The Tyre Industry Sector

The Tyre Industry Sector Tyres and tubes, the strategic rubber products and basic supplements to the automotive vehicles are of most importance to the countrys economy. The tyre industry sector is providing direct employment to over 40,000 people and indirect employment to lakhs of people. This industry sector is now being considered as a core industry sector. The manufacturing of automobile tyres as an essential ancillary for the development of automobile sector came into being in India during the 1930s when the Dunlop India Ltd., the first tyre manufacturing transnational company started its operation in 1935 at Sahaganj in West Bengal. During the early period the overseas tyre manufacturing companies were having major equity participation in the Indian manufacturing companies. After 1970s there was a change in the policy of Government and it decided not to sanction any foreign equity The setting up of joint sector projects with multiple foreign collaboration was considered feasible. At present 11 large companies with 15 factories and 9 medium-scale companies scattered all over India are manufacturing tyres and tubes for automotive vehicles including aero tyres and tyres for defence services. As estimated, their total production during 1987 was 128 lakhs tyres against the total installed capacity of 179.44 lakhs tyres. The interesting feature of the tyre industry in India is that starting from its inception to the present day its progress has been influenced by repeated import of technical collaborations. There is an urgent need to build up indigenous capabilities for tyre technology including the tyre machinery. within view of this, it was opinion desirable to carry out the review of at hand status of this industry and to identify and analyze the critical inputs required for absorption and up gradation of imported technology. The DSIR has introduce a system National Register of Foreign Collaborations Which imagine check and analysis of imported technologies in the country also suggest measures for appropriate choice, acquisition and implementation of foreign know-how. The main objectives of this plan are Undertake financial, economic and legal analysis of set of data on foreign collaborations. Carry out a technology analysis of the imported machinery and provide state of the art machinery in use in the country and status of execution of alliance Provide the basis for National Science strategy wherever possible. In the long run lead to unpack aging of imported technology and in generation of national strength in competitively purchase only certain components of machinery. Coordinate with department of Industry, Commerce and Finance etc. by provided that machinery data input. Facilitate more efficient countrywide contribution with various organizations such as UNCTAD, UNIDO, and ESCAP etc. and in the global switch over of information and co-operation with current developing country the three reports has been ready under National Register of Foreign alliance to review the Tyre Industry in India. 1.6 The In-house RD units in industry are advantageously located to absorb and get improved upon the import machinery. Equipment invention in the Indian tyre industry has witness a fair total of expertise and adaptability to absorb, settle in and adapt worldwide technology to suit Indian conditions. This is reflecting in the swift technology progression from cotton (reinforcement) carcass to high-performance radial tyres in a distance of four decades. Globalization has lead to the concerning of the economy of all the nations and so key Indian company in the tyre industry are pursuing global strategy to improve their competitiveness in global markets. There section mostly undertakes an impression of the Indian tyre industry through an overview of the Indian examination of its expansion trends with respect to manufacture exports and acquisition of technical capability. EVOLUTION OF THE INDUSTRY Phase Period Characteristics Policy Regime 1 1920-35 Negative domestic production. Demand met in the course of imports. Key company included Dunlop, Firestone Goodyear. moderate import 2 1936-60 Home production begins by erstwhile trade companies: Dunlop, Firestone, and Goodyear with India Tyre Rubber Company. Burden of traiff also non traiff barrier on import. 