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› Industry Turnover - Rs. 13,500 crores per annum;
› Total number of tyre companies (large and medium) ± 40m having 47 tyre factories
location all across India.
› Tyre Exports from India to the tune of Rs. 1400 crores annually to over 65 countries
worldwide, including several developed countries. The target for 2004-05 is Rs. 1450
Crores.
› Top 7 large tyre companies in India account for over 85% of total tyre production;
› Unless otherwise stated, in this presentation Indian Tyre Industry refers to large tyre
companies, 7 in number, which constitute 85% of total tyre production in India. In
addition, a large number of small tyre companies also manufacture automotive tyres
(mainly two-wheeler tyres).

› Indian tyre industry is manufacturing all categories of tyres (except some specialized
categories like Snow Tyres for which currently there is no requirement and Aero Tyres).
Indian tyre industry has the capability to produce all categories of tyres.
› Domestic demand for tyres to the extent of 98%, including demand for tyres for all new
vehicles being introduced in the country, is being met domestically.
› Production of major categories of tyres in India is given below: Category Production (
Lakh Nos. ) (2003-04)

TOTAL 546.90 % Share in Turnover

- Truck and Bus 108.21 60%
- Passenger Car/Jeep/MUVs 113.99 11%
- Light Commercial Vehicles 32.71 8%
- Two Wheelers 261.30 11%
- Tractor (Front & Rear) 15.63 6%

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å





å
A leading company in the tyre industry, MRF Ltd. boasts of an enviable track record. The
company has continued in the same vein and has been posting excellent results, notwithstanding
the winds of recession blowing across the economy. Performance of the company has been
commendable in light of the fact that the user industry is facing a slowdown. The company has
benefited from better productivity and operational efficiency. The company caters to a host of
impressive clients. It has signed on to be the sole supplier for auto giants like General Motors,
Fiat and Ford in India. The company is also renowned for its exports, which have also been
witnessing positive growth. The company has recently entered the radial tyre segment and has
met with positive response. The performance of the company could further improve with the
revival of the auto industry. Thus, MRF Ltd. can be expected to retain its position in this
segment. However, investors can move out of the scrip, considering the outlook for the industry
as a whole.


Being the second largest selling brand in India with a market share of 14.6 per cent, Ceat caters
primarily to the replacement market. Due to the strong growth in the OEM sector, the share of
the replacement market in the total revenue of the company has fallen. However, the production
growth in the automobile sector over the past few years should provide a boost to the
replacement market in the coming years and Ceat could be a major beneficiary thereof. With the
advent of multinationals like Goodyear, Michelin, Bridgestone and Continental, a major
shakeout in the industry is imminent and the same could result in Ceat, which is already
operating on thin margins, being hived off as a joint venture with Goodyear, in collaboration
with which Ceat has already promoted South Asia Tyres for manufacturing radial tyres in India.
With a modest track record on the financial front, the forthcoming results may not be
encouraging.



A slow-down in the tyre market and rubber procurement at high prices has put the brakes on
Apollo Tyres Limited (ATL). The company has traditionally been the market leader in the truck
and bus tyres segments. ATL caters to the replacement segment of the domestic market.
Following its take over of Premier Tyres, ATL's market share has risen. Besides the core truck
and bus tyre business, fairly considerable part of its turnover comes from automotive tubes and
flaps, for which it has commissioned a plant in Pune. Despite a reversal in the fortune of the
automobile industry, the chief user base of the company¶s products, the demand for truck tyres,
particularly in the replacement market, was not encouraging. Even as tyre producers grapple with
over-capacity and high levels of inventory, the government stirred a hornet¶s nest by proposing
free imports of used and second-hand tyres. ATL has conversion agreements for small tyres with
TCIL, Stallino Tyres and Rado. Its exports are routed through Apollo International to the US,
Germany, Brazil, Sudan, Egypt, etc. A well-entrenched posend this article to a friendsition in the
replacement market, favours ATL and the declining price trend of key inputs like natural rubber
and carbon black may provide relief to its wafer-thin margins. At the current price level the scrip
has emerged as an attractive buy; thus accumulate its shares in small lots.


