(India/Rubber Asia) Leading Indian tyre maker, Apollo Tyres Ltd, reported a net profit of 166.9 million rupees (£2.2 million) for the first quarter of the current financial year, ended 30 June, up 13.6 million rupees (£180,000) compared with the same period last year.
The first round of the 2005 Asia Pacific Rally Championship (APRC) that was run as the Subaru Rally, Canberra, Australia kicked up plenty of dust in more ways than one. When the dust and din settled, debutant Jussi Valimaki (co-driver Jarkko Kalliolepo) from Finland, driving a Mitsubishi Lancer Evolution VIII for Team MRF Tyres (India), emerged as the winner. However, the 30-year old Finn, nicknamed “Fast Jussi” had to wait for the several hours that it took the Stewards to conduct scrutiny and then exclude first placed Toshi Arai of Japan.
An obviously elated Valimaki said: “This was a good first rally with a new team, new car and new tyres and I’m very happy with the result. I am sure with some more time we can get faster – it’s the biggest win of my career.”
JK Tyre has received the highest ranking in a customer satisfaction survey of tyres purchased in India. Moving up from third position in 2004, JK Tyre topped the 2005 JD Power list with a satisfaction score of 781 index points on a 1,000-point scale. The industry in general performed marginally better growing one percentage point year-on-year.
(India/Rubber Asia) The profits of MRF, one of India’s largest tyre makers, are continuing to come under pressure. With raw material costs showing no signs of easing, the company is resisting attempts to pass cost pressures onto consumers. Chairman and MD, K M Mammen summed up the situation when he admitted that the company was searching for areas where is could rein costs in to “protect our profits.”
India’s Apollo Tyres Ltd tyres has reduced its prices by a range of 2-4.5 per cent. The announcement follows Indian finance minister, P Chidambaram’s decision to reduce excise duty on tyres from 24 to 16 per cent. After MRF and Ceat cut their prices there was speculation that other large manufacturers would also pass the savings onto consumers. “The price cut is in the range of 2-4.5 per cent across products and various categories,” a company official said, declining to go into the specifics of the price reduction.After the Budget announcements, the excise duty on truck and bus tyres for the replacement market was reduced to 16 per cent. Truck and bus tyre accounted for over 70 per cent of the turnover of the tyre industry in value terms.
In India tyre prices are “tumbling” in response to the government’s decision to cut excise tax by eight per cent, local news sources have reported. According to India’s Economic Times, MRF and Ceat have announced 4 – 6 per cent price cuts, while others such as Apollo, Goodyear and Birla Tyres are likely to follow the same lead. This means that typical non-radial bus and truck tyres are 1000 rupees cheaper.
Tyre dealers across India are urging the government to lower the import duty on tyres to five per cent from the existing 20 per cent. The request aims to “checkmate the activities of the domestic tyre majors,” reports Team India.
Indian tyre stocks are riding high in expectance of a reduction in replacement tyre excise duty in the country’s forthcoming budget. According to sources quoted in India’s Business Standard, the expectance of a 24 per cent to 16 per cent reduction has led to renewed interest from institutional investors.
Yesterday Ceat shares rose 6.71 per cent to 75.50 rupees, Goodyear India stock went up 3.89 per cent to 70.85 rupees, MRF up 3.61 per cent to 2,733.05 rupees and JK Tyres up 15.41 per cent to close at 86.90 rupees, the magazine reports. The recent share price increase, however, is set against a background of increased raw material costs.
The Indian tyre industry has grown at a rate of 8.3 per cent over the last decade, mainly fuelled by strong growth in the domestic car industry, according to research and markets. A new report from the analysts concludes that although the replacement market has driven the industry, the OE market has also seen robust growth over the last couple of years.
Confirming these findings, Apollo Tyres recently posted third quarter results showing a 7.74 per cent rise in net profits to £2,060,000 for the quarter ended 31 December. In response, Apollo shares were trading at 253.90 rupees, up 1.56 per cent.
The industry is highly capital intensive, requiring around 4 billion rupees to set up a radial plant with a capacity of 1.5 million tyres, and around 1.5 – 2 million to construct a crossply plant of the same capacity, research and markets reports. The Indian industry is dominated by a few main players. MRF, Apollo Tyres, JK Industries and Ceat all enjoy more than 70 per cent of the total market share.
In India, MRF has topped a JD Power study on OE tyre customer satisfaction for the third year running. More than 1,500 owners took part in the study, assessing tyres on 20 different attributes. Bridgestone, JK Tyre and Goodyear were behind MRF in the ratings. This year’s study was the first to deal solely with radials, as these account for nearly all tyres fitted to new passenger cars in India. The survey also revealed that more than 20 per cent of new-vehicle buyers choose the brand of tyres fitted on their new car.
The ZVRL 265/70 R15-size radial has been manufactured in India by MRF, has met with Ford’s international standards and come as 100 per cent fitment on the Ford Endeavour, says a release from the company. These Indian manufactured tyres will compete against imported tyres which were the only one available in this sector of the market until now. The development of this premium radial tyre opens up the market for MRF.
India’s outsourcing boom is likely to have little impact on the tyre industry that has huge potential. The tyre industry needs to source rubber at global prices. Availability of rubber at par with international majors like Continental, Pirelli or Yokohama would lead to development of India as a base for manufacturing, according to Anil Sampat, an industry analyst and former rubber industry insider. India’s largest player MRF is still one fifth in size of global companies. The only way the Indian tyre industry can grow and reach global scale is to attract investments from international tyre majors as the industry is capital intensive. The small size of Indian companies is a source of worry, says Sampat. With tyre industry expected to grow only by 2 per cent, “real growth can come only when India offers world class manufacturing facilities for global players,” he points out.
The stocks prices of tyre companies have gone skyrocketed in the last few months following the auto boom. Share prices of tyre manufacturer Apollo Tyres increased from Rs 193.00 to Rs 259.85, Ceat appreciated from Rs 44.85 to Rs 63.85 and JK Industries moved up from Rs 38.90 to Rs 86.20. Vikrant Tyre gained from Rs 18.05 to Rs 75.30, Falcon Tyres increased from Rs 23.80 to Rs 26.75 and Goodyear Industries appreciated from Rs 33.70 to Rs 50.30. Govind Rubber gained from Rs 8.49 to Rs 16.32, MRF jumped from Rs 1418.45 to Rs 2097.35, while Premier Tyre increased from Rs 9.15 to Rs 12.38 and Krypton Industries appreciated from Rs 11.21 to Rs 18.00. Making local tyres available at fair prices would emerge as the key factor to Indian rubber goods manufactures taking advantage of the auto boom.
The death of Mamen Mappilai (80), chairman of Indian company MRF, has been announced. He passed away after a short illness. MRF was floated in 1961 and is one of the best-known tyre companies. Mr. Mappilai is survived by a wife, three sons and a daughter.
For the second year running, Bridgestone and MRF Tyres have tied in first place in the JD Power Asia Pacific 2003 India Tire Customer Satisfaction Index Study, which examines customer satisfaction with originally-fitted tyres after 12 to 18 months of ownership. 2,700 owners were quizzed on 15 different attributes. The overall average score improved by 28 points over last year, reflecting the efforts made to enhance customer satisfaction. Top score was 768 (maximum = 1,000) and Bridgestone and MRF were closely followed by JK Tyres (766, just above the industry average of 764). Goodyear scored 751 and CEAT was the lowest, with 730.
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