JK Tyre & Industries Ltd

NSE:JKTYRE

Q3-2026 Earnings Call

[Operator]

Ladies and gentlemen, good day, and welcome to JK Tyre Limited Q3 FY '26 Earnings Conference Call hosted by ICICI Securities Limited. [Operator Instructions]. Please note that this conference is being recorded.

I now hand the conference over to Mr. Ronak Mehta from ICICI Securities Limited. Thank you, and over to you, sir.

[Ronak Mehta, analyst]

Thank you, [ Rudra ]. Good evening, everyone. On behalf of ICICI Securities Limited, I would like to welcome you all to Q3 FY '26 earnings conference call of JK Tyres & Industries Limited. Today, we have with us the senior management team represented by Mr. Anshuman Singhania, Managing Director; Mr. Arun Bajoria, Director and President, International Business; Mr. Sanjeev Aggarwal, Chief Financial Officer; and Mr. A K. Kinra, Financial Advisor. We will begin the call with the opening comments from the management team, followed by Q&A session.

Over to you, management team. Thank you.

[Anshuman Singhania, executive]

Thank you, and a very good evening to all of you. I welcome you all to the JK Tyre quarter 3 FY '26 earnings call. First, I would like to extend my heartfelt and warm wishes to you and your families for a very happy New Year. I am glad that here I have with me Dr. Arun k. Bajoriaji, Director and President, International; Mr. A. K. Kinraji, Financial Advisor; and Mr. Sanjeev Aggarwalji, the CFO.

The Union Budget 2026 reinforces India's commitment to the manufacturing-led growth. The continued drive on capital expenditure with infrastructure allocation exceeding INR 12 lakh crores will improve cost efficiency and support demand momentum in the auto and tire sector.

The Indian economy picked up pace in the second quarter of FY '26 as has exceeded the expectation by achieving GDP growth of 8.2%, signaling a clear and a broad-based uptick in the economic activity. This expansion also marks the highest growth in the last 6 quarters on back of strong rebound in the domestic consumption, resilient rural demand, higher government CapEx, coupled with GST reforms and strong festival demand.

Recent trade deals with EU and U.S.A. have been announced, which will integrate the market with above FTA countries and provide India benefit of market diversification. Indian auto industry continues to ride the wave of strong momentum with pent-up demand.

The year FY '26 will be marked as a year of historic performance for the Indian automotive industry as robust growth is being witnessed across sectors. In FY '26, CV sales are expected to exceed its previous record high of over 1 million units, which was achieved in FY '19, driven by infrastructure development, increased freight movement, GST reforms and lower interest rates.

PV also recorded the highest ever sales of 4.38 million. While SUVs continue to dominate the PV sales, small cars also rebounded strongly. Two-wheeler sales also surpassed the 220 million mark. In FY -- in quarter 3 FY '26, auto industry witnessed a record-breaking performance in both domestic and export market across segments with high double-digit growth. As we enter quarter 4, the momentum looks strong, backed by firm demand across segments, along with fresh pipeline of new launches and an overall improvement in customer sentiment.

Talking about JK Tyres Q3 financials. We have recorded the highest ever revenue of INR 4,235 crores at a consolidated level, up by 15% on a year-on-year basis. EBITDA stood at INR 583 crores with a margin of 13.8%, reflecting a strong year-on-year expansion of 470 basis points. This growth was driven by JK Tyres's continued focus on product premiumization, operating leverage along with execution excellence. Benign raw material prices also contributed favorably.

Profit after tax surged 3.7x to INR 209 crores. In quarter 4, raw material price scenario is expected to remain range bound, 1% to 2% increase. JK Tyres has introduced embedded smart tires for passenger cars to deliver real-time data on tire operating conditions. The launch of embedded smart tires marks a defining milestone in JK Tyres innovation journey while supporting a safe driving along with improving vehicle performance and efficiency.

Electrification continues to be steady and gaining momentum on a continuous basis, and I'm proud to announce that JK Tyres has secured new OEMs approval for supplying EV tires to Hyundai Creta, Tata Punch for electric variants. Recently, Renault Duster has also been launched with our Ranger HPE tires, demonstrating a long-standing faith of customers in our offerings.

