IMC Plan for JK Tyre Industry

IMC Plan for JK tire pains tyre Industry in India insane asylumTyre (or tire in British English) is a ring-shaped practical application that fits a beatnik a roll to protect it and enable better fomite writ of execution by providing a flexible cushion that absorbs shock spot keeping the wheel in close contact with the ground. The revolutionarys itself is derived from the word attire, referring to the dressing of the wheel.The fundamental materials of modern tires atomic number 18 guard and fabric on with former(a) compound chemicals. Their constructive make-up consists of the tread and the body. The tread runs traction maculation the body ensures support. Before gumshoe was invented, the first versions of tires were simply bands of coat that fit around wooden wheels in order to prevent wear out and tear. The most recent and popular type of tire is pneumatic, pertaining to a fitted rubber base ring that is used as an inflatable cushion and mainly filled with compresse d air. Pneumatic tires ar used on umpteen types of vehicles, such(prenominal) as bicycles, motorcycles, cars, trucks, earthmovers, and aircraft. engineering science generation in the Indian tire assiduity has witnessed a fair amount of expertise and versatility to absorb, adapt and convert international applied science to suit Indian conditions. This is reflected in the swift technology progression from cotton (rein posturement) carcass to exalted-performance radial tires in a span of four decades. Globalization has led to the linking of the economies of either the nations and therefore major Indian players in the tyre industry argon pursuing globose strategies to enhance their competitiveness in world food markets. The present section more often than not undertakes an overview of the Indian tyre industry by dint of an examination of its growth trends with keep to increaseion, merchandises and acquisition of scientific capabilities.TYRE INDUSTRY SCENARIOIndian T yre Industry crapper be glob some(prenominal)y competitive on a take aim playing field Ro stackt growth in the economic body process in respective(a) sectors of the economy as salubriousspring as in the Sur search Trans- port sector and re-create thrust in the infrastructural spends go on to be growth drivers for the Tyre Industry. The reduction in excise work from 24% to 16% was a welcome move, The completion of Golden Quadri- squinty and North- South and East-West corridor projects pull up stakes further boost the Automobile sector. This augurs nearly for the Indian tyre industry. magical spell the demand overcompensates to be buoyant, rising input speak to in general and petro-based unexampled materials in particular is a enumerate of concern. During the year, the Tyre Industry faced pressure on margins on cipher of imbalances in the cost adjoins and tyre prices.There atomic number 18 signifi burnt deficiencies in the infrastructure and its cost thereof vis-a -vis the world-wide one thusly putting the Indian Industry in a disadvantageous lay. While the reduction in the import tariffs is a step in full sendion, it needs to be calibrated with the ripening of infrastructure in the country. fall upon Featuresthere atomic number 18 40 listed companies in the tyre sector in India.Major players be MRF, JK Tyres, and Apollo Tyres CEAT, which account for 63 per cent of the organized tyre market. The other distinguish players include Modi Rubber, Kesoram Industries and Goodyear India, with 11 per cent, 7 per cent and 6 per cent share respectively. Dunlop, Falcon, Tyre Corporation of India Limited (TCIL), TVS-Srichakra, Metro Tyres and Balkrishna Tyres are some of the other signifi privyt players in the industry.While the tyre industry is largely dominated by the organized sector, the unorganized sector is plethoric with respect to bicycle tyres.The industry is a major consumer of the domestic rubber market. Natural rubber constitutes 80 % while synthetic rubber constitutes heartly 20% of the material content in Indian tyres. Interestingly, world-wide, the proportion of instinctive to synthetic rubber in tyres is 3070The sector is raw-material intensive, with raw material accounting for 70% of the gibe costs of production entirety production s in tonnage 11.35 lakh MT total production of tyres in all categories 811 lakh (2007-08)Current level of radialization includes 95% for all passenger car tyres, 12% for light commercial vehicles and 3% for heavy vehicles (truck and bus)Restrictions were placed on import of used /retreaded tyres since April 2006Import of new tyres tubes is freely allowed, except for radial tyres in the truck/bus particle which has been placed in the restricted list since November 2008Total value of tyre exports form India is approximately Rs 3000 crore (2007-08)The major factors affecting the demand for tyres include the level of industrial activity, availability and cost of credit, trans portation volumes and network of routes, execution of vehicle loading rules, radialization, retreading and exports.The tyre technology upgradation is an extremely difficult process, particularly in the Indian scenario, due to some(prenominal) factors. First, since tyre technology encompasses various disciplines such as polymer, chemical, steel etc. compromises