3 1961-74 Indian companies-MRF, most important Incheck- enter modern quarter with foreign technology; license of bonus production capacity. Regulation on capacity expansion and repatriation of profits of distant companies; enforcement of export obligation on MNC; protection from external competition 4 1975 -1991 Entry of large Indian business houses like Singhania Modi technical collaborations with MNCs, introduction of radial tyres, vertical integration and exponential growth in tyre production exports Delicensing of production, placing of imports under OGL with tariff non-tariff barriers 5 1992 onwards Outside trade liberalization decrease in trade in duty; re-entry of MNCs also separately or in teamwork with Indian capital. Progressive reduction in introduce duty; liberalized imports Cars Radial Tyre Bias Tyre Two Wheeler Motor Bike Front Motor Bike Rear Scooter Front Scooter Rear Truck, Buses Farm Service Tractor Rear Tractor Front Fork Industrial Light Commercial Vehicle Radial Tyre Bias Tyre Heavy commercial vehicles insufficient public transport system, especially in the semi-urban and rural area better availability of inexpensive consumer finance in the past 3-4 years; Increase availability of fuel-efficient and low-maintenance models. rising urbanization, which creates a need for personal transportation; change in the demographic profile; climate and road constructions stable increase in per capita earnings over the history five years; and Increasing figure of model with changed kind to satisfy various customers wants. Price: Price, in many cases, is probable to be the most primary determinant of demand since its frequently the initial thing that people think about when decide how much of an item to buy. The vast popular of goods and services obey what economists call the law of demand- that, everyone else being equal, the amount demanded of an thing decrease when the price increase and vice versa. (There are some exceptions to this rule, but they are few and far between) Income targeted people: Different companies target their target customer group according to their income group and thus the total demand is determine according to income group. In tyre product demand derived from the automobile products. So highest demand growth in two wheeler segment compare another segmement. Promotional Scheme Different companies provide different promotional scheme to push-up their sales and attract the customer. In case of some special schemes like the 0% interest and low down payment scheme. Sales of increased by up to 70% of total sales. Sales pattern throughout the year There was consent at the opinion that there is a slump in June, July and August and also during the second half of December. At the time of festivals, especially Dusshera and Diwali or at the time of the marriage season the sales are high. The reason given for slump were In summers, people generally go for summer tours and spend a lot of money so they postpone their purchases. Because of religious reasons (Shraddh) in the month of August. People dont prefer to purchase vehicles during the rainy season. Demographics: It is clear that high population of India has been one of the key reasons for vast volume of automobile industry in India. Factors that may be expanding demand include increasing population and an increasing proportion of young persons in the population that will be more inclined to use and return car. Also, increase in people with lesser dependence on fixed only family income structure is likely to add value to vehicle demand. Price of Fuel Movement in oil prices also have an contact on demand for huge car in India. During period of high fuel cost as skilled in 2007 and first -half of 2008, demand for huge car decline in favour of smaller, more fuel efficient vehicle. The change patterns in customer preference for smaller more fuel capable vehicle led to the launch of Tata Motors Nano one of worlds smallest and cheapest. NAME OF COMPANY MARKET SHARE MRF TYRES 22% APOLLO TYRE 21.7% J K TYRE 20% CEAT 13% KESORAM INDUSTRIES 6% DUNLOP 3% FALCON 2% TCIL 1.5% MODI RUBBER 12.4 GOOD YEAR 7% Remaining 5 % of share by other player. MADRAS RUBBER FACTORY Popularly known as MRF, is a major tyre manufacturing company situated in Chennai, Tamil Nadu, and India. MRF makes all types of tyres from auto to sedan, prejudice to radial and tubes and conveyor belts. It is Indias main tyre manufacturing company and among the dozen major worldwide. It exports to more than 65 countries. MRF is the sister related of the leading malayalam daily Malayala Manorama.The creator of the MRF, Mr.K.M.Mammen Mappilai was the brother of late Mr.K.M.Mathew, ex-chief editor of Malayala Manorama. MRF become the opening Indian company to export tyres to USA the very home of tyre technology. Sales crossed INR two billion. MRF tyres were the first tyres selected for fitment on the Maruti Suzuki 800 Indias first small, modern car. Apollo Tyre Apollo Tyres Ltd is the worlds 15th biggest tyre producer with annual consolidate income of Rs 121.5 billion (US$ 2.5 billion) in 2011. It was found in 1976. Its first plant was specially made in Perambra, Kerala. In 2006 the corporation acquired Dunlop Tyres International of South Africa. The company now has four manufacturing unit in India, two in South Africa, two in Zimbabwe and 1 in Netherlands. It has a system of over 4,000 