Also, 4 new types of OTR tires have been launched for industrial and mining applications. These tires are capable of sustaining harsh environments while continuing to deliver superior durability, sustainability and traction.

During the quarter under review, we have further expanded our market footprint by adding nearly 200 dealer pan-India in order to serve the growing domestic demand and 35 pitstops for enhancing customer services. Further 25-plus new fleets have been added to the total count.

In order to cater to the rural demand, rural distribution network is being expanded. Indian tire industry is witnessing a strong demand across segments. In order to capitalize on the significant market opportunity, the company has decided to further expand capacity for TBR, ASLTR and PCR through our expansions in various locations for an aggregated cost of INR 1,130 crores. This will increase our overall capacity by nearly 7%.

We are proud to share that JK Tyre has earned a prestigious silver rating in the latest EcoVadis ESG assessment, placing the company along amongst the top 7% companies globally. This recognition reflects our strong performance across all sustainability pillars and reinforces our unparalleled efforts towards the vision of becoming a green company by 2050.

During the quarter, we completed the merger of our subsidiary company, Cavendish Industries Limited, with JK Tyres after securing all statutory approvals. CIL has undergone a remarkable transformation under the JK Tyre leadership. JK Tyre provided all the necessary technical, financial and managerial support, and capacity utilization was scaled up from around 30% to over 95%, marking JK Tyre's yet another successful turnaround acquisition after Vikrant Tyres and JK Tornel Mexico.

I would like to bring to your attention that this merger is going to be highly value enhancer and will bring a lot of operational and functional synergies through pooling of resources. We are delighted to announce our long-standing association with the prestigious and highly coveted award, ICOTY and IMOTY.

Here are -- there are some few operational highlights. Domestic markets recorded a healthy volume growth of 16%, contributed by replacement segment by 11%, OE segment by 24% on a year-on-year basis. Exports demonstrated resilience and grew by 9% in volume terms despite geopolitical uncertainty.

TBR volumes in the replacement market grew by 15% and in the OEM market by 33% on a year-on-year basis. Passenger line volume grew by 18% on a year-on-year basis, contributed by replacement market growth by 11% and a strong OEM growth of 24%, and export volume grew by 40% on a year-on-year basis.

Farm category volume on a year-on-year basis also saw significant growth, majorly contributing by the OEM and replacement markets. 2-3-wheeler segment volume on the OEM segment also grew by 30% on a Y-on-Y basis.

Now I would like to request Bajoriaji to take over the performance on our JK Tornel.

[Arun Kumar Bajoria, executive]

Thank you, MD, sir. Mexico's economic growth in 2025 remained steady despite heightened uncertainty over U.S. tariffs and persistent macroeconomic headwinds. Further, as per the International Monetary Fund's Worldwide Economic Outlook, WEO report, GDP growth for the full year 2026 is now projected at 1.5%, supported by gradual monetary easing.

The Bank of Mexico has further cut the benchmark interest rate, TIIE, to 7%, its lowest level since 2022, driven by continued remittances from the U.S. into Mexico. These rate cuts are aimed at stimulating economic growth amid sluggish GDP performance and ongoing uncertainty related to U.S. tariffs.

Coming to JK Tornel's performance, in Q3 FY '26, revenues were recorded at INR 615 crores as against INR 507 crores in the corresponding quarter, reflecting a robust 21% year-on-year growth, thereby reaffirming the continued customer preference enjoyed by JK Tornel in Mexico. We are proud to share that we have achieved the highest ever sales in Q3, reaffirming JK Tornel's strong market position.

In addition, we have once again recorded the highest ever sales to mass merchandisers. JK Tornel's EBITDA for Q3 stood at INR 58 crores, up by 45% on a year-on-year basis as against INR 40 crores in Q3 FY '25.

EBITDA margins reached a level of 9.4%, registering an improvement of 148 basis points over the corresponding quarter, led by the product mix improvement and benign raw material prices. PAT stood at INR 42 crores, significantly higher than the corresponding quarter.

We would like to assure you that dedicated efforts are underway to continuously enhance sales and profitability even as we remain cautiously optimistic for the year 2026. We continue to closely monitor the upcoming revision of the United States-Mexico-Canada Agreement, USMCA, in July 2026 as this will be important for sustaining and strengthening our business with the U.S.A.

