The bite of the Chinese dragon
is beginning to get fatal for the Rs 50,000 crore Indian tyre industry. On the one hand while Indian tyre majors are
facing a severe shortage of raw material like rubber in the country, there
seems to be no let up on the indiscriminate Chinese imports of truck and bus
radial tyres (TBRs). What is really alarming is the fact that Chinese dumping
of tyres now accounts for 90pc of TBR imports (2015-16). The share of Chinese
imports was a mere 40pc in 2013-14 and had grown to 70pc in 2014-15. One must
also remember that the market for truck and bus tyres accounts for 60pc of local
“If you have to assess
imports, particularly in the commercial vehicle segment, today I think 90pc of
commercial vehicle tyres (truck and bus radials) imports are coming from one
country that is China. That is an area of big concern for the industry because
most of the tyres that are coming in are in the dumped category. The prices at which the imports are coming
are so low that they are not even adequate to cover the cost of raw materials.
You have a very serious and challenging situation here as one is competing
against imports which are at prices that are so slow that even the raw material
costs are not covered. We would like the government to address this at the
earliest,” noted Rajiv Budhraja,
Director General , Automotive Tyre Manufacturers Association (ATMA) while
speaking to Motown India in an
The Chinese dumping of tyres
is quite evident and to make matters worse these Chinese TBRs cost around Rs
10,000 while that of a branded Indian tyre costs around Rs 15,000. It is also
learnt that these Chinese TBR export prices from China are significantly lower
than the prices of such tyres in the Chinese domestic market as well as
compared to the prices of TBRs imported from other countries like South Korea
and Thailand. Adding to this misery for the Indian tyre manufacturers is the
fact that in the budget for 2016-2017 the government did not impose an
anti-dumping duty on the import of TBRs from China or raise the basic customs
duty from the existing 10 percent. ATMA has been for a long time been pleading
to the government to increase the customs
duty on tyres from 10 per cent to 30 per cent with a view to correct inverted
duty between tyres and natural rubber.
ATMA figures clearly indicate
that the import of TBRs during April and May 2016 grew to 280,000 units,
compared to the 180,000 imported in the corresponding months of 2015-16. TBR
import had also gone up by 60 per cent in 2014-15 and 64 per cent in 2015-16. China
now dominates as the source country for TBR import in India--- 90 per cent.
This indiscriminate dumping has send alarm bells ringing in the Indian tyre
industry as the tyre majors have made investments of around Rs 25,000 crore
towards creating new capacities in TBR manufacturing.
the Indian tyre industry
India today has more than 60
tyre manufacturing plants and is one of the largest tyre markets in the world.
According to TechSci Research, growing automobile sales coupled with expanding
automobile fleet are the major factors boosting demand for tyres in the
country. Moreover, with favourable inflationary scenario, expanding middle
class population and increasing national disposable income, tyre sales across
all the automobile segments are expected to grow in the coming years.
Major tyre manufacturers in
the country today include the likes of MRF, Apollo Tyres, JK Tyre, Ceat,
Goodyear, Birla Tyres, BKT and TVS Srichakra, to name a few. But other big
brands like Bridgestone, Michelin, Yokohama, Continental and Hankook are slowly
making steady progress in India’s tyre market.
In the organised re-treading
business, there are only a few players in India like the Elgi Group, Indag
Rubber Limited, Vamshi Rubber Limited and some tyre manufacturers like MRF and
In another report published by
ICRA early 2016, it said that the domestic tyre industry is likely to do better
in the coming three years (2016-18), when demand would grow in the range of
4-6%.The industry-wide revenue growth is estimated at 4-6%. The report said
that profit margins are likely to remain at elevated levels with bearish
outlook on rubber and crude oil prices, but current levels are unlikely to be
sustained over the next 12-18 months.
With the build-up of accruals
and expectation of demand improvement, tyre manufacturers are expected to
continue to invest towards capacity expansions, particularly in the
two-wheelers segment which suffers from capacity shortage. Around 60% of the
proposed capacity additions (in volume terms) are focused on the 2W industry,
while in value terms over 45% of the investments are being made in the TBR
segment, the ICRA report maintained.
