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03. November 2005

INDIA: Tyre firms await dawn of radial age

Source: Daily "Business Standard", New Delhi; 3 Nov 2005

Though the tyre producers in the country see the truck and bus radial (TBR) market as an important growth segment for the future, the major players involved are not yet sure when exactly the Indian tyre market will be ready for the age of radialisation. The timeframe for improving the market share of TBR ranges from five to 15 years, if one goes by what the leading tyre firms are projecting.

The most optimistic of the lot is J. K. Industries, which believes that the share of the radial tyres in the truck and bus market would go up to 15 per cent from the present 2-3 per cent over the next five years. On the other hand, market leader Apollo Tyres expects no major change in the share of radial tyres for the next 15 years. While the Chennai-based MRF does not share the optimism of J. K. Industries, it believes that the technology for radial tyres needs not come from foreign firms.

“After 30 to 40 years of depending on foreign companies for technology in producing tyres, it is time we develop technology (for radial tyres) on our own,” said an MRF spokesperson.

Around 6.5 lakh tyres a month are sold in the largest segment of the entire domestic tyre market, i.e. truck and bus tyres. Of this only 2-3 per cent comprise radial tyres. This is in sharp contrast to what has been witnessed in the passenger vehicle segment where the level of radialisation has risen nearly 100 per cent. While the price of radial tyres, which is around 50-60 per cent more than cross-ply tyres, continues to keep a good section of the buyers out, industry observers blame the domestic players for not investing enough in R&D to offer cheaper options.

“The level of spending at less than Rs 100 crore a year in R&D will not help. If the domestic players are serious about developing technology for the TBR market, they must invest much more, say Rs 1,500 crore, like what their foreign counterparts are doing,” said an industry analyst. This is true. The best among the domestic lot spend less than 1 per cent of the topline in R&D.

Cost apart, some players also feel that the demand for radial tyres in India is not yet big enough to swing the buyers’ interest away from cross-ply. “May be our cross-ply tyres have reached a level of sophistication that has managed to bridge the gap between radial and cross-ply,” said an MRF spokesperson. This theory, however, does not find many takers in the market. The life of a non-radial tyre still languishes at 50,000 km while the radial tyres can have a life span of up to 125,000 km.

(Syed Rashid Ali, Karachi, Pakistan)

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