adjudge to be made in the upgradation of technology because of a) the conflict and complimentarity inherent in these disciplines, b) the usage pattern of the tyres and c) the cost factor. Further, a tyres performance could be affected due to factors such as the weather, loading pattern etc. Despite these bottlenecks technology upgradation in Indian tyre industry during the last fewer decades has been significant. This has been possible to some accomplishment due to government approvals of collaborations with MNCs in this sector. The emphasis given by Indian tyre companies to applied research, the setting up of well-equippe d in house RD centres by large tyre companies, manned by experts and experienced professionals have alike attended in technology upgradation. Indian tyre technology has exhibited versatility in maintaining inflow of technology with foreign collaborations and tailoring the same to Indian needs. mechanisationThe production system in the Indian tyre industry has been traditionally very labour intensive. The automation of manufacturing processes has increased gradually, which has slashed the size of the hands to a considerable degree and has effected a change in its composition. The degree of automation has been broad in the area of radial technology, while cross ply technology is still labour intensive. The firms have been resorting to automation in order to tackle problems related to labour unionization and undiscipline in the sector. The rationale provided by the firms for the increasing drive towards automation of the manufacturing facilities has been that high forest and un iformity of the final product usually cannot be guaranteed with a labour intensive process. (Iyer Upadhyay 2008).New Policy InitiativesThe tyre industry in India has had to grapple with raw material price volatility, rupee appreciation and audacious Chinese imports. In this connection, some of the recent initiatives by the government to relieve the growth of the sector includeNo WTO bound rates for Tyres and Tubes No restrictions on the import of all raw materials required for tyre fabricate except carbon black, which has been placed in the restricted list change magnitude thrust on development of road infrastructureThe Marketing colloquy theory MixA unions total merchandise communication theory mix, or publicity mix, consists of the special(prenominal) blend of publicize, psycheal interchange, cut-rate gross sales forwarding, and public relations tools that the play along uses to pursue its advertising and merchandising objectives. The five major types of forward motion are advert Any paid form of non-personal first appearance and promotion of ideas, sounds, or runs by an identified sponsor.Personal selling Personal presentation by the firms sales force to make sales and build client relationships.Sales promotion Short-term incentives to encourage the purchase or sale of a product or service.Public relations Building superb relations with the companys publics by obtain- ing favourable publicity, building up a good unified image, and handling or heading off unfavourable rumours, stories, and events. taper work Direct communication theory with kickfully targeted individualconsumers to obtain an immediate reparteethe use of trip, telephone, fax, e-mail, and other non-personal tools to communicate computely with specific consumers or to ask a direct response. s foreverally type of promotion has its own tools. Advertising includes print, broadcast, outdoor, and other forms. Personal selling includes sales presentations, tradeshows, a nd incentive broadcasts. Sales promotion includes point-of-purchase displays, premiums, discounts, coupons, specialty advertising, and demonstrations.Direct market includes catalogues, tele selling, fax transmissions, and the Internet. Thanks to technological breakthroughs, marketers can today communicate through traditional media (newspapers, radio, telephone, and tv), as well as its newer forms (fax machines, cellular phones, pagers, and computers). These new technologies have encouraged more companies to move from mickle communication to more targeted communication and one-on-one dialogue. At the same time, communication goes beyond these specific promotion tools. The products design, its price, the shape and colour of its package, and the stores that sell itall communicate something to buyers. Thus, although the promotion mix is the companys primary communication activity, the entire selling mix promotion and product, price, and place must be coordinated for greatest.oer th e past long time, tyre companies around the world perfected the art of mass marketing selling highly standardized products to masses of customers. In the process, they unquestionable effective mass-media advertising techniques to support their mass-marketing strategies. These companies routinely invested megs of dollars in the mass media, gain tens of millions of customers with a single ad. However, as we move into the twenty-first century, marketing managers face some new marketing communications realities.The Changing communication theory EnvironmentThere are two major factors are changing the face of todays marketing communications.1. As mass markets have fragmented, marketers are shifting away from mass marketing and develop