Despite the Chinese dumping of
tyres, Indian tyre manufactures continue to invest in new capacities and expand
their product portfolio in the last few months:
The largest tyre manufacturer in the country, Chennai based MRF Ltd signed a
Memorandum of Understanding with the Government of Tamil Nadu to invest not
less than Rs. 4500 crore in its plants at Perambalur and Arakonam in Tamil Nadu
over a period of 7 years.
LTD: Apollo Tyres, the country’s second largest company in the
sector by revenue, has ventured into the two-wheeler space. Until now the
company was manufacturing truck, bus and car tyres. The company’s vice-chairman
and managing director Neeraj Kanwar said noted that his company is looking to
cater to at least 85 per cent of the two- wheeler market with its current
product range. Apollo Tyres is also going to invest Rs 4000 crore in capacity
expansion plans on two plants in fiscal 2016-17. Kanwar said that his company
will start rolling out tyres from its upcoming plant in Hungary by January
2017. The company is doubling the capacity of its Chennai plant to 12,000 truck
and bus radials (TBR) a day from 6,000 earlier.
The company has outsourced
production of the two-wheelers tyres in South India and is looking to sell 500,000
two-wheeler tyres per month over the next two years.
JK TYRE: This
Raghupati Singhania controlled company announced in April 2016 that it has
completed the acquisition of Cavendish Industries Ltd (CIL), which houses three
tyre business undertakings of BK Birla Tyres at a value of Rs 2,200 crore. With
this, the company also entered the two/three wheeler tyres market. The plants
are located at Laksar (Haridwar), which manufactures a range of tyres, tubes
and flaps. With this acquisition, JK Tyre becomes a 12-tyre plants company with
nine plants in India and three in Mexico. The company now eyes a turnover of Rs
10,000 crore from the domestic operations in the current fiscal. The group’s total
Income decreased from Rs. 7400 crore for the year ended March 31, 2015 to Rs.
6969 crore for the year ended March 31, 2016.
BIRLA TYRES: According
to latest information, Kesoram Industries may invest Rs 300 crore in its tyre
manufacturing unit at Balasore in Odisha as part of plans to foray into the
passenger car tyre segment in 2016-17. The Basant Kumar Birla flagship had
conceived the passenger car radial project a few years back but legal
challenges held up the implementation of the project. The company had earlier
transferred its manufacturing unit at Laskar in Haridwar to Cavendish. The unit
was later sold to JK Group.
Following the sale of the
unit, two and three-wheeler tyres that were earlier manufactured at Haridwar
are now being produced from Balasore. Truck and bus radial tyres, which were
also made at Haridwar, will now be sourced from overseas and sold under the
Birla Tyres brand
INDUSTRIES (BKT): This Arvind Poddar controlled Balkrishna
Industries, or BKT is India’s leading player in the global industry of off
highway tyre market with capacities of 300,000 M.T.P.A with plants in
Aurangabad in Maharashtra, Bhiwadi and Chopanki in Rajasthan and Bhuj in
Gujarat. The company recorded revenues of Rs 3467 crore in 2015-16. The Bhuj plant
is now fully operational and has 140,000 MT capacity. The company plans to
increase its utilisation levels at Bhuj and focus on adding newer geographies.
It would also be utilising its internal accruals and cash for debt repayment of
USD 92 million and has set a sales target of 1555,000- 165,000 MT.
Bridgestone India Pvt. Ltd
which started its operations in 1996 has a manufacturing facility in Kheda,
Madhya Pradesh, and another in Chakan,
Pune. The company launched its fuel-efficient Ecopia EP150 and Ecopia EP850 set
of tyres in India. Ecopia tyres are engineered with a combination of light and
strong materials for greater fuel efficiency and to reduce carbon emissions.
The company will manufacture the new ranges at its plants at Kheda and Chakan.
