Marangoni GRP to evaluate production options in coming months

In its latest Annual Report, India’s GRP Ltd. shared that the 2020-21 financial year “proved to be a watershed year in more ways than one” for the Marangoni GRP retreading joint venture. While the world and India were under the grip of COVID-19 for the best part of the 12-month period to 31 March 2021, the company says Marangoni GRP “made rapid strides in several directions” that “set it on a path of high growth and expansion in the next year.”

The joint venture – 50 per cent owned respectively by GRP and Marangoni S.p.A. – increased its overall sales by about 70 per cent. This growth came through increasing customer demand as well as the appointment of new franchisees in the states of Maharashtra and Tamil Nadu.

Sales of Ringtread products, which GRP calls the “core” of Marangoni GRP’s strategy, rose approximately 60 per cent year-on-year but were hampered by shortages from reaching greater heights. GRP notes that “global shipping challenges dented the growth somewhat.” Sales of the company’s ‘flat’ treads sold under the Unitread and Classico brands, doubled during the year to 31 March 2021; a stated key focus for Marangoni GRP during this period was to compete with market leaders in India’s cross-ply segment, such as MRF, Elgi, Indag and Midas.

From sourcing to manufacturing

Ringtread is positioned as the joint venture’s flagship product, and Harsh Gandhi, joint managing director of GRP, shared during a recent earnings call that these “command at least 20 per cent to 25 per cent premium over the next best product available in the country.” Pricewise, the company’s flat treads “are comparable to other flat treads,” he adds.

Marangoni GRP doesn’t produce treads of any kind in India – Gandhi explains that the joint venture currently imports Ringtread products from Marangoni “on a trading basis as a master franchisor” and purchases outsourced flat treads on a “contract manufacturing basis” from producers located within India. But this situation may change in the future: The managing director states that setting up a manufacturing capacity would be warranted once the operation reaches a “certain minimum volume,” however he didn’t disclose what this minimum is.

“I would say, at the moment, the number of franchisees that we have does not warrant building a manufacturing scale plant. But yes, this is something that is in the offing and hopefully in the next several quarters as we hit certain volume of Ringtreads, we will look at a full-blown manufacturing setup for this,” says Harsh Gandhi.

A dozen franchisees & partnership with tyre major

As of May 2021, the six-year-old joint venture between Marangoni and GRP had 12 signed franchisees throughout India, however the pandemic has temporarily affected ambitious growth plans. The company also operates “fledgling partnerships” with a major tyre manufacturer in India and an online tyre retailer. The first of these already accounts for three per cent of Marangoni GRP’s monthly sales and is expected to reach “double digits” next year.

GRP estimates India’s retreading market to be worth $700 million, with a compound annual growth rate of seven to eight per cent. The organised sector – companies registered for tax purposes – account for 50 per cent of this total.