And now, I would request Mr. Sanjeev Aggarwalji to talk about the financial performance of JK Tyres for the third quarter of FY '26.

[Sanjeev Aggarwal, executive]

Thank you, sir. Thank you very much. Let me briefly share the key highlights -- key financial highlights for Q3 FY '26. Number one, the company recorded its highest ever consolidated revenue of INR 4,235 crores, up by 15% on Y-o-Y basis as against INR 3,694 crores in corresponding quarter.

EBITDA for Q3 FY '26 was recorded at INR 583 crores as compared to INR 335 crores in the previous -- in the corresponding quarter last year, an increase of 74% on Y-o-Y basis. EBITDA margin during the quarter were recorded at 13.8% vis-a-vis 9.1%, representing an expansion of 470 basis points.

Cash profit for the quarter more than doubled and stood at INR 478 crores as against [Technical Difficulty] corresponding quarter last year.

[Operator]

Sorry to interrupt you, sir, but your voice is breaking.

[Sanjeev Aggarwal, executive]

Okay. Profit after tax for Q3 jumped by 3.7x and stood at INR 209 crores as against INR 57 crores in Q3 FY '25. Government of India on 21st of November '25 notified 4 new labor codes, consolidating the earlier 29 labor laws and has comprehensively defined the term basis. And accordingly, there is an incremental financial implication of these labor codes to the extent of INR 56.75 crores towards retiral obligation, which has been taken into account and has been shown as the exceptional item in the P&L account.

Radial tire capacity utilization remained high, beyond 95%, and overall Indian operating capacity utilization touching 90%. Capacity utilization at consolidated level remained over 85%. In Q3, export volumes from India remained steady despite the uncertainties and have grown by 9% in terms of volume on Y-o-Y basis.

As informed earlier, our subsidiary company, CIL, has been merged into JK Tyre in December 2025 with effect from the appointed date of 1st of April 2025. Subsidiary, JK Tornel Mexico, witnessed a significant improvement in its financial performance and has added to the consolidated financials.

EPS in Q3 jumped 4x to INR 7.29 per share as against INR 1.85 in the corresponding quarter. Return ratios, ROCE and ROE, have been very stable and very -- and have been in the comfortable zone, in the middle double-digit level.

Net debt as on 31st December stood at INR 4,183 crores as compared to INR 4,200 crores as on September 30, 2025. Fresh disbursements were taken for expansions, which increased the total term loans. And on the other hand, some working capital loans of CIL were repaid to avail working capital in JK Tyre at better interest rates post-merger.

The balance sheet of the company continues to remain healthy and robust with key financial ratios, leverage ratios, within 0.71 debt to equity and 2.17x debt to EBITDA, respectively. We have already circulated the Q3 earnings presentation, which is available on our website, and you can please refer to that.

And now we open the forum for questions and answers. Thank you.

[Operator]

[Operator Instructions]. Our first question comes from the line of Bharat Bhagnani from Living Root Analytics.

[Bharat Bhagnani, analyst]

So I want to understand what is the capacity utilization we're operating at? And also, if you can give some color on the volume growth and pricing growth in the revenue mix this quarter?

[Anshuman Singhania, executive]

Okay. So the capacity utilization has been at a level of 90-plus percent. And our -- what you call -- the other question which you were asking was the pricing?

[Bharat Bhagnani, analyst]

I'm asking the revenue mix for the volume growth and pricing growth?

[Anshuman Singhania, executive]

So the revenue growth has been in the replacement -- in the replacement market, it is 56%, and OE is 23%. And...

[Bharat Bhagnani, analyst]

No. So Anshumanji, I'm basically asking the growth that we have achieved, 15% quarter-over-quarter. So within this, how much have we got from -- in terms of volume growth and how much have we got in terms of pricing growth by taking a price hike?

[Sanjeev Aggarwal, executive]

So majorly, this is because of the volume growth because this is almost like with a slight difference where we have increased some pricing in certain SKUs. So majorly is because of the volume.

[Anshuman Singhania, executive]

So domestic volume growth has been 16% and our replacement volume growth has been 11% and OE has been 24%. And in export [indiscernible] grew by 9%.

[Bharat Bhagnani, analyst]

Right. So there is not much of pricing growth, right? So you've not taken any price hikes...

