The impact of crude oil prices is now being seen on vehicle maintenance as well. Tire companies are now planning to increase tire prices. A company has even announced it. JK Tire, a well-known tire company of the country, has announced a major price hike. According to a senior company official, JK Tire & Industries Ltd plans to increase its tire prices by another 4-5 percent in the current October-December quarter. The company is doing this to mitigate the impact of rising raw material costs and container freight costs.
Tire prices will increase
After the company announced its second quarter results, JK Tire managing director (MD) Anshuman Singhania told reporters that we intend to increase prices by 4-5 percent in the third quarter. Earlier, prices were hiked by 5 percent in the first quarter and 7 percent in the second quarter. He said the business environment is challenging due to geopolitical tensions in West Asia. Raw material costs remain “persistently high”, and supply chains are also being disrupted. Moreover, container freight rates are also much higher than their earlier levels.
A big drop in profits
For the July-September quarter, JK Tire’s consolidated profit after tax fell 71.5 percent year-on-year to Rs. 65.11 crores. Earnings before interest, tax, depreciation and amortization (EBITDA) margin declined to 7.1 percent from 13.3 percent. Singhania said that the price of raw materials has increased by about 9 percent in the second quarter compared to the first quarter.
In the first six months of the current financial year, the overall growth has been around 30 percent. “In the third quarter, we are looking at a further 4-5 per cent increase in the price of the entire basket of raw materials,” he said. Also, he said the company’s product mix is improving. According to him, demand for large rim tires is increasing in both the ‘original equipment’ (tyres fitted to new vehicles) and ‘replacement’ (tire to be replaced later) categories.
