New Delhi: Tyre manufacturer JK Tyre & Industries has said that it will invest Rs270 crore for expanding its production capacity of off-the-road (OTR) tyres by 2011.
The company, which currently has 42% share in the 95,000 units domestic OTR market in the country, is adding fresh capacity of 9,000 units per annum at its Mysore plant to take the total to about 44,000 tyres a year in the next two years.
The increase in capacity is done with a view to enhance presence in the local market and later explore opportunities for in the overseas market.
“We will be investing a total of Rs270 cr in expanding our OTR capacity by March 2011. Apart from Indian market, we are also looking at exporting to other countries,” JK Tyre and Industries vice president and managing director R.P. Singhania said.
“The company would invest Rs120 crore for adding a capacity of 4,000 tyres till March 2010 to its existing production strength of 35,000 OTRs, while the rest will be infused for adding another 5,000 units by 2011 to cater to the overseas markets,” he added.
Singhania further said that for the Rs120 crore investment by March 2010, the company has received a loan of Rs100 crore from (BEML) Bharat Earth Movers Ltd and the rest is being funded by the company through internal accruals.
“For the next phase, we have not decided as yet,” he added.
Asked about the impact of global economic slowdown on the company’s plans, he said that the company has put on hold Rs25 crore expansion programme for specialty tyres at its Mysore plant since October-November last year.
“We are waiting for the market to recover, which at the moment we are not sure when will it happen,” Singhania said.
He, however, said that the company has restarted its Rs50 crore expansion project for its passenger car radial tyres at Gwalior to expand capacity to 50 lakh tyres from the current 44 lakh.
“Also we are scouting for location for a greenfield plant that will have a capacity of 2.5 million tyres per annum that will entail an investment of Rs300 crore,” he said, adding it could be finalised within a couple of months.
The company has already completed expansion at its Mysore truck radial tyre facility to hike capacity to eight lakh units from 3.6 lakh units entailing an investment of Rs315 crore.
“The plant is currently under trial and we expect to start production there soon,” he said.