Tyre Industry:

Now a days in INDIA Tyre industry place a major role. Tyre industry mainly
involves Raw material intensive and Tyre manufacturing . It produces all categories of Tyres
based on demand except snow Tyres and aero tyres . 55% of production is for replacement
market followed by 29.8% sold to OEM (Original equipment manufacturers) directly and the
remaining is exported. Tyre includes different components using raw materials that must be
assembled and processed to achieve right balance between factors like grip,
energy,handling,comfort etc..

Market shares:

Tyre jindustry involves various companies based ontheir performance they are
divided into large scale companies and medium and small scale companies .Large scale
companies are APOLLO Intl , APOLLO Tyres , Balkrishna industries,SEAT ,Falkon
Tyres,Good Year India,JK Tyres,MRF,Falson(INDIA) ,Falson Industry,TVS etc«Mesium and
small scale are dewan Tyres , Dunlop, Modi rubber ,Modi stone, Raam Tyres ,surya
INDl.corb,Tyre corp(I)etc. The market share is different for different companies based on their
performance.

  å   

Apollo Tyres 3119.76 (20%) 2842.56

MRF 2801.77 (18%) 2743.73

Balkrish Ind 1208.13 (7.9%) 1188.80

Goodyear (I) 5876.67 (38%) 564.52

JK Tyre & In 533.37 (3.4%) 501.34

Dunlop (I) 499.29 (3.2%) 500.26

Ceat 428.86 (2.6%) 414.13

Falcon Tyres 374.88 (2.4%) 392.43

TVS Srichakr 214.86 (1.4%) 208.35

Modi Rubber 194.56 (1.2%) 192.93

Nature of competition

Interms of tyre trade in the world ,China has become the world largest Tyre export
country in 2004. Tyre industry has more demand this leads to more competitors.

 
å
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Most of the players have their respective areas of strength
HHI indicated diversity in player concentration ratio between segments and industry
Apollo continued to dominate T&B category
Apollo surpassed MRF to become leader in car & jeep category
MRF continued to hold leadership position in LCV category
MRF dominated two and three wheeler category tyres
Goodyear remained market leader in tractor tyres
MRF, CEAT and JK are the market leaders in OTR category

Competition exists between various companies as already given like large scale and small
scale.From 2004 the demand for tyre increses so many companies came with various special
features for tyres from APOLLO tyres company to MODI rubber company

å     

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  å  
Vehicle Categories
Commercial usage
Personal usage
Markets
Original Equipment Manufacturers (OEMs)
Replacement Demand
Exports
Design
Cross-ply tyres
Radial Tyres

Based on present conditions of tyre (demand0 the segments are existed as above given different
types.

Segmentation by tyre suppliers place a major role in segmentation criteria . This can be given as
follows
1.Replacement market

2.Original equipment manufacturers.(Vehical manufacturers)

3.Expert

4.state transport undertaking(STU) i.e primarly for bus tyres

5.GOVT purchase.

Upto 2004 the tyre industry don¶t have present existence demand but after 2004 demand increses
so market share is different for various companies with respect to competition and market
segmentation

PEST Analysis

At government level, it seems that some ambiguity exists. It also seems that
measures to regulate the waste - including post-consumer tires - are the main
one being set up as "reflex" reactions, and with an eye toward securing
political capital. This means that awareness and ways to tackle a simple
waste question will be preferred solutions' low-key, and perhaps more
effective. Once in service, plants or processes such as these may well be kept
running to a "net deficit of the environment "to avoid political
-



embarrassment - even if this results in the "poaching" of raw materials from

the waste conversion options ahead of the hierarchy. Such as post-
consumertires.
The goal now seems to be much on reducing vehicle use, as opposed to the
optimal use of scarce resources. Producer responsibility has so far ignored
the tire industry, which is treated as a part of automobile manufacturing as a
whole. However, it moves to incorporate this fact concept in legislation,
safeguards should be established for "blocks" the proportion of discarded
casings for retreading - and also how these would be shared between the
manufacturer's own tire retreading operations in-house and independent
retreading facilities




The Indian tyre industry accounts for around 5% of the global demand as well
as global supply of tyres. Domestic tyre industry has witnessed a remarkable

  
recovery in FY10, after a slowdown in FY09. This growth was driven by strong
revival in automobile demand on the back of resurgence in economy, rise in
employment levels, and easing of interest rate scenario. Although strong
demand growth is an encouraging scenario for the domestic industry, rising
imports has become key concern factor off-late. On an average, 55% of the
production is for replacement market, followed by 29.8% sold to OEMs
directly and the remaining is exported


