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:
MRF Ltd:
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.
APOLLO TYRES
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
BALKRISHNA
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.