[Anshuman Singhania, executive]

No, very, very -- no, very, very minor [ we grew ].

[Bharat Bhagnani, analyst]

Right. And given the raw material scenario we are at currently, so where do you see margins for this year and the next quarter -- next couple of quarters?

[Anshuman Singhania, executive]

So raw material will be range bound, as I said, and it will be 1% to 2% going up, we are expecting. But the margins are going to be quite intact because there is a lot of volume push in this, and plus our premiumization will also play a role in the margin, and plus the higher capacity utilization will also play a role in that.

[Bharat Bhagnani, analyst]

Right, right. And sir, a final question. One of our competitors like CEAT, they almost reported like a 25% growth on a similar base because the other companies have a higher base than us. And we were reporting -- we reported around 15%. So is the management targeting a higher revenue growth going forward?

[Anshuman Singhania, executive]

We are targeting a double-digit revenue growth. And since you mentioned about the competition, particularly CEAT, please don't forget that they have a larger base of 2-, 3-wheeler as well, and also that acquisition.

[Sanjeev Aggarwal, executive]

Yes. They acquired one company and the revenue from that company which they acquired is Camso. So that has added to the revenue.

[Bharat Bhagnani, analyst]

Okay, okay. But we are targeting like -- are we targeting in terms of the mid-double digit, high-double digit, low-double digit in terms of revenue growth?

[Sanjeev Aggarwal, executive]

Mid-double digit, as we have seen in this quarter. If the momentum continues, which is more likely, then we are expecting mid-double digit growth.

[Operator]

[Operator Instructions]. Our next question comes from the line of [ Aditya Akhani ] from Shah Capital.

[Unknown Analyst]

Congratulations for a good set of numbers. I want to understand the revenue mix on a standalone basis in terms of category and BU. As well as what was the percentage drop in the raw material cost on quarter-on-quarter?

[Anshuman Singhania, executive]

So the -- quarter-on-quarter the raw material -- quarter 2 to quarter 3, it was flattish. So there was -- it was flattish. And here, the other question which you were asking was the growth, right? The growth...

[Unknown Analyst]

Revenue mix on a standalone basis?

[Anshuman Singhania, executive]

Revenue mix. So truck, bus is 58% and passenger car line is 27% and non-truck buyers is 11%.

[Unknown Analyst]

Okay. And 11% includes 2-, 3-wheeler?

[Anshuman Singhania, executive]

No, 2-, 3-wheeler is separate, which is 4%.

[Unknown Analyst]

Okay. And in terms of BU?

[Anshuman Singhania, executive]

In terms of BU. I didn't understand BU.

[Unknown Executive]

Market-wise.

[Unknown Analyst]

Replacement, OEM -- market-wise.

[Anshuman Singhania, executive]

Yes, yes. In terms of market-wise, replacement is 63%, OE is 26% and 11% is export.

[Operator]

[Operator Instructions]. Our next question comes from the line of Ronak Mehta from ICICI Securities Limited.

[Ronak Mehta, analyst]

Congratulations on good performance. My first question is on your Mexico business. So what was the average realization in rupee -- in terms of rupee versus Mexican peso for this quarter now that rupee versus Mexican peso has moved over INR 5 in the last 2, 3 months, which is, I think, positive for the company? So just wanted to understand on that benefit because of this.

[Sanjeev Aggarwal, executive]

As you can see, it is flat, about flattish, the revenue per kilo or whatever you want to say it as.

[Anshuman Singhania, executive]

Yes. But the net revenue...

[Arun Kumar Bajoria, executive]

But the net revenue has gone up by 21% year-on-year basis. As I've mentioned that from INR 507 crores, it has gone up to INR 639 crores.

[Sanjeev Aggarwal, executive]

So in constant currency, as Mr. Bajoria mentioned, that the revenues have been flattish.

[Ronak Mehta, analyst]

Understood. So the entire benefit is from the depreciation or, I would say, the rupee depreciation.

[Sanjeev Aggarwal, executive]

So the impact of the rupee is 21% and the net revenues in terms of rupee has gone up by 21%.

[Anshuman Singhania, executive]

Year-on-year basis.

[Sanjeev Aggarwal, executive]

Yes, on Y-o-Y basis.

