JK Tyres & Industries is a publicly owned tyre maker headquartered in New Delhi India. The company manufactures tyres and flaps for two-wheelers, cars, farm equipment, commercial vehicles and off-road tyres. Though the company primarily targets the Indian tyre market it also has operations in around 80 countries in Asia, North America, Latin America, Europe, Africa and Australia.
The company manufactures tyres from 9 facilities located all across India. The company has registered an annual turnover of INR 8838 crores in the year 2016 and is currently the market leader in the truck and heavy vehicles tyres segment in India.The company is also preferred OEM supplier to leading automobile companies such as Maruti Suzuki, Tata Motors, Hyundai, Honda etc. The company is also highly committed to the environment and has been always sensitive about keeping its carbon footprint to the minimum.
Strengths in The SWOT analysis of JK Tyres
Strengths are defined as what each business does best in its gamut of operations which can give it an upper hand over its competitors. The following are the strengths of JK Tyres :
- Strong distribution channel: JK tyres are backed by a very strong network of distributors with almost 141 outlets just in India. The company is also known to engage its dealers and has a relationship programme which ensures high incentives, rewards for superior performance and other value-added initiatives. This relationship that it shares with its dealers is one of its biggest strengths.
- Market Leadership: JK Tyres are the market leader in the radial tyres market for trucks and heavy vehicles and this is a segment which is expected to have steep growth prospects in the future.
- Standards and certifications: JK tyres is the first company in Asia to be awarded an ISO: 50001 certifications. It also has an ISO 9001 and ISO 14001 certification.
- Cavendish: The move to takeover cavendish has helped JK tyres expand their product since it currently owns 1.2 million units of truck radials. The move has also helped to improve the production capacity of farm tyres and off-road tyres.
- Presence in all segments: JK Tyres has the presence in all three price segments in the India market. The premium segment is sold under the label JK tyres, the mid-tier under Vikrant Tyres and the value segment is sold under the label Challenger.
- Exclusive channels: JK Tyres sells their truck tyres through Truck wheels whereas the Xpress Wheels chain is for the suburban and local markets. The company uses the chain Steel Wheels for dealing exclusively with passenger cars and two and three –wheelers. This ensures that customers get exclusive and specialist services in each category.
Weaknesses in The SWOT analysis of JK Tyres
- Cost control: With fluctuation in the prices of synthetic rubber which is the main raw material for tyres it is becoming increasingly difficult to control costs of manufacturing.
- Focus on radial tyres: The excessive importance given to the radial tyres segment for trucks has diluted the focus on other lucrative areas such as farm tyres and passenger cars. The company needs to look at areas other than truck tyres.
- Pricing: As competition increases in the tubeless tyres from foreign players and multinational companies JK tyres will need to focus on keeping its prices intact since that will be its core differentiator. This will be a huge challenge for the company
Opportunities in The SWOT analysis of JK Tyres
Opportunities refer to those avenues in the environment that surrounds the business on which it can capitalize to increase its returns. Some of the opportunities include:
- High market potential for tyres: The market potential for tyres is expected to grow at a CAGR of 9.9 % between the years 2017 and 2022. The prime reasons for this are the new vehicle launches which have grown in frequency in both passenger cars and two-wheelers and the growth in spendable income.
- Growth in two-wheeler market: The number of two-wheeler purchases is expected to be at an incline in the next decade and the two-wheeler tyres market is expected to hold the highest market share in the Indian market. This will be a potential opportunity for JK tyres to look at since it will mean more frequent replacements as well.
Threats in The SWOT analysis of JK Tyres
Threats are those factors in the environment which can be detrimental to the growth of the business. Some of the threats include:
- Competition: The company faces stiff competition from Bridgestone, Michelin, and Cooper as well as local players in each regional market like PRF and Apollo Tyres in India.
- Dumping from China: Tyre manufacturers in India are facing severe challenges from the dumping of tyres from countries like China and other regions with whom India has entered into free trade agreements. This is eating into the market share of most of the Indian companies primarily because of their pricing mechanisms. Other threats include GST and demonetization.