Indian Tyre Industry 2008
Credit Analysis & Research Limited, January 2008, Pages: 82
Indian Tyre Industry to Register a Growth of 9-10% in the Next 5 Years
The Indian Tyre Industry produced 736 lakh units of tyres (11 lakh tonnes) garnering Rs. 19000 crores in FY07. MRF Ltd. was the market leader (22% market share) followed closely by Apollo Tyres Ltd. (21%). The other major players were JK Tyre & Industries (18%) and Ceat Ltd.(13%).
The Indian tyre industry is characterized by its raw material intensity (raw material costs account for approximately 70% of operating income), capital intensity, cyclicality, fierce competition among the top players, low bargaining power and resulting low margins. The top players are now focusing on branding their products and strengthening their distribution network so as to increase their market share.
The industry derives its demand from the automobile Industry. While OEM market offtake is dependent on the new vehicle sales, replacement market demand depends on the total population of vehicles on road, road conditions, vehicle scrapping rules, overloading norms for trucks, average life of tyres and prevalence of tyre retreading.
The main category of tyres produced in the country is that of Truck & Bus tyres. These tyres accounted for 57% of the total tyre tonnage production in FY07 followed by LCV tyres which accounted for 9% of the total tyre tonnage production. Approximately 53% of the total tyre tonnage offtake was by the replacement market, 31% by OEM and 15% by the export market in FY07.
The industry tonnage production registered a 5 year CAGR of 9.69% between FY 02-07. The largest category of Truck & Bus tyres recorded a 5 year CAGR of 7.85% (slower than the industry) while Light Commercial Vehicle (LCV), motorcycle and car tyre categories grew at 15%, 16% and 14% respectively (faster than the industry). Off the road (OTR) tyre category (customized tyres) which fetch a higher margin compared to other tyre categories, is the fastest growing category. The OTR tyre category has registered a 5 year CAGR of over 20% in the last five years. Most of the top players are increasing their capacity for the production of OTR tyres so as to improve their product mix, this being a high margin product.
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 Indian manufacturers will need to graduate to production and export of 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 cost of radial tyres and poor awareness of the 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.
Chapter No. Particulars
Executive Summary
1 Introduction
1.1 Evolution of Indian Tyre Industry
2 Tyre Basics
2.1 Structure of a tyre
2.2 Performance parameters of Tyres
2.2.1 Tyre Inflation
2.2.2 Rolling Resistance
2.2.3 Tyre Noise
2.3 Manufacturing Process
2.4 Tyre Technology
3 Classification
3.1 Tyre Market
3.2 Tyre Design
3.3 Tyre Category
4 Characteristics & Demand Drivers
4.1 Characteristics
4.1.1 Raw material intensive
4.1.2 Cyclical
4.1.3 Competition
4.1.4 Wide Distribution network
4.1.5 Capital Intensive
4.1.6 Low Bargaining Power
4.1.7 Branding
4.1.8 Technology
4.1.9 Margins
4.1.10 Duty Structure
4.1.11 Porter Model
4.2 Demand Driver
5 Tyre Production & Offtake
5.1 Category-wise production
5.2 Market-wise offtake
6 Market Growth
6.1 Category-wise tyre production growth
6.2 Market-wise offtake growth (units)
6.2.1 Truck & Bus tyre
6.2.2 LCV tyre
6.2.3 Cars
6.2.4 Motorcycle
6.3 Total Exports
6.4 Imports
7 Market Competition
7.1 Overall Market Share (FY07)
7.2 Category-wise Leaders and followers (FY07)
7.3 Category-wise Market Gain/Loss FY07 over FY06
8 Cost
8.1 Raw Material Expense
8.1.1 Natural Rubber
8.1.2 Nylon Tyre Cord Fabric
8.1.3 Carbon Black
8.1.4 Styrene Butadiene Rubber
8.1.5 Poly Butadiene Rubber
8.2 Power & Fuel Expense
8.3 Employee Expense
8.4 Selling Expense
8.5 PBDILT
9 Outlook
9.1 Projected growth
9.2 Projection Methodology
9.2.1 OEM Market growth
9.2.2 Replacement market growth
9.2.3 Export market growth
9.2.4 Limitation of the projection methodology
9.3 SWOT Analysis of Indian Tyre Industry
10 Company Profile
10.1 Apollo Tyres Ltd.
10.2 Ceat Ltd.
10.3 MRF Ltd.
10.4 Goodyear India Ltd.
10.5 JK Tyres & Industries Ltd.
Annexure 1 Category-wise Industry tyre production
Annexure 2 Cater-wise Industry tyre exports
Annexure 3 Player-wise tyre production FY 07
Annexure 4 World Tyre Market
Table No. Particulars
3.1 Features of Cross Ply & Radial tyres
4.1 Raw Material cost of tyre manufacturers
4.2 Imported Raw Material as a percentage of total Raw Material consumed
4.3 Segment-wise market share in the Automobile Industry
4.4 Selling & marketing expense as percentage of Operating Income
4.5 PBDILT & PAT margin of different players
4.6 Duty Structure
6.1 Tyre Imports
6.2 Category-wise Indian & Chinese tyre prices
7.1 Category-wise Leaders and followers (FY 07)
8.1 Raw Material Expense
8.2 Natural Rubber: Global Production
8.3 Natural Rubber: Global Consumption
8.4 Natural Rubber: Domestic Demand and Supply Scenario
8.5 NTC: Domestic Demand & Supply
8.6 Carbon Black: Domestic Demand & Supply
8.7 SBR: Domestic Demand & Supply
8.8 PBR: Domestic Production & Consumption
8.9 Power & Fuel Expenses as a % of total sales
8.10 Employee Expenses as a % of total sales
8.11 Selling Expenses as a % of total sales
8.12 PBDILT as a % of total sales
9.1 Expected tonnage growth in tyre categories vis-à-vis past tonnage growth
Figure No. Particulars
2.1 Structure of a tyre
2.2 Tyre Inflation
3.1 Classification of tyre
3.2 Tyre Design
3.3 Growth trend for tyre segments
4.1 Cyclicality in tyre demand
4.2 Market share of players (FY07)
4.3 Porter Model
4.4 OEM market tyre demand & production
5.1 Shares of different types of tyres produced
5.2 Market-wise offtake
5.3 Market-wise offtake of tyres for different types of vehicles
6.1 Category-wise Growth %
6.2 Market-wise offtake growth for truck & bus tyres
6.3 Market-wise offtake growth for LCV tyre
6.4 Market-wise offtake growth for Car tyres
6.5 Market-wise offtake growth for Motorcycle tyres
6.6 Destination-wise % distribution of export sales value
6.7 Trend in tyre exports
6.8 Category-wise Tyre Exports (Units) (FY07 & FY02)
6.9 Category-wise Tyre Imports (Units) (FY07)
7.1 Overall Market Share (FY07)
7.2 Category-wise Market Gain/Loss (FY07 over FY06)
8.1 Components of Raw Material Cost
8.2 Natural Rubber: International & Domestic Price Trends
8.3 Caprolactum Price
9.1 Apollo Tyres Ltd. Share Price
9.2 Ceat Ltd. Share Price
9.3 MRF Ltd. Share Price
9.4 Goodyear India Ltd. Share Price
9.5 JK Tyre & Industries Ltd. Share Price
Apollo Tyres Ltd.
Ceat Ltd.
MRF Ltd.
Goodyear India Ltd.
JK Tyre & Industries Ltd.
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