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TRACTION

Automotive Tyre Manufacturers’ Association

Vol.-VIII , Issue-1, Jan-Feb 2018

A Newsletter of

Editorial

Rajiv BudhrajaDirector General

inally, after few quarters of Flacklustre performance, India has regained the status as the

fastest growing major economy in the world. And there couldn't have been a more cheering news as we herald the new fiscal year FY19 in few days.

Growing at the fastest pace in five quarters, India's GDP growth rate for third quarter (Q3) stood at 7.2% surpassing that of China's 6.8% during the same quarter. India Inc firmly believes that the economy is on the mend and will gather more momentum in the new fiscal year.

What is important is that the boost to GDP has come on the back of improvement in investment, manufacturing and construction sectors. Gross Fixed capital Formation, a proxy for investment demand in the economy, has registered a sharp increase of 12% in the quarter. Agriculture grew at 4.1%, manufacturing at 8.1% and constriction at 6.8% during the quarter.

Emboldened by the good Q3 GDP data, the full year's growth has been revised upwards to 6.6% and the size of the Indian economy is projected to grow to $2.6 trillion by the end of

March.

At another level, the rise in GDP points to the fact that the Indian economy seems to have transcended the disruptions caused by demonetisation and introduction of GST.

No doubt, there’s a favourable base effect, because demonetisation led to lower growth in the December 2016 quarter, but even so, India’s GDP growth has improved.

As a forerunner to release of GDP figures, ATMA Annual Convention presented to the world the manufacturing and export prowess that Indian Tyre sector has achieved over the years. The Convention represented one of the largest gatherings of Indian tyre industry with top managements charting out a road map for the sector. (Pg 13 )

They say, you can't put down an idea whose time has come. This couldn’t have been more true for Indian economy as well as for the tyre industry the growth of which is intricately linked to the economy. Happy Reading!

Inside This Issue

Ÿ Industry Trends

Ÿ Auto (Pg…2)

Ÿ Natural Rubber (Pg…3)

Ÿ NR Global (Pg…4)

Ÿ Snapshot (Pg…5-9)

Ÿ India Stats (Pg…10)

Ÿ Focus (Pg…11)

Ÿ Events (Pg…12-16)

Ÿ Quotable Quotes (Pg…17)

Ÿ China Column (Pg... 18-19)

Ÿ Globe Watch (Pg... 20)

Ÿ Stat-o-Sphere (Pg…21-22)

ATMA Convention charts out road map for Tyre Industry

Pg 13

Industry Trends - Auto

2

Vehicle Production - India

All Figs in NosFY 17 FY 18

Note: Figs in brackets indicate % change YoY

Apr- Feb (FY18) & YoY Comparison

+ Including P. CAR, MUV/SUV/VANS.

After a disappointing first quarter, have carried on with a M&HCVsbullish run during rest of the year with production in Dec-Feb up

substantially in view of base effect (demonetization).

Passenger Vehicle production has maintained a steady march over last year's figures with Feb production marching up by 7%.

The production in has driven LCVsupwards significantly in the last few

months with Feb production up by 34%.

Motorcycle production has stood much higher in the last three months in view of base effect.

Production in case of Scooters (2/3 wheelers) has consistently grown in double digits during the current year.

production which has been sliding sequentially has Tractorrecouped in Feb’17.

622527

11978990

3441609

305338300662

(-2%)

3643887(6%)

13776617(15%)

715502(15%)

Unit(s): 1 Lakh = 100,000; 10 Lakhs = 1 Million; 100 Lakhs/10 Million = 1 Crore.

39078(26%)

10000

20000

30000

40000

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

330504

354813(7%)

100000

200000

300000

400000


53381

60962(14%)

40000

50000

60000

70000

80000


988107

1278315(29%)

600000

800000

1000000

1200000

1400000


40960

54861(34%)

30000

40000

50000


508139

707448(39%)

200000

300000

400000

500000

600000

700000

800000


FY17 FY18

FY17 FY18

FY17 FY18

FY17 FY18

30944

(Apr-Feb) (Apr-Feb) 60000

(Apr-Feb) (Apr-Feb)

(Apr-Feb) (Apr-Feb)

(Apr-Feb) (Apr-Feb)

Industry Trends - NR India

Natural Rubber - INDIA All Figs in TonnesFY 17 FY 18

3Note: Figs in brackets indicate % change YoY

NR Prices NR Stock in Jan'18 stood 13 % lower in comparison to Jan’17.at the end of Dec’17 stood marginally higher at 280000 tonnes.

Export

NR Consumption went up by a robust 13% in Jan 2018. Accordingly NR production-consumption gap stands higher than previous year.

NR Production fell sequentially in Jan 2018 and remained at the year-ago period.

Stock NR (RSS-4) Price

NR Imports which have remained largely lower than previous year's level went up in Jan in view of domestic shortfall. have petered out.NR exports

574000

594000

860575

904960(5%)

(3%)

(Rs/kg)

72000

72000(0%)

20000

40000

60000

80000


84600

(13%)96000

70000

75000

80000

85000

90000

95000

100000


Import

24279

41978(73%)

10000

20000

30000

40000

50000

60000


6329

0

1000

2000

3000

4000

5000

6000

7000


146.66

127.46(-13%)

80

100

120

140

160


277000

280000(1%)

100000

200000

300000


Apr- Jan (FY18) & YoY Comparison

(Apr-Jan)FY17

(Apr-Jan)FY18

FY17 FY18

29

(Apr-Jan) (Apr-Jan)

Industry Trends - NR Global

Global NR Overview (ANRPC* Countries)

4

Jan - Dec’17 & YoY Comparison

Figs in brackets '()' indicates % change (YoY).*ANRPC - Association of Natural Rubber Producing Countries(Member countries : Cambodia,China, India, Indonesia, Malaysia, Papua New Guinea, Philippines, Singapore, Sri Lanka, Thailand & Vietnam)

NR production went up by 6% in calendar 2017 boosted by 27% growth in the month of Dec''17.