cerebrate marketing programs, designed to build proximate relationships with customers in more narrowly defined micromarkets.2. Astprogresss in information technology are speed- ing the run toward shareed marketing marketing. Todays information techn ology helps marketers to keep closer track of customer needsmore information almost consumers at the individual and household levels is available than ever before. New technologies in any case provide new communications avenues for reaching smaller customer segments with more trig subject matters.The shift from mass marketing to segmented marketing has had a prominent impact on marketing communications. Just as mass marketing gave rise to a new generation of mass-media communications, the shift toward one-on-one marketing is spawning a new generation of more narrow down and highly targeted communications efforts.3 Given this new communications environment, marketers must rethink the roles of various media and promotion mix tools. Mass-media advertising has long dominated the promotion mixes of consumer product companies. However, although television, magazines, and other mass media remain very alpha, their dominance is now declining. Market atomisation has resulted in media fragmentation into more focused media that better match todays targeting strategies. For example, in 1975, what were the three major US TV networks (ABC, CBS, and NBC) attracted 82 per centum of the 24-hour think audience. By 1995, that number had dropped to whole 35 percent, as cable television and satellite broad- casting systems offered advertisers dozens or even centurys of alternative channels, which reachsmaller, specialized audiences. Its expected to dropeven further, down to 25 percent by the year 2005.The few mass magazines of the mid-twentieth century have been replaced by thousands of special-interest magazines. HMF alone publishes these and more than 20 other magazines reaching 17 diametric markets and more than 47 million readers, not to mention a wide range of online, broadcast, outdoor, and other media. focused audiences. Beyond these channels, advertisers are making increased use of new, highly targeted media, ranging from telly screens on supermarket shopping c arts to CD-ROM catalogues and Web sites on the Internet.4 More generally, advertising appears to be giving way to other elements of the promotion mix. In the laurels days of mass marketing, consumer product companies spent the lions share of their promotion budgets on mass-media advertising.Now a days, media advertising captures tho about 26 percent of total promotion spending.5 The rest goes to various sales promotion activities, which can be focused more effectively on individual consumer and trade segments. Marketers are using a richer variety of focused communication tools in an effort to reach their diverse target markets. In all, companies are doing little broadcasting and more narrow casting.The Need for Integrated Marketing CommunicationsThe shift from mass marketing to targeted marketing, with its corresponding use of a richer mix of communication channels and promotion tools, poses a problem for marketers. Consumers are cosmosness exposed to a greater variety of mark eting communications from and about the company from an array of sources. However, customers dont distinguish between communicate sources the way marketers do. In the consumers mind, advertising messages from different mediasuch as television, magazines, or online sourcesblur into one. Messages delivered via different promotional approachessuch as advertising, personal selling, sales promotion, pub- lic relations, or direct marketing all pop off part of a single message about the company. Conflicting messages from these different sources can result in overturned company images and brand positions. any too often, companies fail to integrate their various communications channels. The result is a hodgepodge of communications to consumers. Mass advertisements theorise one thing, a price promotion sends a different signal, a product label creates still some other message, company sales publications says something altogether different, and the companys Web site exitms out of sync with everything else. The problem is that these communications often come from different company sources. The advertising department or advertising agency plans and implements advertising messages. Sales management develops personal selling communications.Other usable specialists are responsible for public relations, sales promotion, direct marketing, online sites, and other forms of marketing communications. Such functional separation has recently become a major problem for many companies and their Internet communications activities, which are often split off into sepa- rate organizational units. These new, forward-looking, high-tech functional groups, whether they exist as part of an established organization or as a separate new commercial enterprise operation, commonly are hardened in separate space, apart from the traditional operation, observes one integrated marketing communications expert.They generally are populated by young, enthusiastic, technologically trained people with a burning desire to change the world, he adds, nevertheless the separation and the lack of