The country’s national industry body, the Automotive Tyre Manufacturers’ Association (ATMA), says an estimated Rs 26,15 billion (£329 million) will be invested in TBR capacity in the years to 2011, providing an extra 3.77 million unit capacity.
This news, reported by Indian business Web site livemint.com, comes following a fiscal period in which commercial vehicle sales decreased by 22% to 384,122 units. Yet, as the Wall Street Journal partner publication notes, industry experts believe the investment is justified. According to PriceWaterhouse Coopers analyst Abdul Majeed, the completion of a number of road infrastructure projects and the likelihood that laws will be introduced to phase out older vehicles will boost demand for new commercial vehicles. “The new truck and bus sales will give an impetus to the replacement demand for the radial tyres,” he said. Centrum Broking analyst Mahantesh Sabarad added that greater production volumes will lead to more competitive prices for truck and bus radials.
While passenger car radialisation is reaching a hundred per cent in India, the current level of truck and bus radialisation, reports livemint.com, is hovering around 8% to 12% of the truck and bus tyres sold in the 2009 fiscal year. This proportion, however, is expected to shoot up dramatically in the near future. “All the developed nations are heavily radialised in the commercial vehicles,” said Neeraj Bhatia, JK Tyres’ senior general manager, strategic planning. “[India] too will move very fast. In the next three-four years, it could be anywhere upwards of 25%-30%.”
This view is also held by the ATMA. The organisation’s director general, Rajiv Budhraja, believes the current level of radialisation is an inflection point beyond which growth will accelerate. “The first spurt comes around at this level, then accelerates and stabilises at 30%.”
One industry figure, however, voices scepticism. Koshy Varghese, executive vice-president, marketing at MRF Ltd., India’s largest tyre manufacturer in terms of revenue, believes that while existing radial plants will be expanded and investment made in greenfield facilities, demand for crossply tyres will also remain. “For an average Indian truck operator, the cost of operation is the most important motivator. It doesn’t matter to him whether it’s a radial or a cross ply,” he commented. (Tyres & Accessories/Staffordshire, U.K.)