Indian tyre makers to invest Rs 6,000 cr.

August 13, 2009 11:38 am

Indian tyre makers plan to invest Rs 6,000 crore, as popularity of radial tyres rises in the commercial vehicles segment. After a ban on Chinese radial tyres, only two international players — Michelin and Bridgestone — have a stake in the $10-million domestic market. However, with the expected entry of companies such as Goodyear, Continental, Kumho, Pirelli, Yokohama and Hankook in the high-profit truck and bus radial tyre segment this year, all that is soon to change.
 
Incidentally, India’s commercial vehicles segment remains weak in the auto industry, with sales dipping 33 per cent to 1.83 lakh units in FY09. As of now, radials make up only 9 per cent of the CV market against the world average of 65-70 per cent. The industry estimates it to grow to 25 per cent in the next three years.
 
“Indian companies are working on plans to compete against the rising import of foreign tyres by increasing domestic radial tyre production as well as improving product quality,” said Automotive Tyre Manufacturers’ Association (Atma) chairman R. P. Singhania. As per the association, truck and bus tyre makers have lined up Rs 6,000 crore investments for green field facilities and increasing capacity at existing plants for new-age tyres.
 
Singhania, owner of JK Tyres & Industries, is investing Rs 700 crore at his Mysore plant to enhance truck and bus radial capacity to 12 lakh tyres from 3.68 in the next three years. Birla Tyres is setting up a dedicated CV radial plant and Apollo Tyres has set up a new truck and bus radial plant at Baroda. Kolkata-based Dunlop Tyres is also entering the radial tyre segment, while MRF is investing Rs 600-Rs 800 crore to increase capacity across its product portfolio.
 
These investments come after the government’s restrictions on imports of Chinese tyres late last year. The government has also come up with a rule that every importer of tyres must have a licence. Every month, over a lakh CV radial tyres were coming from China, but after this diktat, only MNC companies are importing 70,000-80,000 radial tyres. Japanese tyremaker Bridgestone and French tyre company Michelin import CV tyres in small quantities. Goodyear, Kumho, Yokohama, Continental, Hankook and Pirelli, which import car tyres and have established distribution network, now plan to tap the high-margin CV tyre market.
 
“There is massive shift towards radial tyres with the dual-benefit of better mileage and improved fuel-efficiency over the conventional cross-ply tyres. Like cars, 97 per cent of which use radial tyres, the bus and truck segment will also witness a major shift in the next few years,” said Rajiv Budhiraja, Director General, Atma.