[Ronak Mehta, analyst]

Okay. Understood. Okay. Sir, my second question is on the demand scenario. So now that GST benefit has already come through in the replacement segment, do you see that continuing even post the fourth quarter because most of the companies are guiding for double-digit growth for the fourth quarter? But do you see this demand sustaining in the replacement market even beyond the March quarter?

[Anshuman Singhania, executive]

Yes. So we are seeing that entering the quarter 4 is going to be very strong, and we are very confident about the healthy growth which is going to be coming across the sector. Not only GST, GST is definitely boosted, but we are seeing the macro tailwinds which are very positive in terms of rural demand, in terms of positive consumer sentiment. And moreover, lowering of that interest rate also is a very positive momentum. And we see that continuing that into FY '27.

[Ronak Mehta, analyst]

Understood. Okay. So one last question from my side. Sir, you, along with some of your peers across the industry have announced new CapEx, and the size of the CapEx is large for everyone. So do you see a scenario -- and most of the companies have been reporting almost 90% utilization level like you. So do you see a scenario that in the near term, say, for next 12 months, there could be a scenario where there is capacity constraint and the industry is looking to take price hike just to -- just because there is no capacity available? So pricing-wise, I think the scenario is favorable for the company -- for the industry?

[Anshuman Singhania, executive]

Look, everybody is announcing at the different capacity level capacity growth, right? And as I told you that domestic market is looking to be very buoyant in the coming year. So this -- the appetite of commercial vehicles have come back after a long pause. So this will continue. And plus, please don't forget that domestic is one consumption point. The other is the export market at large, which is a big also consumption point for tires. And right now, as you know that the EU and the U.S. FTAs are almost at the fine prints of getting finalized. We are expecting that tire should be given that importance, and we will benefit from that for export. So the capacities will be needed as we go forward because of the robust demand overall.

[Ronak Mehta, analyst]

No, sir. So my question was more from the pricing point of view. So given that the demand environment is pretty strong and the capacity is almost near peak utilization level, in case a scenario -- in case of a higher raw material pricing scenario, do you think that the price hikes could be much more easier this time given that recently because of GST also there was a price cut and industry also doesn't have adequate capacity? So pricing-wise, is it easier -- do you think that it will be easier for you as well as other industry players to take price hikes in the near term?

[Anshuman Singhania, executive]

See, the demand -- in terms of the demand-supply situation and the overall market dynamics, whatever necessary price revisions maybe have to be undertaken going ahead, that's a call every individual company will have to take.

[Operator]

Our next question comes from the line of Abhishek Jain from AlfAccurate Advisors Private Limited.

[Abhishek Jain, analyst]

Congrats for a strong set of numbers, sir. Sir, my first question on that demand scenario on the Mexican business. So just wanted to understand how much the volume growth Y-on-Y and quarter-on-quarter in Mexico? And what are the levers for the business growth over there?

[Anshuman Singhania, executive]

No. So as Bajoriaji was responding to the question earlier, Mexico has seen a year-on-year basis a demand of 21% jump of revenue from Y-on-Y basis. As we go along that, we see a good traction coming in from Mexico itself because the economy is picking up there. The other thing is also that we are continuously exploring the U.S. Mexico under the USMCA. Right now, it is not announced anything, the duties, but we are taking advantage of that and we are exporting into U.S.

Plus, we see that Brazil and LATAM is also at a steady demand. There, we are also finding newer spaces to increase our throughput in terms of volumes. And as I told you that we are constantly increasing our foothold in Mexico, appointing dealers and higher volume through mass merchandise as well. So we are seeing a good throughput coming in from there.

[Abhishek Jain, analyst]

Sir, in Mexican business, how much is the contribution of the export right now?

[Anshuman Singhania, executive]

Well, from the Mexican, it is about 40%.

[Abhishek Jain, analyst]

40%. And 60% is the domestic?

[Anshuman Singhania, executive]

Yes.

[Sanjeev Aggarwal, executive]

Yes.

[Abhishek Jain, analyst]

And sir, in the domestic market, there also that the Mexican government has imposed duty on the many countries. So just wanted to understand what is the benefit to you because your plant is over there. So is there any benefit goes to you because of this?

