Indian tyre market turned over £3.8b last year, states MRF
In its recently released annual report for the 2010-11 financial year, MRF Tyres estimates the entire Indian tyre industry’s annual turnover as being Rs 300,000 million (£3.8 billion), with exports accounting for Rs 36,000 (£455.8 million) of this. MRF states that during the year to the end of September 2011 an estimated 119.2 million tyres were produced in India by 39 tyre companies; the ten largest of these produced 95 per cent of this these.
Truck and bus tyres accounted for 65 per cent of tyre industry turnover, MRF shares. The replacement market constituted some 70 per cent of truck and bus tyre turnover, as while volume in the original equipment sector is high the margins are lower. The sector continues to be dominated by cross-ply production; radialisation in the light commercial vehicle and heavy vehicle markets was 18 and 15 per cent respectively in 2010-11. In the passenger car tyre sector the replacement market generates 42 per cent of turnover, and 98 per cent of all passenger car tyres produced in India are now radials.
The tyre industry provides direct and indirect employment to one million people, says MRF. This includes dealers, retreaders and truck operators. There are around 5,000 tyre dealers spread throughout the country, most of whom sell multiple tyre brands.
MRF notes that the worldwide recession is making India an attractive destination for investment, and is even preferred by foreign investors over China. Thus, the tyre maker expects foreign tyre makers to increasingly enter and invest in the Indian market. This will intensify competition and could cause a glut in the Indian market, MRF opines. Other issues, including the rate of duties charged on natural rubber compared with that for imported tyres, may lead to the Indian market becoming even more crowded in future.
During the timeframe in question, MRF achieved a turnover of Rs 106,370.3 million (£1.3 billion), a year-on-year increase of 32 per cent. Net profit rose 75 per cent to Rs 6,194.2 million (£78.4 million) Overall, the company’s volumes increased 12 per cent; volumes within the heavy commercial vehicle segment, the company’s largest, grew 11 per cent, while increases within the motorcycle and scooter tyre segments were 14 and 24 per cent respectively. MRF’s passenger car tyre segment registered a five per cent increase while volumes of front and rear tractor tyres grew eight and 21 per cent respectively.
Amongst the developments expected during the course of the current financial year is the start of operation at MRF’s eighth Indian plant. This facility, which is located in Perambalur, will have an initial capacity of 350,000 truck and car radials.