dealerships in India, of which over 2,500 are select outlets. In South Africa, it has over 900 dealerships, of which 190 are Dunlop Accredited Dealers. It gets 59% of its income from India, 28% from Europe and 13% from Africa. It is planning to become the 10th biggest tyre manufacturer in the global with annual revenues of $6 billion by 2016. Ceat Tyre On top of the road since 1958, CEAT has run up to be one of the best tyre manufacturers in the industry. CEAT not only make trailblazing tyres, but also marketplace tubes and flaps. And thats not all. At CEAT represent our selling tough yet even secure yet set to look at the undaunted. CEAT are young and revving to go; with an old age that come with years of market turnout More than 3500 Cr yearly return and signal list of customers and OEMs, a diversity of award and license are info so as to could talk for Company but CEAT rather burn the road with our show. CEAT think that tyres are not just accessories they are the force that moves your aspirations. in means of us you get to choose from a broad variety of tyres that costume your wants and vehicle kind (Not to mention, radials are racers in the global market might is one of the mainly significant quality of goods which complement solid foundation as a part of RPG enterprise Company commitment to quality ensures that you have a safe ride, always. So go on, defy destiny. J.K Tyre J.K. Tyre has been at the forefront of the radial revolution in India. Since inception, J.K Tyre has been frequently release high excellence technology products, which have withstand the examination of time. It is our beliefs to incessantly expect and appreciate the customer needs convert them into presentation principles for our goods and military and meet these standards every time. The Goodyear Tire Rubber Company Goodyears attendance in India is over 89 years old, with two plants, one each in Ballabgarh and Aurangabad. In the passenger car section Goodyear India provisions tyres to a lot of of the chief Original tools Manufacturers. Goodyear India has also been a lead the way in introduces tubeless radial tyres in this section. In the ranch segment in India, Goodyear tyres are supplied to all the main tractor companies. In 2010/11, Goodyear India was awarded the Super brand status. Industry has one of the largest distribution networks in India. It has divided the Indian sub continent into various regions and has set up a Regional Office for each region. By individual company. Clearing and forwarding agents (CFAs) are attached to them. Often the larger regions have 2 or3 or more CFAs to cover the region properly. The total number of CFAs across the country is 1102. Factory DDC RDC CFA DEALER Industry has three level distribution structures. The factory supplies goods to the RDCs (Regional Distribution Centres) and from these RDCs the goods are transferred to CFAs (Carrying and Forwarding Agents.) Which act as godowns for distribution to the dealers there is only one DDC RDCs are the mother godowns for storage of goods. The tyres, tubes and flaps are transported to these from factories. The set is formed at RDCs and strapped. The tube is inflated before transportation to RDCs. The Dispatch challans are issued to the transporters. In some cases, the RDCs are required to supply the goods directly to the dealers and invoice them in the required format. Ceat has recently shifted from the DDC structure wherein it had 7 DDCs to the RDC structure, however this structure is proving inefficient from the operating cost point of view. The inventory cost has shot up and availability has suffered. The amount of safety stock in the system has also gone up. Hence Ceat is about to shift back to the DDC structure over a one year period. CFAs are the smaller godowns which pull the goods from the RDCs. They transfer the goods to the dealers and an invoice needs to be generated. The CFAs pull the goods from RDCs according to demand. These CFAs distribute the goods to th e dealers Tubes and flaps sourcing units Tyre sourcing unit Factory RDC RDC CFA CFA CFA CFA DEALER DEALER DEALER Key Issues of Industry High tax usage The high tax content on tyres can be gauged from the fact that the proportion of total tax to the tax disqualified price for various category of tyres is 44% for Truck Tyre; 41% for Passenger Car Radial Tyre, 35% for Tractor Rear Tyre and 76% for Truck Tyre Tube. Radialization in the Commercial Vehicle Segment Indian Tyre Industry hitherto is predominantly a cross ply/bias tyre manufacturing industry, particularly in the commercial vehicle segment (truck, bus, LCV) whereas in the developed countries Radialization level is much higher. In comparison to normal (Bias) tyres, Radial tyres offer higher life/mileage, lower fuel consumption, improved safety and ride quality and several other benefits. However, the initial cost of a radial tyre is approx. 