Tire majors including JK Tyre, Apollo, Ceat, MRF, Birla, Bridgestone and Bal Krishna have planned to invest this amount over the next two to three years. Birla Tyres is investing over Rs 1,000 cr, Ceat Rs 800 cr and JK Tyres Rs 365 cr.
According to sources, MRF, Apollo, Bridgestone are also planning hefty investments. This investment spree is expected to result in the tire industry turnover crossing the Rs 32,000 cr mark from the current level of Rs 19,000 cr.
Some tire companies are expanding their existing capacities while others are going for green field investment. The industry has estimated an 8%-9% growth in tire demand in the next couple of years based on the rise in vehicle production. Manufacturers are keen to promote radial tires for buses and trucks.
Worldwide trends show that most developed countries produce the radial category of tires. Over 90% of tires manufactured in the developed world are of the radial category. Though India is a late entrant on the scene, the current level of radialization in passenger car tire category is over 95% and only 2% to 3% in the truck/bus tire segment.
Deepak Tandon, president of Birla Tyres said, “In the next one to two years, we will be investing around Rs 1000 cr. We have planned a new plant at Hardwar in Uttarakhand, which will be operational by the middle of next year to produce 250 metric tons of radial tires for commercial vehicles.”
Paras Chaudhary, managing director of Ceat, says, “Of the Rs 19,000 cr of the total revenue of the industry, radial tires contribute only 9%-10%. So, there is a tremendous scope for growth here for domestic needs as well for exports.” The Indian tire industry has been exporting annually about 20% of truck tires produced in the last decade to over 65 countries. Ceat has earmarked around Rs 800 cr for investment in two green field facilities. Chaudhary further explains, “The radial tire technology is capital intensive; hence, you are seeing heavy investments by manufacturers.”
Major factors that have inhibited the growth in production of the radial category of tires are the need for massive investments besides the tendency of transport operators to over-load vehicles coupled with bad roads that have proved to be detrimental to radial tire performance. As the transport authorities are curbing over-loading and civic administration lays better roads, manufacturers see hope.
Hence a good part of the Rs. 5500 cr investment will go for production of radial tires. AS Mehta, VP, JK Tyres predicts, “With road network improving in the next five years, we can see the radialisation for the commercial segment increase from the current 2%-3% to 15% and 40% in the next 10-13 years.”
