Indian tyre industry to register a growth of 9-10 per cent in next 5 years: CARE

Our Corporate Bureau
01 January 2008

Mumbai: Credit rating, information and advisory services company Credit Analysis & Research Ltd. (CARE) has said that the Indian tyre industry will grow at 9 – 10 per cent over the next five years.

In a press release, CARE said that the industry produced 736 lakh units of tyres (11 lakh tonnes), garnering Rs 19000 crore in FY 07.

CARE says MRF Ltd. was the market leader with a 22 per cent market share, followed closely by Apollo Tyres Ltd at 21 per cent. Other major players in the tyre industry were JK Tyres & Industries Ltd with an 18 per cent market share, and Ceat Ltd with a 13 per cent market share.

According to CARE, the industry tonnage production registered a 5 year compounded annual growth rate (CAGR) of 9.69 per cent between FY 02-07.

Truck & Bus tyre category (accounting for 57 per cent of the tonnage production) recorded a 5 year CAGR of 7.85 per cent (a rate slower than that of the industry) while Light Commercial Vehicle (LCV), Motorcycle and Car tyre categories grew at 15 per cent, 16 per cent and 14 per cent respectively (at rates faster than that of the industry). Off the road (OTR) tyres (customised tyres which fetch a higher margin compared to other tyres) category is growing at a fast pace. The OTR tyre category registered a 5 year CAGR of over 20 per cent in the last five years.

Most of the top players are increasing their capacity for the production of OTR tyres so as to improve their product mix, for e.g. CEAT Ltd. is increasing its OTR capacity at its Nasik plant from 60000 to 100000 tyres by end 2008, JK Tyres & Industries is expanding its OTR capacity from 25000 tyres to 42000 tyres by end 2008, even smaller player like Falcon Tyres is making its foray into the OTR category.