Indian Tyremakers Thinking Globally

With India’s vehicle industry experiencing a slowdown of late, the country’s tyremakers have needed to consider how to best maintain their profits. According to a report published in India’s Business Standard newspaper, a number of manufacturers including Apollo, Ceat, JK Tyre and MRF are increasingly thinking internationally in the face of this new challenge. Not only are Indian tyremakers looking at establishing overseas manufacturing plants – at least one is also casting its gaze at established manufacturers in other countries with a view to acquiring one of these firms.

The nation’s second largest tyre manufacturer, Delhi based Apollo Tyres is reportedly actively pursuing the acquisition of an overseas tyremaker. It seems most likely that Apollo will seek the purchase of a company based in Europe, although an acquisition in the Americas is by no means out of the question. “Margins are better in Europe with good product acceptability and confidence in technology,” commented Neeraj Kanwar, joint managing director and COO, Apollo Tyres. The company has seen European market demand for radials increase substantially in recent times, and on the back of this Apollo aims to become a major player in Europe in the next half decade or so.

The country’s largest tyre exporter is JK Tyre, with about 60 per cent of its total revenue generated through exports. In the next three years the company intends to invest Rs 11,000 million (£133.8 million) boosting total capacity from its current level of 9 million up to 12 million. This investment includes Rs 4,500 million (£54.8 million) earmarked for the establishment of a new facility. This total investment figure, quoted in the Business Standard, is more than double the £45 million reported by T&A in July. “We want to strengthen our position in Latin America, Southeast Asia and Africa,” said A S Mehta, JK Tyre’s director of marketing.

Also setting up a new facility is Ceat, who is currently establishing an Rs 5,000 million (£60.8 million) plant that will primarily serve the export market. Between 60 and 70 per cent of the facility’s output will be shipped overseas, mostly to Europe and the Americas. This boost in exports will greatly assist the company in achieving its aim of increasing export revenues to Rs 10,000 million (£121.7 million) within the next three years.

MRF Tyres, India’s number one tyremaker and a company already exporting to some 75 countries worldwide, has planned the construction of a Rs 9,000 million (£109.5 million) greenfield facility in the southern state of Tamil Nadu, and again export markets will be a high priority for the new plant.

According to India’s Automotive Tyre Manufacturer Association total tyre exports should reach Rs 35,000 million (£425.8 million) by March 2008, 140 per cent more than four years earlier. Currently about 44 per cent of all tyre exports from India are truck and bus radials, with passenger car tyres making up a further 20 per cent.