The Singhanias promoted JK TyreBSE -0.88 % & Industries, which acquired Cavendish Industries from BK Birla Group company Kesoram Industries a year ago, said they have managed to turn the unit around, reduced conversion costs and have posted profit before tax (PBT) for operations in the fourth quarter of the last financial year.
“It has been a year since we got management control at three units of Cavendish Industries. Since then, we have right-sized the strength of the workforce there, reduced wastage and conversion costs. Cavendish became PBT-positive in the fourth quarter of the last financial year despite the unexpected and sharp rise in prices of raw materials in recent times,” said Arun Bajoria, director and president (international operations), JK Tyre & Industries and Cavendish Industries.
JK Tyre had acquired Cavendish Industries for Rs 2195 crore last fiscal, a move that gave the company access to 1.2 million units of truck radials, 0.63 million units of two-wheeler and three-wheeler tyres and capacity for bias tyres.
“Radialisation has been on the rise in the domestic market. We downsized the strength of the workforce by a third to contain production of bias tyres. Our plant conversion costs have come down by 40% between the first and the fourth quarter and we have reduced wastage at bias unit by over 60%. All these measures helped us in quickly turning around operations,” said Bajoria, adding productivity at Cavendish’s units manufacturing truck radials have gone up to 70-80% since the acquisition.
The acquisition of Cavendish Industries have not only given JK Tyre access to three factories located at Laksar, Haridwar, where manufacturers enjoy tax benefits but also enabled its entry into the two-wheeler and three-wheeler segments. Since the completion of the acquisition, JK Tyre has a total capacity of 34.7 million tyres a year across 12 facilities in India and Mexico.
JK Tyre is targeting doubling turnover to Rs 20000 crore midterm and Bajoria said the company will continue to explore opportunities, both through the organic as well as inorganic route to grow its business.
Overall, the JK Group is looking to increase revenues to $8 billion (Rs 53,600 crore) by 2020, which hopes to achieve by acquisitions in the automotive, defence and papermaking space, Raghupati Singhania, a senior member of the promoter family, had recently told ET.
The group has identified paper, cement, tyre, automotive and auto component as key growth drivers and will focus on these areas to scale up operations. In addition, it has keen interest in defence and aerospace and is firming up plans for a bigger play in the space.