Turnover of Indian Tyre Industry Rs. 25,000 Crores
Tyre Production (Tonnage) 13.50 lakh M.T.
Tyre Production Ȃ All Categories (Nos.) 971 Lakh
Tyre Export from India (Value) Rs. 3000 (est.) crores
Number of tyre companies 36



 

In terms of procurement, corporate fleet and transport managers are very low
inorganizational hierarchy. There is now a "blame culture" whichtends to mitigate
against any risks. So in terms of "packaging", supported by the financial
benefitsadherence to proven safety standards and quality would be required to




overcome resistance. Although private consumption is more sensitive to

environmental issues than ever only a small minority will actually make purchasing
decisions based entirely on these criteria. However, "the image of the environment"
could provide a justification for the purchase, if supported by safety and appropriate
quality assurance standard. In a twist of others on the same topic, consumers - as
residents and special interest groups - are more willing to get involved in
environmental issues to a policy level.


p

Most of the major players do not engage in basic research due to the high costs
involved. The source of technology for the domestic firms has been through
reverse engineering, joint ventures and collaborations. The emphasis given by
Indian tyre companies to applied research and the setting up of well-equipped
in-house R&D centers by the companies, which are manned by experts and
experienced professionals, have also helped in technology upgradation. Indian
tyre technology has exhibited versatility in maintaining inflow of technology
through foreign collaborations and tailoring the same to Indian needs. R&D is
essentially business or market driven. The emphasis given by Indian tyre
companies to applied research, the setting up of well-equipped in house R&D
centres by large tyre companies, manned by experts and experienced
professionals have also helped in technology upgradation. Indian tyre
technology has exhibited versatility in maintaining inflow of technology
through foreign collaborations and tailoring the same to Indian needs.

  
The production system in the Indian tyre industry has been traditionally very
labour intensive. The firms have been resorting to automation in order to
tackle problems related to labour unionization and indiscipline in the sector.
The rationale provided by the firms for the increasing drive towards
automation of the manufacturing facilities has been that high quality and
uniformity of the final product usually cannot be guaranteed with a labour
intensive process.


 › Indian tyres have good acceptance in global markets
› Compounded Average Growth Rate (CAGR) of tyre exports in the last one decade has
been 8%
› Exports to over 65 countries worldwide.
› 17% export to highly quality conscious US market. Other major export markets are -
(countries in) Latin America UAE, Bangladesh, Iran, Philippines, Vietnam, etc.
› Over 20% of truck and bus tyres (bias) produced domestically are exported. Emphasis
now is on export of radial tyres, including Passenger Car radial tyres.
› All large tyre companies are exporting as a long term commitment.
› Truck and bus tyres account for over 65% of tyre industry turnover in India (in terms of
value and tonnage). Hence, demand for truck and bus tyres is a true indicator of the
performance of Indian economy in general and also the tyre industry in India.

The exports from the country clocked a CAGR of 13% in unit terms and 18% in value terms in
the period FY 02¬07. Most of these tyres that are exported are of cross ply design. With
radialisation catching up in some of these markets, the manufacturers will need to graduate to
radial tyres so as to protect their share in the export market. Radialisation of tyres is still minimal
in India. Only the car tyre market has moved to radial tyres (95%) but in all other categories
cross ply tyres are still preferred. Poor road conditions, overloading in trucks, higher initial cost
of radial tyres and poor awareness levels in tyre users are the main reasons for the non transition
of the domestic market to radial tyres. However, going ahead, radialisation in truck & bus tyres
may increase due to government¶s focus on infrastructure development.

During the first six months of its current financial year, India produced some 28 per cent more
tyres than a year earlier. Data from national industry organisation the Automotive Tyre
Manufacturers¶ Association (produced using information supplied by its eight member
companies, who account for around 90 per cent of the country¶s tyre production) states that 9.53
million tyres rolled out of ATMA member factories in India between April 1 and September 30
this year; in the same months of 2009 just 7.44 million tyres were produced. According to
ATMA, production increased across all tyre market segments, the largest expansion being seen
in the motor scooter segment, where production grew 67 per cent year-on-year. Passenger car
tyre production in India increased 41 per cent to 2.09 million, while light commercial vehicle and
truck/bus tyre production grew two and five per cent respectively. A total of 1.27 million
truck/bus tyres were produced in the April to September period.