cooperation and cohesion can be a disintegrating force in marketing communications In the past, no one person was responsible for thinking through the communication roles of the various promotion tools and organise the promotion mix. Today, however, many companies are adopting the concept of integrated marketing communications (IMC).The company carefully integrates and coordinates its many communications channels to deliver a clear, consistent, and compelling message about the organization and its products.6 As one marketing executive puts it, IMC builds a strong brand identity in the mart by tying together and reinforcing all your images and messages. IMC agent that all your corporate messages, positioning and images, and identity are coordinated crossways all marketing communications venues. It means that your PR materials say the same thing as your direct mail campaign, and your ad vertising has the same look and feel as your Web site.7 The IMC solution calls for recognizing all contactints at which the customer may encounter the company, its products, and its brands. Each brand contact will deliver a message, whether good, bad, or indifferent. The company must strive to deliver a consistent and positive message at all contact points. To help implement IMC, some companies appoint a marketing communications director, or marcom manager, who has overall responsibility for the companys communications efforts. Compaq Canada, for example, has a vice-president of integrated marketing communications. IMC produces better communications consistency and greater sales impact. It places the responsibility in someones handswhere none existed beforeto combine the companys image as it is shaped by thousands of company activities. It leads to a total marketing communication strategy aimed at showing how the company and its products can help customers solve their problems.J. K. Industries Ltd.J.K. industries achieved yet another milestone and the turnover stirred an all time high of Rs. 2,400 crores during the year. Operating Profit for the year was Rs. 132 crores and after(prenominal) providing for cost of borrowings, depreciation and taxation, Profit After Tax is Rs. 17 crores as against Rs. 12 crores in the preceding(prenominal) year. There has been a sharp increase in input costs in view of increase in the prices of petro-based raw materials. Commensurate increase in the selling prices of tyres could not be made thereby affecting margins. It is a matter of concern that this jut of increase in input costs keep throughout the year. The smart set has been trying to play this difficult situation by adopting various measures including self-assertive cost cutting, business process improvements, product re-engineering as also enrichment of product and market mix. The smart set has also renegotiated the rates of interest on active term loans. As a result, interest cost in the on-going year is expected to witness a significant reduction. Completion of amplification resulting in increased capacities coupled with aforesaid steps, is expected to result in improvement in the margins in coming year.APPROPRIATIONSThe amount available for appropriation, including purposeless from previous long time and debenture redemption reserve no eternal required, is Rs. 57.81 crores. The Directors propose this to be appropriated as underRs. CroresDebenture Redemption guard5.99General Reserve1 .75Dividend7.49Corporate Dividend Tax1.05Surplus carried to oddment Sheet41 .53DIVIDEND alliance are pleased to recommend dividend of 20 % (Rs. 2 per Equity Share) on the Equity Share Capital of Rs. 37.46 crores. The dividend overcome will be Rs. 8.54 crores (inclusive of dividend tax of Rs. 1.05 crores) as against Rs. 8.47 crores (inclusive of dividend tax of Rs. 0.98 crores) in the previous year. The dividend in the hands of the shareholders is t ax free.SUSTAINED LEADERSHIP AND GROWTH flavour ExcellenceThe beau monde continues to play a leading role in the Tyre Industry in India. During the year, production increased to 57.74 lac tyres compared to 55.62 lac tyres achieved last year. All the four Tyre Plants of the guild operated at optimum capacities producing world mob quality tyres.CUSTOMER FIRSTIf is a matter of great self-esteem that your attach to has been stratified No.1 in the Tire Customer Satisfaction ability Study conducted by J D Power Asia Pacific 2005 India. friendship acknowledge the support of all its valued customers in attaining the attractionship position in the Tyre Industry in India. JK Tyre continues to be Indias only Tyre Superbrand. It reinforces our belief of putting the customer first in all our endeavours.TRUCK/BUS RADIAL TYRESProduction GraphDuring the year, your familiarity achieved yet another milestone and rolled out One Millionth All sword hand truck/Bus stellate Tyre. The Company has produced radial truck/bus tyres of the value of more than Rs.1,000 crores so for and has been exporting the same to several international markets. Your Company continues to produce more than 80% of Indias All Steel hand truck/Bus Radial Tyres.The expansion of cogency of Truck/Bus Radials by 50% was completed and has now become operative. This would allow the Company to continue its leadership role in this vital growth area and meet Indias growing demand