25% higher though on a cost per kilometre (CPK) basis, radial tyre gives higher benefits Embossing of Maximum Price (MRP) on Truck/Bus Tyres In February, 1988, as per a directive of the Ministry of Industry, Embossing of MRP on truck and bus tyres was started. This was based on the recommendations of the Committee on Tyre Industry (1984, known as Satyapal Committee). In the last over 15 years, the economic scenario has undergone a sea change with liberalization, removal Major raw-materials of tyre industry (Natural Rubber and of controls and free global trade in most items. Tyre Industry is also delicensed. Petroleum based materials) undergo wide fluctuations in prices. In such a dynamic scenario, it is a not practical to emboss the price on tyres due to market dynamics Used Tyre Developed and industrialized countries are facing a monumental problem in disposal of used tyres. Hence, developing and high tyre consumption countries like India are being looked upon as a dumping ground for used tyres several countries have banned or imposed severe restriction on price. (For assessment of Customs Duty) in 1997. Till recently, floor price mechanism was effective in restricting imports. Import of used tyres. In India, Government introduced .floor However; of late the volume of used tyre imports (in circumvention) of the floor price has increased significantly. Automotive Industry Standards (Ais) All large tyre companies had voluntarily taken BIS (Bureau of Indian Standards) certification. In addition, Government has proposed Automotive Industry Standards AIS) which are essentially. Safety standards. And applicable to tyre industry also. Government support for promoting Made in India. Brand for Tyres Indian tyre industry is facing intense competition from China and other South East Asian countries in tyre exports to other Though the quality of Indian tyres is better and has wider acceptance, due to cheaper pricing, higher volumes and aided by Government support and subsidies, Chinese tyres are cutting into the share of Indian tyre exports. There is a need to promote India Brand for tyres as one which spells quality and higher standards. Countries There are a need to promote India Brand for tyres as one which spells quality and higher standards. Trends of Industry Emergence of tubeless tyre market There is no tube in a tubeless tyre. The tyre and the rim of the helm form a sealed box to seal the air as the tubeless tyre has an inner lining of resistant halo butyl. The valve is straight mounted on the rim. If a tubeless tyre gets puncture air escape only during the hole created by the nail, thus charitable substantial time between a stab and a flat tyre. Players focusing on radial tyres By means of only radial cords, a radial tire would not be sufficiently rigid at the contact by means of the ground. To put in extra stiffness, the entire tire is bordered by extra belts so as to be orient closer to the way of travel, other than typically at some spiral angle. These belts can be made of steel (therefore the term steel-belted radial), Polyester, or Aramid fibers such as Twaron and Kevlar. In this way, squat radial tires break up the tire carcass into two separate systems: The radial cords in the sidewall allow it to act like a spring, giving flexibility and ride comfort. The rigid steel belts reinforce the tread region, connote far above the ground mileage and performance. Every system can then be individually optimized for best performance Re-treading of tyres One more area of worry for the tyre manufacturers are the rising retreading, where the worn out trample of the aged tyre is replace with a new tread. Retreading expenses regarding 20% of a novel tyre and is so accomplishment hold of popularity, mostly in Southern part of the country. Elgi Tyres and Tread Ltd are the two major ret readers in India. Meaning of such retreaters can be gauged by the detail that about 85% of the tyre demand is for replacement. The PEST analysis is a helpful tool for sympathetic marketplace growth or decline, and as such the spot potential and route for a business. PEST is an acronym for following Economic, Social and Technological factors. Tyre industry in India is growing strongly and their manufacture rising from every year. In 2012 there were 40 tyre manufacturing companies working in India which be consisted of key life-size brands in tyre industry such as Good year, MRF, Falcon Tires and Bridge stones etc. tell pest analysis on this market to check at what extent political, economical, technical and social factors are moving this tyre industry in India. Political Factors Were supporting Indian tire industry as Indian Government especially reduces its taxes on basic inputs to endorse the industry. Tax and duties on the import and export of tires were set less so that cheaper tires and