The restriction on imports of radial tyres from China by the government has come as blessing for the Indian tyre industry. Leading tyre manufacturers, such as Ceat Tyres and JK Tyres, among others, have ramped up production during the fourth quarter ended March 31, and are expecting more than 15 per cent growth in sales volume in the truck tyre segment.
Radial tyres imported from China are nearly 30 per cheaper than those manufactured in India —had captured over 10 per cent market share. After the ban on import of Chinese bus and truck radial tyres since November 2008, domestic sales have improved.
The present market price of a light truck radial tyre is over Rs 20,000 in India.
“We are expecting over 15 per cent growth in sales volume on quarter-on-quarter basis for truck tyres. Positive sales of passenger cars in past three months have also helped us,” said Arnab Banerjee, vice president — marketing and sales, Ceat Tyres.
JK Tyres’ director-marketing of AS Mehta said, “Benefit of ban on import of Chinese radial tyres started reflecting in our sales from March. But actual figures can only be predicted by the month-end. We expect this to continue till the second quarter of 2009-10.”
Mehta, however, was concerned about many traders still importing radial tyres under bias and cross ply tyres. “ We (at the Automotive Tyre Manufacturers’ Association) had taken up the issue with the Centre, after which it had issued licenses to serious importers of tyres from China,” he said. The government issued licenses to Tata Motors, Ashok Leyland and Eicher to import radial tyres by paying anti-dumping duty.
However, analysts expect only a marginal change due to the ban on the bottom line of tyre companies in fourth quarter ended March 31, 2009. Unless the demand for commercial vehicles pick up in India, there will be hardly any change in the results of these companies, they say.
Demand for commercial vehicles (CVs) have fallen by 20-25 per cent in the past year, an analyst, who did not wish to be named, said. Karvy Stock Broking vice-president Ambareesh Baliga expects demand for CVs to pick up from the second quarter of financial year 2009-10, which would boost the demand for radial tyres.
But as the prices raw materials such as rubber and crude oil have started moving northwards, companies are wary about being able to sustain the momentum in next quarter. Rubber prices have gone up from Rs 50-70 to Rs 85 a kg, while crude prices have moved up to $51.83 per barrel from $41 in January.
Source : www.mydigitalfc.com