Export quantities also rose during the half-year. ATMA figures indicate an 18 per cent year-on-
year increase in overall tyre exports between April and September, although exports of light
commercial vehicle and truck/bus and tractor tyres were lower than a year earlier, the two
segments declining five per cent and 16 per cent respectively. On the other hand, exports of
Indian industrial tyres shot up 1,956 per cent, with 9,156 tyres exported in the first half of the
financial year, as opposed to merely 445 tyres a year earlier. Two-wheeler/moped tyre exports
increased 456 per cent to 3,100, while passenger car tyre exports grew 26 per cent.
|
| 

From the end of 19th century to till now there is drastic change in types of tyre. Each type of tyre
consists of different type unique features, technology and different type of strength holding
capacity.

Types of tyres and technology used for it, is as follows:

1. Tyre with cotton (reinforcement) Carcass:

This is 1st popular type of tyres used worldwide in starting phase of proper bias and cross ply
tyres. Cotton plies were used as main reinforcing material. Cotton reinforcing material had
inherent problems of low strength and high moisture re gainer. Leading to large number of plies
to get the requisite casing strength for the tyre weight of the tyre and poor heat dissipation. This
gave adverse impact on tyre weight and buck rendering poor performance.

2. Tyre with Rayon (reinforcement) Carcass:

To overcome with the problem of poor performance of the cotton reinforcement tyres, new type
of tyre became more popular in which development of Viscose and Rayon are used which give
much better strength to tyres. Since less number of piles were needed to match cotton strength,
concept of ply rating developed. It is also possible to have higher ply ratings now.

3. Tyre with Nylon (reinforcement) Carcass:

In this type of tyres reduction of number of piles is done with development and introduction of
Polymide i.e. nylon for strength and flexibility. This development substantially improved the
heat and impact resistance of the carcass leading to better tyre performance and higher durability.
Nylon casing gave a boost to retreadability. Thus effective cost of the tyre in operation became
much more economical.


            
 
      !    !  
          

4. Radial (Construction) Tyre- Textile/ Textile Belt (Rayon/Nylon/Polyester)

Bias tyre technology has major disadvantages like tyre with bias technology have inherent
problem of high heat development and poor life.
Radial technology came into the existence in 1950¶s. In this type, piles were made highly
flexible by keeping the cords at 90 degrees and in order to improve tyre life, inextensible (stiff)
belts were placed on the top the carcass under thread. his led to stiffer tread portion, leading to
higher Tread life (Mileage) and much more comfortable ride due to flexible carcass. This was the
beginning of 'Revolution' in tyre technology.
Initially these types of tyres were introduced with casing piles as well as belt material of textiles.

After introduction of Radial tyres, there was continuous improvement in Radial type tyres.
5.     "  
Once steel tyre got developed it found its immediate application in Belt material, keeping casing
plies of Textile, to further improve durability.

6.     "   

Similarly, development of glass fibre which is practically inextensible, led to application in
passenger and Light Commercial Vehicle tyres with Textile Casing, providing corrosion free
radial Tyre belt material.

7.  
  
A new concept of low aspect ratio (ratio between section height and section width) of the tyre in
cross ply construction was introduced for higher speed and better performance.

8. 

Concept of tubeless tyre in cross ply construction wherein an inner liner compound based on
chlorobutyl or Halo Butyl which is impermeable to gases, was introduced eliminating the usage
of tubes. This concept could not find sustained application in India due to bad roads and poor
handling/maintenance of Rims other than in OTR range. However, Tubeless tyres are produced
for Export Market.
Gradually this concept will become fully acceptable with the advent of new generation vehicles
and improved service facilities.

9.     "   

Due to poor roads and inadequate vehicle maintenance, Steel belts had corrosion problem due to
cuts and chips in the tread. This led to trials with Aramid belt (Textile material with very high
strength and Low extensibility).
However, this could not find any sustained use.

10.     " 

n developed countries, Radial Truck/Bus tyres use steel wires in casing as well as in Belts to
achieve the optimum advantage of radial construction. In India also this construction was tried
since late 1970s by Indian Companies using tyres of collaborators. This could not succeed.
Indian companies started experimentally since late 1980s (themselves or with collaborators)
which continues and the product has found gradual entry into low load application.

