India
An agreement on contract labourers’ wages at Birla Tyres’ Balasore plant has been reached after prolonged negotiations. The Indian tyre maker and the union representing plant workers have decided upon a daily wage increase from Rs 92 to Rs 160 (£1.80) with the daily rate increasing to Rs 180 next January and Rs 200 from May 2014. The contract settled on 6 September will be valid until the end of July 2015.
When Reifen China opens the doors to the Shanghai New International Exhibition Center for the show between 14 and 16 November 2012, it will mark the sixth time that international tyre trade event has been held. And it comes at a good time for European buyers looking to connect with Chinese manufacturers as it is set against a backdrop of continuously increasing capacity and the relaxation of import tariffs against Chinese passenger car tyres bound for America.
Vredestein UK managing director Stuart Jackson also serves as the chairman of TyreSafe, so it is safe to say he is pleased to welcome the safety organisation’s latest member – Vredestein’s parent company Apollo Tyres.
McLaren’s Jenson Button completed a dominant weekend to win the Belgian Grand Prix. Only second-placed Sebastian Vettel could match the Briton’s ability to look after his tyres, using an almost identical one-stop strategy – medium compound P Zero White tyres, changed to hard compound P Zero Silvers just before the midway point – to finish 13 seconds behind Button, who led from start to finish. This was the first race at which a driver has achieved this in 2012 While Button’s imperious drive would have taken some beating, Vettel’s ascent from tenth on the grid was aided by a spectacular smash involving Championship leader Fernando Alonso and McLaren’s Lewis Hamilton at the first corner, over which Lotus’s Romain Grosjean has been handed a one-race ban.
A fire broke out in the mixing department of Apollo Tyres’ Kalamassery on the evening of 2 September. According to a company statement, nobody was injured in the blaze. Fire crews battled the fire for several hours before gaining the upper hand, and machinery and rubber is said to have been destroyed. Apollo says the unit will be out of commission several days. In the meantime, alternative arrangements for supplying mixed compound have been made.
In its 2011 Annual Report, Goodyear India Limited shares that it intends to phase out production of cross-ply medium commercial truck tyres and transfer the freed-up capacity to the manufacture of agricultural tyres. “In the farm segment, growing levels of farm mechanisation and subsequent growth in all agriculture related industries should provide your company with attractive growth prospects,” stated the Annual Report, adding that the majority of agricultural products currently sold by Goodyear Indian are cross-ply construction.
Almost a year ago, MRF chairman K M Mammen told journalists the tyre maker was considering acquiring or leasing a 100,000 hectare rubber plantation in Southeast Asia. Since then, little has been heard on the subject. In recent days, however, Indian newspapers the Hindu Business Line and Business Standard have both quoted MRF executive vice-president of marketing, Koshy Varghese, as saying the company is currently investigating its options.
Tyrexpo Asia 2013 has smashed through the 150-exhibitor milestone; with six months still to go before opening day, the biennial event is now 90 per cent full, an unprecedented position in the show’s 16-year history. Event organiser ECI International also reports the presence of “heavyweight” domestic Singaporean, Malaysian, Indonesian and Chinese exhibitors, plus interest from a large number of Indian, European and US suppliers.
India’s Govind Rubber Ltd has reported net sales of Rs 782.3 million (£8.9 million) for the three months to 30 June, a 35.6 per cent year-on-year increase. Net profit, at Rs 10.1 million (£), was up 248 per cent on the corresponding quarter of 2011. The tyre maker recently announced an Rs 8.5 billion (£115,500) expansion project at its Alwar plant in India, and the company also intends to set up a new greenfield facility in Dahej. According to company chairman and managing director Vinod Poddar, the new facility will have a daily capacity of 225 tonnes.
According to business association the Federation of Indian Chambers of Commerce and Industry (FICCI), tyre manufacturing in India is one of the sectors most affected by what it calls ‘inverted customs duty structure’. Results of a FICCI survey show the tyre sector, along with several others, are most keenly disadvantaged by the structure of India’s import duties, which charge higher duties for imported raw materials than for imported finished products.
Stamford Tyres Corporation and Sumitomo Rubber Industries have commented further on their plans to set up a joint venture sales company in India. Yasutaka Ii, director and senior executive officer of Sumitomo Rubber, said “India is a market with huge potential. We are delighted to continue our partnership with Stamford Tyres which has a strong distribution track record, as part of our group’s expansion into new markets. This new joint venture will allow the two companies to leverage on their expertise to address the needs in the Indian market and tap onto this market’s huge potential.”
In addition to discussing strategic plans for the coming years, today’s Apollo Tyres annual general meeting saw the release of the company’s approved unaudited results for the first quarter of India’s 2012-13 financial year, the three months to 30 June 2012. During the quarter, net sales rose 12 per cent to Rs 31.65 billion (£367.5 million) and operating profit increased 48 per cent year-on-year to Rs 3.61 billion (£41.9 million). Net profit jumped 79 per cent to Rs 1.38 billion (£16.0 million); Apollo attributes this rise to “a more judicious product and customer mix.”
Japanese tyre maker Sumitomo Rubber Industries and Singapore’s Stamford Tyres Corporation have announced plans to establish a joint venture sales company in India. The operation, Falken Tyre India Private Limited, will start business in April 2013 and be 60 per cent owned by Sumitomo Rubber subsidiary Sumitomo Rubber Asia (Tyre) PTE. Ltd, with Stamford owning the remaining share. Falken Tyre India will focus on India’s replacement tyre market; Sumitomo says it will supply tyres that “meet the local needs.”
In a speech at Apollo Tyres’ annual general meeting, company chairman Onkar S Kanwar named several regions the company has identified as potential future “home markets” and sites for manufacturing facilities. He shared that Apollo increased its revenues 37 per cent to US$2.5 billion last year and is currently growing at above local industry rates in its current home market regions of India, Europe and South Africa – and therefore the company feels the time is right to expand this base. He cautioned, however, that such plans may squeeze profit margins in the short-term.
An analyst in India opines that JK Tyre & Industries is currently a very good investment, and he states that shares in the company may be capable of achieving gains as high as 40 per cent over the coming half year or so. Aashish Tater, head of research at Kolkata-based Fort Share Broking, told Indian business news broadcaster CNBC-TV18 that there is a “bullish call” on the tyre sector, and he named Goodyear India and JK Tyre & Industries as the broker’s “prime picks.” Tater particularly feels that the second of these offers opportunities for investors.
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