Tyre makers shift focus to CV radials

Improving the road network is not only putting the country's economic development on the fast track, but is forcing tyre manufacturers such as CEAT, MRF, JK Tyres and Apollo to augment capacity for commercial vehicle (CV) tyres to meet the expected surge in demand.

As many as eight tyre players are expected to make an investment of about Rs 6,000 crore in a new greenfield facility within the country, or increase capacity at existing facilities, according to an executive of the Automotive Tyre Manufacturers Association (ATMA), the apex body of tyre makers in India.

Though sales of CVs, including trucks and buses, was disappointing in the last financial year, with a growth of just four per cent, and the forecast for the next couple of quarters flat, analysts and experts say that tyre companies are hiking capacities in conjunction with long-term growth opportunities in the sector.

Rajiv Budhraja, director general, ATMA, said, "India's CV industry is witnessing a downturn. It is projected to gain momentum in the next few years on account of strong demand from the infrastructure industry. CV growth is mainly cyclical in nature and India is not an exception. Various factors including tight liquidity and high interest rates are denting sales but these are expected to ease out in the coming period."

JK Tyres, India's third largest tyre maker, is investing Rs 700 crore to augment truck and bus radial capacity to 12.1 million annually from 4.52 million now.

Arun Bajoria, president, JK Tyres and Industries, said, "We are witnessing tremendous growth in demand for radials in trucks and buses and off-the-road tyres. Our overall investment programme, which includes the Rs 480 crore investment for this year, will be Rs 1,180 crore for the next three years."

CEAT tyres, India's fourth largest by revenue, is setting up two manufacturing facilities to produce truck tyres, off-the-road tyres, and passenger car radials. The company will spend Rs 900 crore on its new facilities and will also conclude its radialisation programme.

Meanwhile, MRF and Apollo, the leading tyre manufacturers in India, are also expanding CV tyre production. MRF is investing Rs 600-800 crore to hike capacity across its product portfolio while Apollo is increasing capacity in cross-ply and radial tyres.

"Sales of CVs are directly linked to gross domestic product of a country," said Koshy Varghese, VP, marketing, MRF. "It depends on growth in the manufacturing, mining and other key sectors. Growth in sales of CV tyres is expected soon."

The world's largest tyre maker Bridgestone is keen on setting up a radial bus and truck tyre plant in India with a proposed facility to come up in the next three years. The company currently imports such radials from its Thailand unit.

The focus on radials in India is catching up with that in the developed nations. Radial tyres have various benefits such as increased mileage, fuel savings, longevity and better, smooth driving, over the conventional cross-ply tyres.

Radialisation is high in the passenger car segment in the country, but languishes with a share of just 6-7 per cent in the CV segment (world average 65-70 per cent).

Analysts attribute the low penetration of radials in the CV segment in India to higher cost, overloading, lack of vehicle maintenance, poor quality of roads and the lack of initiatives from vehicle as well as tyre makers.

MAKING IT BETTER

Tyre makers are hiking capacity in commercial vehicle tyres with an eye on long-term growth opportunities

JK Tyres is investing Rs 700 crore to increase truck and bus radial capacity

CEAT is setting up 2 units, with Rs 900 crore, to produce truck tyres, off-the-road tyres and car radials

MRF is pumping in Rs 600-800 crore to hike capacity across its product portfolio

Apollo is increasing capacity in cross-ply and radial tyres

Bridgestone is setting up radial bus and truck tyre plant in India in next 3 years