India
Confirming news first reported in December 2007, on May 2 India’s MRF Ltd initialled a memorandum of understanding with the government of the state of Tamil Nadu for establishing a greenfield facility. This new factory, at Perambulur, will be the tyremaker’s third in the state. The memorandum was signed by company chairman and managing director K.M. Mammen and M.F. Farooqui, Tamil Nadu secretary to government for the Industries Department.
India’s Aditya Birla group is reported to be in the process of signing a land deal with the port authority of Altamira, in eastern Mexico. The purpose of the deal is to facilitate the establishment of a US$150 million carbon black facility. “We may sign the agreement next week,” commented AV Birla Group regional joint president Surendra Goyal. “The $150 million project will be completed in two years.”
According to Goyal, the region near the port, in the Mexican state of Tamaulipas was, selected as an entry point to the US, where naptha is cheaper. The Mexican carbon black facility will add to the company’s global capacity of around 790,000 tonnes per annum, an amount that makes the company the world’s fourth largest producer. In total the Aditya Birla group plans to invest about US$600 million to increase its carbon black manufacturing capacities in India and globally. Goyal, who heads the group’s operations in Latin America and Egypt, said the company also intends to set up a facility in Oman.
India’s Ceat Ltd is said to be reducing the 2,000 strong workforce at its facility in Bhandup, Mumbai by as much as a quarter in order to reduce costs. This plant will also soon be relocated to the city of Ambernath, and before this takes place Ceat intends to offer voluntary redundancy to employees over the age of 56. The hiring of new workers at the Bhandup facility has not taken place for about two years.
“We can save costs by relocating to Ambernath,” said Ceat managing director Paras Chowdhary. “The company will also unlock value by selling the 23 acres of Bhandup land. The money will be invested in funding our expansion plans. He added that the company will save Rs170 million (£2.13 million) in local taxes by relocating in addition to lowering operating costs.
A study into India’s tyre market reveals that MRF leads the field in terms of OE tyre customer satisfaction. The J.D. Power and Associates 2008 India Original Equipment Tire Customer Satisfaction Index (CSI) Study, released April 22, shows that, from a field of five leading manufacturers, MRF ranks highest with an overall CSI score of 836 out of a possible 1,000.
The manufacturers’ products were evaluated by 3,381 new vehicle owners, following 12 to 18 months of ownership, in five key areas: appearance, durability, traction, ride quality and handling. The 2008 survey, the eighth conducted, was also the third consecutive occasion in which MRF has topped the customer satisfaction list. Close behind in second place was Apollo Tyres, who achieved an overall ranking of 816 points.
J.D. Power and Associates reports the study’s findings reveal a strong link between the ownership experience and intent to repurchase. Amongst customers reporting a high level of satisfaction with their tyres, nearly 80 per cent said they “definitely would” repurchase their original brand. The factors for which owners reported the highest levels of satisfaction were tyre appearance and ride quality at highway speeds.
Repurchase intent, however, drops by nearly 40 per cent among customers who are highly dissatisfied with their original tyre brand. For customers who say they “definitely would not” or “probably would not” repurchase their original brand, tyre noise is the most commonly cited reason for their decision.
“Consumers may not have much choice in which tyres come standard with their new vehicle, but they definitely have a choice when it comes time to replace those tyres,” said Mohit Arora, senior director at J.D. Power and Associates, Singapore. “Having a satisfying tyre ownership experience will certainly strengthen a customer’s decision to purchase the same brand that came on their vehicle. Hence, it is vital for manufacturers to increase product quality to achieve high levels of customer satisfaction in order to foster higher loyalty and advocacy levels.”
According to the results, almost 20 per cent of new vehicle owners report problems with their tyres, the most common of these being puncture damage, an issue reported by 65 per cent of these owners. It is thus unsurprising that the second most important consideration for owners when purchasing new tyres, behind brand name, is a tyre’s self-sealing qualities. “While puncture damage is typically beyond the control of manufacturers, and considering that self-sealing tyres have the second strongest impact on vehicle purchase, having this feature on their tyres may prove advantageous for manufacturers,” commented Arora.
The average score amongst the five manufacturers was 818. Individual scores are as follows: MRF 836, Apollo 816, JK Tyre 798, Bridgestone 795, Goodyear 783.
A greater presence within India is on the cards for Yokohama Rubber after its April 18 confirmation that it had, eight days earlier, signed an agreement with the Haryana State Industrial and Infrastructure Development Corporation to acquire a 25-acre (101,250 square metre) business site at the corporation’s industrial estate in Bahadurgarh. News of this deal was first reported by India’s media at the start of April but not confirmed by the Japanese manufacturer until now.
Yokohama Rubber has unfolded its Indian business since April 2007 when the company established Yokohama India Pvt. Ltd., a wholly owned subsidiary. The current business site acquisition also forms a part of this activity and Yokohama Rubber says it is now planning to work out details on how to utilise the acquired site. A report previously released by the Indo-Asian News Service indicates that the company will invest Rs 9 billion (£112.9 million) into the project, and about 900 jobs will be created.
