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Tyre Majors Plan Big Investments This Year

(Hindu Business Line) After nearly a decade, the Indian tyre manufacturing sector is set to commit major investments towards capacity expansion in 2008.

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A substantial chunk of investments may flow in to create fresh capacities in off-the-road (OTR) and radial tyres, including the hitherto neglected area of truck-bus radials. Some early moves may also be witnessed to tap the emerging business opportunities in two-wheeler radials.

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According to industry sources, irrespective of the growing replacement demand for BIAS or cross-ply tyres in both the domestic and overseas markets, major Indian manufacturers may fall short of adding fresh capacities in this old technology segment.

As an alternative strategy, they are likely to opt for outsourcing of such tyres, creating the scope for either more imports or growth of smaller domestic bias tyre makers.

“Indian bias tyres are now fetching a premium even overseas. However, we are not considering any fresh capacity addition in this segment,” said Arnab Banerjee, president of Ceat Ltd. The company has recently started outsourcing tyres.

“If an immediate opportunity crops up, we would prefer the outsourced bias tyres for the export market and cater to the domestic demand through own capacities,” adds A.S. Mehta, director of marketing of JK Tyre.
 
Investments in infrastructure have opened up opportunities for manufacturing a wide range of OTR tyres. So much so that at least three major Indian tyre makers – Apollo Tyre, Ceat, and JK Tyre – have already announced plans for adding fresh OTR capacities by 2009 at the latest.

While Apollo is setting up fresh capacity at Vadodara to meet the captive demand of Bharat Earth Movers, JK Tyre is planning a Rs 120-crore investment in a second plant at Karnataka. Ceat is focusing on export opportunities for high tonnage OTRs and is setting up a new plant near Patalganga in Maharashtra.

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JK Tyre, which till now was the only Indian truck-bus radial tyre manufacturer, has decided to “maintain its lead” and is ramping up capacities at Mysore from 3.7 lakh to 5 lakh tyres a year. The project will be completed in 2009. The company has stabilized its technology substantially during the last two years.

Apollo has already set up a pilot truck-bus radial plant at Vadodara and is set to take a call on further expansion in the next quarter. Ceat is in search of technology for setting up new radial capacity. The company may finalise the project proposal in the next quarter.

MRF has also announced plans to set up a truck-bus radial capacity. (Tire Review/Akron)
 

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