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After scaling new highs in early-2022, rubber prices may have come down marginally over the last few months. But tyre manufacturers remain cautious as another round of price hikes is not being ruled out. The top management at JK Tyre, country’s leading tyre manufacturer, is closely monitoring the situation as market dynamics remain volatile, a top executive said.
“The extent of increase in our costs have come down a bit since September and now the prices are stable. However, we are closely watching the situation and taking every quarter as they approach,” said Anuj Kathuria, President, JK Tyres. According to him, growing costs have adversely impacted the margins of most tyre manufacturers in the country since early-2021.
However, companies like JK Tyre have not been able to pass on the entire burden to the customers, who are already grappling with an wide spread inflationary cycle, resulting in repeated price hikes of passenger cars and two-wheelers. “Since we could not pass the additional costs entirely to the consumers, cutting prices is not on the horizon at the moment, even though rubber prices are stable,” he told Business Today. JK Tyre has hiked prices by 10-12 per cent across its portfolio of commercial and passenger car and two-wheeler tyres over the last one year.
For JK Tyre, rising cost of materials resulted in a shrinking operating profit in the past few quarters. However, as prices stabilised, its margin improved in the December quarter. Falling from a margin of 9.47 per cent in December, 2021, its operating profit margin touched 6.63 per cent and 6.88 per cent in April-June and July-September quarter, respectively. In December, however, it improved to 8.7 per cent.
Copyright©2023 Living Media India Limited. For reprint rights: Syndications Today
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