New Delhi, 4th May 2021 (GNI): CARE Ratings has upgraded JK Tyre & Industries Limited’s (JKTIL) Long-Term Issuer Rating to ‘CARE A/ Stable’ from ‘CARE A- / Stable’. The rating agency has also upgraded the rating of its domestic subsidiary; Cavendish Industries Ltd. (CIL) to ‘CARE A- (CE)’ / Stable from ‘CARE BBB (CE) / Stable’
The rating upgrade reflects, JKTIL better than envisaged operating performance in FY21 on the strength of strong demand from replacement, OEM and export markets, higher operating efficiencies, leaner cost structure and focus on better working capital management, which has resulted in improved profitability and higher cash accruals leading to substantial reduction in debt. The Company has also resorted to aggressive marketing by expanding the dealer network and brand shops in the current financial year to cater to high rural and suburb demand.
The subsidiary of the Company; CIL has well aided in the strong operating performance on the domestic front and successfully turned around with highest ever revenues and profitability this year on the back of higher operating efficiencies resulting from positive demand drivers as mentioned aforesaid.
This robust performance has triggered positive rating action for both the Companies; JKTIL and CIL.
The acquisition of Cavendish Industries Ltd. (CIL) by JK Tyre in the year 2016 was strategic in nature and well considered decision to increase the manufacturing capacities at a much lower investment cost and also to enter 2/3 wheeler tyre segment. CIL’s presence is primarily in the domestic replacement market and has diverse product portfolio in the truck and bus (T&B) bias and radial tyres, two/three-wheeler (2/3W) tyres and non-truck bias tyre segments, stated in the press release.ends
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