Tyre major JK Tyre will take price increase decisions in the fourth quarter of the current financial year to offset the hardening of raw material prices.
The company, which announced its Q3 numbers on Tuesday, saw its operating profit margins impacted by an increase in the raw material cost, particularly in the natural rubber. “To mitigate that, we have taken measures on cost reductions, and we are continuously revising our prices and enhancing our product mix and cost optimization,” said Anshuman Singhania, MD, JK Tyre.
The company has already taken up to the tune of 1% price hike in Q3 and for the year it has taken a price increase to the tune of about 4% said Sanjeev Aggarwal, CFO, JK Tyre.
“Going forward in Q4, we will look at the competitive environment and do the revisioning and we expect a 2% to 3% increase in raw material cost going ahead,” he added. For Q3, raw material cost saw an increase of 2%, he said.
The company’s Mexican subsidiary also has not yet felt the pinch of any tariff measures by the US.
“Right now, there has not been any concrete percolation of the tariff,” said Singhabia.
“There’s going to be very serious negotiations between Mexican and US govts, and we will await results on that.”
On the funding front, the USD 100million loan that JK raised from IFC will be used partly to retire costly debt and partly to fund capex.
“We will use USD 50 million for expansions — USD 30 million for JK Tyre and the balance for Cavendish Industries and the balance USD 50 million has to be utilized for the purpose of replacing a high cost debt,” said Aggarwal.
JK Tyre reported a consolidated Q3 net profit of INR 57 crore and revenue of INR 3,694 crore.