[Anshuman Singhania, executive]

Yes. So we have as -- the benefit is because we are a local producer there in that. So we get the benefit of a low-cost base, and that's why we've been able to supply tires into the market and export. So we get that benefit.

[Abhishek Jain, analyst]

So from here on, what kind of the growth we are looking in the domestic Mexican market and export market in the Mexico business in the next 1 year or so?

[Anshuman Singhania, executive]

We are looking at the mid- to single-digit -- mid- to high single-digit growth.

[Sanjeev Aggarwal, executive]

Absolutely.

[Abhishek Jain, analyst]

Single-digit growth?

[Arun Kumar Bajoria, executive]

High single digit.

[Abhishek Jain, analyst]

Okay. Got it. And how much margin expansion you are looking over there?

[Anshuman Singhania, executive]

We are looking in the range of about 1% to 2%.

[Abhishek Jain, analyst]

1% to 2%.

[Operator]

Our next question comes from the line of Nandan Pradhan from Emkay Global Financial Services.

[Nandan Pradhan, analyst]

Thank you for taking my questions.

[Sanjeev Aggarwal, executive]

Can you please speak louder?

[Operator]

But can you please speak a little louder?

[Nandan Pradhan, analyst]

Yes. Is this better? Am I audible now?

[Operator]

Comparatively better, yes.

[Nandan Pradhan, analyst]

Yes. Congratulations on a great set of numbers, sir. And I just had 2 questions. One is the INR 14 billion CapEx that was undergoing, we had mentioned that it would come onstream from Q3, and I think PCR had started from October. So just wanted to know the status on that currently. That's the first question.

[Anshuman Singhania, executive]

Yes. So our PCR is already under ramp-up. It has attained its full, what you call -- it is already going to be attaining its full capacity by July '26. And our TBR is by April '26. And ASLTR is going to be -- is already completed, achieved.

[Nandan Pradhan, analyst]

And sir, we had also called out EBITDA margin guidance of 13% to 15%. I think we are already towards the upper band. And with Q4 RM basket going upwards of 1% to 2%, the impact of that would largely flow through in Q1 of '27. So do we still stand by the guidance of 13% to 15%?

[Anshuman Singhania, executive]

Yes, we will, because as I was explaining in the earlier call, there is a lot of robustness in terms of the OE demand, and we are the largest in the truck and bus. So there, we are seeing good throughput coming in, and it is going to be sustained even in the FY '27. And we also see a good traction also in the passenger car line as well, where our premiumization is playing an important role in terms of margin expansion. So last year, in our mix in the 16-inch and above, we were 27% in the mix of passenger car, and today, we are at 31% to 32% in the mix. So that is also panning out for us.

And we are -- just to complete the story, we are also expanding, as I mentioned, INR 1,130 crores, where we are also undertaking more expansion in the passenger line, which will also enhance us for higher rim size capability.

[Nandan Pradhan, analyst]

Sir, just one last question, if I could squeeze in. We had spoken about a INR 50 billion CapEx over a period of next 5 years. So this INR 1,130 crores would essentially form a part of that plan, if I'm not wrong.

[Sanjeev Aggarwal, executive]

So this is -- the INR 1,130 crores is a part of that only.

[Anshuman Singhania, executive]

And this will be sort of phasing out...

[Sanjeev Aggarwal, executive]

Yes, over a period of 3 to 4 years.

[Anshuman Singhania, executive]

In 3 to 4 years.

[Nandan Pradhan, analyst]

So this INR 1,130 crores would be over a period of 3 to 4 years?

[Sanjeev Aggarwal, executive]

No, no. This will take 1 or 2 years' time, rather 1.5 years exactly to complete the project.

[Operator]

Our next question comes from the line of Kuber from Axis Securities.

[Kuber Chauhan, analyst]

Congratulations, sir, for a good set of numbers. Just 2 questions from my end. First one is what kind of traction, demand traction we are witnessing in the [indiscernible]? Is it more from trucks? Is it more from passengers? That is one question. Or are there any other [indiscernible]?

And secondly, you said that we are -- 40% the de1pendency is on Mexico. So are we going to reduce in near future?

[Anshuman Singhania, executive]

No, let me correct you. The 40% is not the dependency of Mexico to our revenue. Mexico's export is 40%, and rest 60% has been selling domestic in Mexico.