11. "    
As in the case of Bias Tyres, the concept of tubless tyre was extended to radial construction and
introduced in later half of the century in Developed countries. A tubless tyre not only has tube
eliminated but provides for smoother ride and vehicle handling. This is slowly entering into the
Indian market with the advent of new generation vehicles.

12.  "    

The concept of low aspect ratio tyre, after gaining the experience from cross ply construction,
was introduced in Radial construction also. The present trend of tyre development for high speed
tyre is being pursued in this direction. Tyres with aspect ratio upto 0.65 are being manufactured
today enabling Indian Industry to adopt high speed rating e.g. 190 kmph, 210 kmph etc.

13. o 
 
    
High Performance Passenger Car radial tyres not only have very low aspect ratio (0.65 - 0.35)
but also have substantial changes in construction. Very low aspect ratio enables use of large
diameter wheels which, in turn, allows better stability at high speeds. The tyre contour is based
on the cross section of a fully loaded tyre and this reduces the energy losses within the tyre and
reduced dynamic fatigue. High performance Passenger tyres are made with speed rating upto ZR
indicating speed capability in excess of 240 kmph. In India, this concept has not yet been found
popular though customers are demanding tyres upto 220 kmph (V Rating).


14.   
 
"  
A new concept of run flat tyre (puncture proof) was introduced by Continental in early 1980s
wherein the basic construction of the rim and bead was changed by which on loosing air the tyre
tread sits on the rim thus enabling one to drive at a reasonable speed for a long distance till the
flat tyre could be attended to.
This revolutionises the OE need for a new vehicle as the Stepney tyre can also be dispensed off.
However, there is very slow progress of this concept. This has not been tried in India so far.

15.    "  

Tremendous work is being carried out towards the development of tyres with modified special
compounds, besides tyre construction aspect, to reduce rolling resistance thus gaining in fuel
consumption. However, the ultimate advantage is obtained by Radial Construction which is
gradually findig its well deserved place in Indian Industry.

16.  

   
This is the latest development in Passenger Radial tyres. These tyres have a rolling resistance
appreciably lower than normal tyres. These tyres have high proportion of non petroleum based
material used in their construction and are called environment friendly or#  #.
This concept is well perceived and will gradually find its application world over, including India.

Marketing Initiatives
All key players in tyre industry do their marketing with respect of the categorization they have
done for Indian market.
Tyre supplies are broadly to the following segments:

› Replacement Market (aftermarket)

› Original Equipment Manufacturers (OEMs), i.e. vehicle manufacturers
› Export
› State Transport Undertakings (STUs) (primarily for Bus tyres)
› Government Purchases
They also very much concerned about their advertising with respect to their product line and
production ability.
For example, MRF company is major in tyre industry advertise their whole product line giving
the stress on mostly the passenger car segment from where they earn maximum.

For whole Tyre Industry the dealers network is also active in India. Dealers are again categorized
as:
Dealers: Multi Brand (different companies); Single Brand; Company owned exclusive
showrooms.

Dealers of commercial vehicle tyres and passenger segment tyres are different, though some
overlap does exist.

Dealers of commercial vehicle tyres also financing purchase of tyres for commercial vehicles
and agricultural tyres.

Dealers are also an important link between the tyre companies and the end consumers and
replacement / warranty schemes are implemented by the companies through the dealers.

Distribution Channels used in tyre Industry...

The distribution system consists of distributors, followed by large dealers and also small/sub
dealers. Some tyre companies also follow a system of appointing C&F agents, in place of
distributors.

Replacement Market: Tyre companies sell tyres through widespread dealer distribution net-work
( over 5000 in the country ), either through exclusive dealer of the companies or through multi-
company dealers.

OEM: Direct supply by tyre companies through negotiations.

STU: Direct supply by tyre companies through tender system.

Government: Direct supply by tyre companies through tender system.

Export: Through dealers in the exporting countries.

Import: Some tyre companies also import tyres for the domestic market. Such imports are
generally from the principal company overseas or from technical collaborator or from tyre
companies with which it has an alliance for a particular line of tyres, for example, passenger car
tubeless tyres;

With tyre import freely allowed (except Truck / Bus (Radial Tyres)) import of various categories
of tyres is also taking place.

Tyres are imported by importing agents and then marketed through the dealers who are
marketing Indian tyres also.