli (Rajasthan), Banmore, (Madhya Pradesh) and Chennai (Tamil Nadu). The company also has three plants in Tornel, Mexico.
The company, which has also developed a tyre with 80% biodegradable materials, says that the ‘green tyre’ is close to a market launch. JK Tyre has a target to achieve net zero emissions by 2050.
