JK Tyre & Industries Ltd, one of India’s larger tyre makers, reported on Monday that the company’s net profit for its third quarter ended 30 June increased five-fold to Rs20.2 crore because of increased sales and cost-cutting. The company is also planning a 1:3 rights issue to fund its plan to expand production capacity for truck and bus tyres.
JK didn’t reveal how much money it is targeting to raise from the rights issue.
JK Tyre’s sales in the quarter increased 4% to Rs817.8 crore as it supplied products to new vehicles such as the Mahindra Logan. In the same period a year ago, the company’s revenues were Rs786.45 crore.
“Profits increased due to strong growth in automobile sales and our focus on cost- cutting,” said Raghupati Singhania, vice-chairman and managing director of the company. “Stable prices of our raw materials like rubber- and petroleum-based products also helped.”
Demand for passenger cars and commercial vehicles, JK’s main consumer segments, in Asia’s fourth largest automotive market, increased by 10% to 448,338 vehicles from the same quarter in the year-ago period.
The company plans to spend Rs360 crore to increase the manufacture of truck and bus radials, which offer better fuel efficiency than traditional cross-ply tyres, from 370,000 units a year to 800,000 units.
JK Tyre shares rose 3% to end the day at Rs152.25 on the National Stock Exchange.