Indian Tyre Industry- Trend Analysis of Sales, Net Profit, EPS and Radialisation Level in India

Abstract

The tyre industry in India is passing through a challenging phase much like the overall economy. Such a drastic fall in the sales of commercial vehicles during 2013-2014 under review has not been witnessed in a long time. In the short term, therefore, the outlook for tyre industry is not a very optimistic one. The tyre industry’s growth is expected to be in sync with the GDP growth. However, replacement demand from vehicle sales over the past two years can provide an opportunity. A weakening Rupee and high interest rates are currently the areas of concern for the tyre industry, but are expected to improve during the course of the year ahead. With the stable forecast of raw material prices, the Company expects a positive year ahead. Radialisation has now slowly started picking up in India. The Indian passenger car segment was almost completely radialised (98 per cent) by 2008-09. However, radial penetration in the Truck & Bus segment has been low at around 22 per cent. Contrary to the global scenario, where the Truck & Bus segment is highly radialised with most developed nations reaching over 90 per cent levels, Indian Truck & Bus segment witnessed single digit growth in radialisation. However, this trend is expected to pick up rapidly over the next 5 (five) years. In view of that, healthy capacity additions in the Truck & Bus radial segment were witnessed in 2012-13, which will drive the future radial tyre demand.