Bridgestone currently has a daily capacity of 15,000 units and 10,000 units at
its Khed and Chakan facilities respectively for passenger car tyres. The
company commenced Truck & Bus Radial (TBR) production in October 2013 with
around 1,000 units being rolled out every day from the Pune plant, though the
company is expanding the capacity on a monthly basis. The company is also
looking to enter the two-wheeler tyre segment though no concrete plans have
CONTINENTAL INDIA: This tyre major from Germany has been in India
for several decades, first as a technical collaborator with Modi Rubber but
later as a wholly owned company after Continental AG acquired Modi Tyres
Company Private Limited in 2011. Thus was born Continental India. The Modipuram
plant in Meerut district of Uttar Pradesh in India manufactures tyres for buses
and trucks while tubes are manufactured at Partapur plant which is located at a
distance of about 20 kms from Modipuram plant. It built the first radial PLT
green tyre at Modipuram on December 14, 2015 and cured on December 31. Again in
2013 the first TBR green tyre was built on February 1 at Modipuram and cured on
In 2014 Continental started
production and commercial distribution of radial tyres for commercial vehicles
(TBR) as well as premium passenger car tyres (PLT) in India. Continental has
established a new state-of-the-art manufacturing facility for TBR & PLT
tyres at its existing tyre plant at Modipuram with an initial capacity of
800,000 tyres p.a. for PLT and 220,000 tyres p.a. for TBR with further
expansion potential. The company has increasing its showrooms in India and has
been on an aggressive expansion drive for its outlets. Recently it inaugurated its
first showroom in Uttarakhand for heavy commercial vehicle tyres with the
launch of Anand Automobiles at Rudrapur.
Ms. Mallika Rawal (National
Marketing Manager, Truck Tyres Division) said “At Continental, we are focused
on developing tailor-made products according to the customers’ needs and
requirements by forging strong bonds with them. Rudrapur is an important
transportation and industrial hub in Uttarakhand and with the opening of this
showroom we want to be more accessible to the customers located in this belt.”
MICHELIN INDIA : French tyre major Michelin announced its entry
into high-performance bicycle tyre market in India with the launch of a range
of premium products in March 2016.Michelin’s tyre range in India, includes
passenger cars, truck and bus, two-wheeler and OTR (Off the Road) vehicles.
The plant in Chennai produces
radial truck and bus tyres. In 2015 Michelin produced 16,000 tonne of truck and
bus tyres from its Indian facility this year, a 45% rise from the previous year.
Michelin announced its entry
into the two-wheeler tyre market in India with the launch of their Michelin
City Pro tyres for scooters and motorcycles up to 150cc. Michelin City Pro is
designed for intensive urban use.
YOKOHAMA INDIA : This Japanese tyre major recently opened its
newest Yokohama Club Network (YCN) in India at the industrial town of Bhiwani
in Haryana. A fully owned subsidiary of Yokohama Japan, YCN’s are important to
Yokohama India’s growth strategy in India. Yokohama India with this launch now
has 45 specialised centres distributing Yokohama tyres in India. At the launch Ken Matsukawa, Director, of
Yokohama in India said the presence of YCN’s in its cities will help Yokohama augment
its growth in India. “YCN’s have been a main reason that we grew 48.1% in India
in 2015 and Yokohama India’s future strategy also lies here,” he said.
Yokohama India currently has
more than 825 point of sales which also includes 44 YCN across India.Yokohama India is 100pc
subsidiary of The Yokohama Rubber Co.,
Ltd. In November 2014, Yokohama India started the first phase of commercial
production at its first tyre manufacturing unit in India at HSIIDC Bahadurgarh
TVS SRICHAKRA LTD: TVS Srichakra Limited, a part of the TVS Group, recorded
stand alone revenues of Rs 2082 crore for the fiscal ending March 31, 2016 and
a consolidated income of Rs 2360 crore. It is a leading manufacturer of Two
& Three Wheeler tyres and Off-Road tyres. Incorporated in 1982, the company
manufactures and markets its products under the ‘TVS Tyres’ and ‘TVS Eurogrip’
brands. The company rolls out around 1.9 million tyres every month out of its
two units located in Madurai (Tamil Nadu) and Pantnagar (Uttarakhand). The
company has expanded its capacity to reach 2.3 million tyres per month.
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