Fourth quarter figures for Goodyear India Limited have been released, and show a 24.58 per cent rise in profits compared with the same period the previous year. During the quarter that ended March 31, 2008 a profit of Rs 126.20 million (£1.60 million) was recorded on the back of sales totalling Rs 2,277 million (£28.8 million), an increase of 14.03 per cent on the previous year. Annual profit, in contrast, declined 10.8 per cent compared with that of the year before, to Rs 451.2 million (£5.71 million). This decrease occurred in spite of higher annual net sales of Rs 9,175.1 million (£116.2 million), an increase of 6.8 per cent. Annual EBIT, at Rs 5549 million (£70.3 million), showed an increase of 16.7 per cent.
India’s government has asked the national fair trade regulator MRTP Commission – a quasi-judicial tribunal established to investigate monopolistic, restrictive and unfair trade practices – to look into suspected cartel-like behaviour amongst India’s major tyre manufacturers. On April 16 the commission’s investigative division issued notices to five leading tyre makers who, combined, control more than 80 per cent of the Indian market: The five include MRF, who alone controls 24 per cent, Apollo (22 per cent), JK Tyres (17 per cent), Ceat (14 per cent) and Goodyear (6 per cent).
The 100 per cent acquisition of Mexico’s Tornel by JK Tyre, announced on April 11, sees the Indian tyre manufacturer become the country’s fourth-largest. The £34.19 million acquisition, which is expected to close by the end of May, will be funded through a special purpose vehicle (SPV) – a company created solely for this particular transaction – based in Mexico.
“We will raise the money through internal accruals and debt, which will be structured though a SPV,” commented JK Tyres & Industries’ vice-chairman & managing director Raghupati Singhania. “Tornel will be a fully-owned subsidiary of JK Tyres and there will be no dilution of the existing shareholding in the company. We shall also bring a rights issue in the next few months, which will be in the ratio of 3:1, to help bridge the funds for the acquisition. The price of the issue will be determined at the time of offer.”
India’s JK Tyre & Industries has gained a channel through which it can access the NAFTA markets following the purchase of Mexican tyre manufacturer Tornel. The Rs 2.7 billion (£34.19 million) acquisition was announced on April 11, and will give JK Tyre the scope to expand in the Americas thanks to the free trade agreement in place between Mexico, Canada and the US.
“The acquisition is also a strategic fit for JK Tyre as we are already the largest exporter to the North and South American markets,” chairman Hari Shankar Singhania said in a statement released by JK Tyre. The statement added that Tornel operates three tyre facilities with a combined annual capacity of 6.6 million tyres, and employs around 2,000 people.
MRF Tyres, one of India’s leading tyre manufacturers, is planning to produce aircraft tyres for planes and helicopters. According to local news reports, MRF has taken the initiative following aircraft manufacturer Boeing’s decision to sign an agreement with Tata Automobile Limited (TAL) Manufacturing Solutions, a wholly-owned subsidiary of Tata Motors to make structural components for the 787 Dreamliner. MRF is also said to be in the process of producing tyres for military helicopters.
JK Tyres president Arun Bajoria has predicted that radialisation is the “next big thing” in the Indian tyre market. His comments came alongside an announcement that the company will almost double the Indian manufacturer’s PCR capacity thorough the construction of a Greenfield passenger car radial tyre factory. “We are falling short of capacity and we are planning a new plant,” Arun Bajoria, president, JK Tyre & Industries Ltd told the Hindu Business Line. Bajoria told the newspaper that JK Tyre is scouting out possible locations in Karnataka, Tamil Nadu and some States in the north of India.
Data released by India’s Automotive Tyre Manufacturers’ Association indicates that exports of bus and truck tyres from this country increased 8.9 per cent between April 2007 and January 2008, with a total figure of 2.07 million units sold in this period. Total revenue from exports also grew during this period, by 4.6 per cent to Rs 17.35 billion (£218.4 million).
TVS Srichakra, the number one motorcycle tyre maker in India, is focussing on promoting its “large programme of off-the-road (OTR) tyres for the export market” at this year’s Reifen Essen exhibition. The Indian manufacturer describes itself as a global player due to its distribution networks in Europe and USA; and major OEM accounts in Europe. In total the company and exports to over 55 countries in all the six continents. TVS Srichakra, with its “Eurogrip” programme for overseas markets, offers a wide range of off-high way applications, covering in excess of 400 stock keeping units.
Michelin India Tyres disclosed on March 31 it has begun supplying tyres to Honda Motors India for their Civic saloon. The tyre chosen for the Civic is the premium Energy MXV8, a tyre Michelin India CEO Jean Paul Caylar said is “truly designed for comfort and chosen by the main Asian car makers for its silence and fuel savings.
“We see this as a first step in starting a relationship with Honda in India to compliment an already very close partnership we share with Honda worldwide” said Caylar. Director of sales and marketing for Honda in India, T Natsume, added ”we are extremely pleased to have Michelin as one of the partners for the Honda Civic.”
Yokohama is reported to be planning a new tyre manufacturing facility in India. According to the Indo-Asian News Service, the plant in the northern state of Haryana will be built with an investment totalling more than Rs 9 billion (£112.9 million). Details of the project were announced by the Haryana State Industrial and Infrastructure Development Corporation on April 1, including news that it has allotted Yokohama a 25-acre section of land in an industrial estate in the National Capital Region of Delhi.
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