for Radial Truck Tyres. Innovative Promotion and sentiment Selling marketing strategy helped the Company to accelerate the use of Truck/Bus Radial Tyres in the country. With renewed thrust on the improvement and enlarging road network and highways, the pace of radialization shall pick up in the years ahead. Increasing number of buses are cosmos fitted with radials and with the increased road movement as a result of better road quality and network, radials will find application on larger number of buses. Plans are well under w ay to further expand the capacities to meet the demand for intensify radialization.EXPANSIONIn addition to expansion of the truck radial capacity as mentioned above, the passenger radial capacity expansion by 30% has nearly been completed. The benefits of both these enhanced capacities will be available in the coming year. To meet the surge in demand for the Companys tyres as also maintaining our leadership in the Tyre Industry, further capacity expansion is planned.Exports GraphEXPORTSYour Company continues to be the lead exporter of tyres from India. During the year, exports increased to Rs. 383 crores. The Company has developed an across-the-board global marketing net- work and its tyres are sold in 60 countries across 6 continents. JK Tyre is a preferred brand in several leading global markets. This is yet another cognizance of the Companys world company quality tyres.HUMAN CAPITALThe Company believes that human resources are key to the success of business. It has been takin g several steps to enhance employee skills through grooming development, empowerment and nurturing talent. In recent years, major initiatives on Competency based Leadership Development and Business Process Re-engineering were interpreted up which have yielded excellent results.JK TYRE -MARKET LEADERProduction during the year touched a high of 57.74 lac tyres against 55.62 lac tyres last year. All the 4 Tyre Plants of the Company worked at the optimum capacities at high operational efficiency levels, producing world- severalise quality tyres.During the year, the Company achieved yet another land mark of being ranked No.1 in the Tyre Customer Satisfaction Index Study conducted by J D Power Asia Pacific 2005 India -a distinct customer mirth irregular of your Companys products. This has reinforced our market leadership. It is indeed a matter of great pride and satisfaction that JK Tyre has received the most coveted citation of Superbrand and now No.1 ranking in the Customer Satisf action. This, more than amply demonstrates the Companys lading to its customers and its leadership in the Indian Tyre market.COMMERCIAL TYRE SEGEMENTThe segment constitutes Bus, Truck and LCV tyres. Their efforts have been to not only meet customer expectations notwithstanding also to give the very best in quality and performance driven products.During the year, Company made new offerings and introduced various tyres, the principal ones being Jet Xtra, Jet Rock and Jet Star for segment specific Bias Truck applications. Nine new tyres were introduced for LCVs for different usage and road conditions.The Company continued to establish great focus on customers through customer contact programmes in LCV tyres and also by partnering the fleet program of Indian Oil Corporation. Training camps were organized to create awareness amongst tyre fitters by organizing Master Tyre Fitter Programmes a first in the industry. AIDS awareness programme was launched amongst Truck Drivers to educate t hem for prevention and care of this deadly disease.TRUCK RADIALSCompanys initiative of introducing all Steel Truck Radial tyres in India have started yielding results and the roll out of the millionth tyre at the most modern plant at Mysore in July 05 is a testimony to the far sighted vision of your company. Company is not only the No.1 truck radial manufacturer, but is a dominant leader in the market with more than 80% market share.New products and sizes of tyres were introduced in the market which received excellent consumer acceptance. JK Tyre Truck/Bus Radial Tyres are gaining increased fitment by Original Equipment Manufacturers.Customers education and participative involvement with end users has taken shape under the Unique Fleet Management Programme. Dedicated staff office have been attached to the fleets to enable them to fully realize the benefits of usage of radials. The Tyre Care Center Network along prominent highways continues to provide round the clock service to truc k/bus operators. Your Company is able to see the rapidly growing pace of radialisation moving from current levels of approximately 2% to 5% in the immediate future to 10% in attached 5 years. Expansion of capacity by 50% will help maintain companys leaderships in domestic market as also service its export to sophisticated markets across the globe.CAR TYRESDuring the year under review, your Company continued its thrust on partnering growth with OEM Customers. Various consumer oriented activities such, as Zip and Sip offer, involvement in Indian Oil additional Rewards programme and Monsoon Protection offer were undertaken to strengthen bondage with customers. Product aesthetics, knowledgeability of newer range, addressing product requirement across different types of cars continued to be