material could be imported and good quality tires can be exported. Tire made in India were mostly exported to other budding countries such as Latin America, South-East Asia, Middle East and the Africa. The economy of was promising and the total construction of vehicles more than double between 2000 and 2012 so it had a good quality potential for the industry. Basically in 1926, the first tire was made by a British company Dunlop, and followers of Dunlop were other three foreign companies: The Americans Firestone, Good Year and Italian Ceat, but latter on Indian Social Factors Presently, small families are demanding for 2/4 wheelers for individuals. The sales of tyres have gained more in past decade. From upper class families with more than 1 car per family observed to be increasing demand of tyres exponentially, mainly in cities where Woking couples find difficult to maintain them without more than 1 car. As we know that Indian middle class families are known for its savings frenzy has now been slowly warming up to an idea of EMI and buying on credit. Due to these factors, there is an enormous demand in passenger cars. Technological Factor Technology creation in the Indian tyre industry is in effect geared to expansion research, connecting the adjust of tread design, back up material etc. on the whole of the key players do not employ in basic explore due to the elevated expenses involved. The base of information for the home firm has been during reverse engineering, combined ventures and collaboration. The stress given by Indian tyre companies to applied research and the setting up of well-equipped in-house RD centre by the companies, which are manned by in technology up stage Indian tyre technology has exhibit flexibility in maintain inflow of technology in the course of foreign collaboration and couture the same to Indian wants RD is basically trade or market driven. But basic inputs suppliers could also help in conceive new projects. Mix growth and in-process trouble have be the main shove of in-house RD in the Indian tyre industry. The Indian Tyre industry is likely to show a healthy escalation rate of 9-10% over the next five years, according to a study by Credit Analysis and Research Limited While the truck and bus tyres are set to index a compounded yearly growth rate (CAGR) of 8%, the beam business vehicles (LCV) part is normal to explain a CAGR of with reference to 14 %. Though we have to also take account of the outcome of the global depression on top of the sector in construction these assessments. The enlargement of the division is powerfully linked to the expansion plans of the automobile companies; the governments thrust on development of road infrastructure and the sourcing of auto parts by the global Original Equipment Manufacturers (OEMs). Some major hurdles en route for attaining these projected development rates could be basic inputs connected price uncertainty rupee joy and the hostile threat of cheap Chinese imports. The Indian tyre companies need to make lively attention to detail to discover newer market as the alive market for bus-truck tyres, which account for about 45 % of the total export volume, is nearing saturation. To hand is also a critical must to increase the degree of Radialization in order to protect their share in the export market. Worldwide tyre manufacturers have been making stable efforts to innovate and offer a diverse range of products such as tyres with pressure alert systems, jog flat tyres, natural tyres and force able tyres. In this context, the Indian home companies have to follow a enlargement strategy of hysterically novelty and rising importance on produce separation. The Industry Growing At 8 To 9% by the (YOY). Their Market Leaders Adopted a Latest Technology in Manufacturing of Tyre Proudcts.and government also step taken reduced import and encourage domestic player and small scale industry to take part in growth story. Basis of Elecon is providing best quality to customers. Due to constant start work on quality, better concentration on the material usage and proper prices the Elecon could improve its performance. As per my knowledge tyre industry running successfully in india.industry demand is mostly base on automobile products. The major factors moving the demand for tyres include the level of developed activity, availability and cost of praise transport volumes. the new boom in the tyre industry due to skill and technology sector has coupled continuous thrust of government on infrastructure projects is expected to sustain healthy growth of commodities insist roughly all company have announce extensive boost in capability which effect in to boost in earnings of industry In the increase in the tax rates, transportation charges, railway freight, road constrictions patterns ,increase basic input prices (rubber) is worry for the industry.