[Kuber Chauhan, analyst]

Okay. So my bad, my bad. And in terms of demand, where we are witnessing more traction? And in next year as well, what we see in terms of demand?

[Anshuman Singhania, executive]

Yes. So we are witnessing a good demand across the sector. There has been a sharp demand which is coming in from the OEM in the CV, in the truck and bus segment. As I said that truck has already crossed FY '19 high numbers in terms of their sale, and we see that traction going forward in the quarters of next year. And we are also seeing a good traction coming in from passenger radial as we are reading that -- and we are participating closely with the OEMs with an exciting product launches across the passenger car segment. Plus, as the rural income is also picking up, we are also seeing traction in the farm sector and as well as the 2-, 3-wheeler as well.

[Operator]

Our next question comes from the line of Bharat Bhagnani from Living Root Analytics.

[Bharat Bhagnani, analyst]

Yes, I think this question is for Sanjeevji. Sanjeevji, can you just explain the current tax and deferred tax calculation which is there? And what's the tax rate for us?

[Sanjeev Aggarwal, executive]

So because we are in the process of implementing the projects, certain projects, therefore, some kind of deferred tax increases every year. And -- because this gives the benefit in income tax to defer for the amount of new projects. But we are using 25% tax bracket, the new regime actually we are in, in JK Tyres. So 25% is the effective tax rate for us.

[Bharat Bhagnani, analyst]

Okay. And in this particular quarter, how much is the effective tax rate that we have paid?

[Sanjeev Aggarwal, executive]

So that will be the same, except that -- because we were also carrying forward some of the losses in the books of [ computation ], income tax, not in books of accounts. So that -- some benefit might have come actually our way from CIL. Then we have got...

[Bharat Bhagnani, analyst]

[Foreign Language]?

[Sanjeev Aggarwal, executive]

Around 25% roughly. That is the effective tax rate.

[Bharat Bhagnani, analyst]

25%?

[Sanjeev Aggarwal, executive]

Yes.

[Bharat Bhagnani, analyst]

So I think going ahead, do we have this deferred tax?

[Sanjeev Aggarwal, executive]

So this will be divided between the deferred tax and the actual tax payment. And because -- overall, they will remain 25%.

[Bharat Bhagnani, analyst]

Overall. And I think the exceptional items also you have given the note for that. So I think going forward, this exceptional won't come, right?

[Sanjeev Aggarwal, executive]

So there are 3 exceptional items in this note, which is -- one is the stamp duty, which is because of the merger incident and onetime. The other one is foreign exchange losses. As you would know, there was a huge volatility during the quarter. And this is also not the full sort of the realized loss, I would say. This is mark-to-market partly. And the third one is because of the labor law, labor code. So this is onetime again. So I hope...

[Bharat Bhagnani, analyst]

So all of these are onetime, I think, apart from foreign exchange...

[Sanjeev Aggarwal, executive]

Yes, these 2 major ones are onetime. And ForEx losses today could be ForEx again tomorrow. And -- but this is mostly the mark-to-market one.

[Bharat Bhagnani, analyst]

And Anshuman, one final thing from my side. The rubber prices have gone up a bit. So till what level of rubber prices are we comfortable that we are confident that we'll be able to maintain the margins?

[Anshuman Singhania, executive]

So rubber prices have gone up. And as I've said that our total raw material basket would be hovering around perhaps 1% to 2%. So that will not make much of an impact because there is a lot of volume push with enhanced capacity, so utilization is also at its full.

[Bharat Bhagnani, analyst]

So you're okay with these kind of prices as well, right? You're able to -- you're confident that you will be able to maintain...

[Sanjeev Aggarwal, executive]

So lower the price, the better it is. But...

[Anshuman Singhania, executive]

We will plan accordingly as the -- in terms of the competitiveness of the market, price increases.

[Operator]

[Operator Instructions]. Ladies and gentlemen, as there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments.

[Sanjeev Aggarwal, executive]

So yes, thank you so much for joining this conference call for quarter 3. And I hope we have given you these answers satisfactorily to your questions. So good day. Thank you so much.

[Anshuman Singhania, executive]

Thank you.

[Arun Kumar Bajoria, executive]

Thank you.

[Operator]

Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.