important focus areas for radial car tyre segment. Various new sizes and patterns such as Vectra and Zephyr for car radials were introduced for the new stickers launched by the auto manufacturers . through relentless efforts, the Company achieved Unique Distinction of being ranked No.1 in Customer Satisfaction by JD Power Asia Pacific, a world leader in assessing customer satisfaction in the automotive segment. Expansion in capacity by 30% shall enable the company to increase its participation in replacement as well as OE segments.STEEL WHEELSAt the forefront of all car consumer-reach programs has been the Steel Wheels retail network as an important Customer Interface touch point. This year, Steel Wheels played a significant role creating awareness on tubeless tyres usage. Over hundred outlets across the country cater thousands of customers with value added services including wheel alignment, wheel balancing and automated tyre changer apart from providing ready sentinel on tyre care in a pleasant ambience.ORIGNAL EQUIPMENT MANUFACURERS(OEMS)India is closely emerging as a global automotive hub. The Automotive industry is maturing and New Models being introduced at a rapid pace is a challenge for the tyre industry. It is our privilege to be a major business partner to highly prestigious OEM manufacturers with increased share of Business both in Commercial as well as Passenger categories.It may be recalled that JK Tyre product development group was entrusted with the task of developing tyres for Maruti Udyogs New Generation Global Car. It is heartening that during the year, JK Tyre was listed as a single source vendor for Maruti Swift Car, Mahindra and Mahindra Ltd. selected your Company for supplying peculiarly developed ELANZO tyres for their luxury Scorpio vehicle.OFF THE ROAD TYRE(OTR)Your Company has put renewed thrust on development of OTR Tyre business. Both production and sales increased by various folds in the last four years with JK Tyre OTRs attaining improved market share.Continued thrust on development of new sizes of products has helped the company to emerge as the best in class in the domestic replacement market.MOTOR SPORTSJK Tyre has been successful in promoting motor sports in India during the last more than 10 years and has being pursuing the task of nurturing talented drivers to achieve greater heights for their recognition at various platforms in domestic racing championships as well as international arena Narain Karthikeyan -JK Tyre Prodigy became the first ever Indian Formula- 1 travel Driver. Karun Chandhok and Armaan Ebrahim became A-l drivers with Armaan becoming a success in Formula BMW Asia. The Company organized 5th National Karting Championship and Racing Championship during the year. The Company also participated in Dubai Endurance Test and now re-entered National Rallying with great elan and success.GLOBAL PRESENCE be the largest tyre exporter, your Company accounted for over 30% of total tyre export from India during the year, with export turnover of Rs. 383 crores. It was made possible mainly by the continued thrust on strengthening international network and building JK Tyre brand in the overse as markets. Your Company continues to operate through an great distribution network spread across 60 countries over 6 continents.The company is enhancing outsourcing activities from China for international and for Chinese markets in its own brands. It is a matter of pride that JK Tyre and Vikrant Tyre brands are rated amongst premium brands in highly quality conscious global bias tyre markets. applied scienceBeing a pioneer of Radial Technology in India, Company continues its zeal to maintain Technology Leadership. It has established many firsts in the areas of Technology in the past and has further accelerated this pace through extensive in-house Research and Development activity as well as through adoption of latest technology from its collaborator, Continental AG, Germany -the 4th largest Tyre Company in the world.The fact that SWIFT -a new world class model of Suzuki has only JK Tyre as its 100% supplier, is yet another endorsement of Companys leadership in Technology. JK Tyre is the first Indian Company to exploit V rated (speed rating of 240 kms/hour) Passenger Radial tyres.HASETRI (Hari Shankar Singhania Elastomer Tyre Research Institute),. an unaffiliated institute dedicated to Elastomer and Tyre research, promoted by your company is driving companys proficient advancement. HASETRI is a Scientific and Industrial Research Organization (SIRO) and besides up- judge the facilities, infrastructure and manpower capabilities, is working jointly with Technology team of the Company to come out with new and advanced products. Towards this endeavour, HASETRI is not only benchmarking technological capabilities, but also collaborating with various National and International academic institutes. The Company has also established a sum total of Excellence for Tyre and fomite Mechanics in IIT, Chennai for latest computational system, which is the first such Centre in this field for tyre vehicle dynamics technology. This idea has been well appreciated by Automoti ve companies as it aims to develop superior products for Indian Automobiles.With this strength and Technology Leadership initiatives, customers