India

NR Consumption YoY (INDIA vs. CHINA)

China

NR Consumption grew by 3%. Second half of the year has witnessed a steady increase.

India NR consumption witnessed 3% growth in in calendar 2017. On the other hand, consumption contracted marginally by 2% in in the same time period.China

All Figs in ‘000 Tonnes2016 2017

11123

11831(6%)

Jan-Dec'16 Jan-Dec'17



8150

8193(1%)

1033

1066(3%) 4992

4900(-2%)

823

1046(27%)

500

700

900

1100

1300

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

653

674(3%)

400

500

600

700

800

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

('000 T)


5

Snapshot

Global production of Medium/Heavy Duty Trucks is expected to grow at a CAGR of 3% from 2017 to 2021 mainly d r i v e n b y A r t i c u l a t e d T r u c k * production at a CAGR of 5%. Local OEMs dominate most key regional markets for Trucks.

Global Medium/Heavy Duty Truck* market expected to grow @ 3% CAGR (2017-21)

2.782.99 2.85

2.612.77

2.9 3.02 3.12 3.17 3.26

2012 2013 2014 2015 2016 2017(p) 2018(e) 2019(e) 2020(e) 2021(e)

China accounts for > 1/3rd of Global Medium/Heavy Duty Truck Production Share

33% 38% 36%28%

35% 36% 36% 36% 36% 36%

17%16% 17%

18%16% 15% 15% 14% 14% 13%

15%14% 17%

20% 15% 15% 15% 16% 16% 16%

9% 6% 6%8% 9% 10% 10% 10% 10% 10%

14% 14% 13% 17% 17% 17% 16% 16% 16% 16%

2% 2% 2% 2% 1% 1% 1% 2% 2% 2%9% 10% 9% 7% 6% 6% 7% 6% 7% 7%

2012 2013 2014 2015 2016 2017(p) 2018(e) 2019(e) 2020(e) 2021(e)

ROW Eastern Europe Western Europe India North America Asia Pacific China

Production growth in the segment will mainly be driven by China, which accounts for more than 1/3rd of global production share of Medium/Heavy Trucks.

Global Medium/Heavy Duty Truck Market

The global Trailer market is expected to grow at a CAGR of 3% from 2017 to 2021. Within the Trailers market, Semitrailers account for 90% of total Trailer production globally. However, the share of 'Drawback Trailers' is slowly gaining traction mainly on account of demand from China.

“ “

CAGR 1%

CAGR 3%

*Incl. medium duty trucks (6-15GVW) and heavy duty trucks (>15GVW );

The Global Medium/Heavy Truck market (Production) grew at a CAGR of 1% between 2 0 1 2 a n d 2 0 1 6 a n d i s expected to grow at a CAGR of 3% from 2017 till 2021.

(Production in Million units)

*A Rigid Truck doesn't tow a trailer and has a fixed no. of wheels, whereas an Articulated truck are multi axle vehicles and can tow trailers.

6

Snapshot

Heavy Duty Trucks account for >60% of total Prod. Share of Medium/Heavy Trucks

61% 64% 67%

39% 36% 33%

2012 2017(p) 2021(e)

Heavy Duty Trucks (> 15 GVW) Medium Duty Trucks (6-15 GVW)

Growth in Medium/Heavy Duty Truck market majorly driven by Heavy Duty Trucks

1.1 1 1.10.8 0.8 0.9

0.9 11.3

2012 2017(p) 2021(e) 2012 2017(p) 2021(e)

Medium Duty Trucks (6-15 GVW) Heavy Duty Trucks (> 15 GVW)

Rigid Trucks Articulated Trucks

Within the Heavy Duty Truck segment, Articulated Trucks are expected to drive growth with an est. prod. growth of CAGR @ 5% (2017-21)

% Share of Articulated Trucks in Heavy Duty Truck segment by Region

34

%

32

%

34

%

33

%

10

%

10

% 40

%

40

% 56

%

52

%

56

%

52

%

56

%

52

%

56

%

52

%

56

%

52

%

56

%

52

%

66

%

68

%

66

%

67

%

90

%

90

% 60

%

60

% 44

%

48

%

44

%

48

%

44

%

48

%

44

%

48

%

44

%

48

%

44

%

48

%

20

17

(p)

20

21

(e)

20

17

(p)

20

21

(e)

20

17

(p)

20

21

(e)

20

17

(p)

20

21

(e)

20

17

(p)

20

21

(e)

20

17

(p)

20

21

(e)

20

17

(p)

20

21

(e)

20

17

(p)

20

21

(e)

20

17

(p)

20

21

(e)

20

17

(p)

20

21

(e)

Western

Europe

Eastern

Europe

North

America

Russia China India Asia Pacific Brazil Rest of

Latin

America

ROW

Rigid Trucks Articulated Trucks

1.11.0 1.1

1.7 1.8

2.2CAGR 2%

CAGR 4%

Heavy Duty Trucks, accounting for more than 60% of total prod. Share in the Medium/Heavy Truck segment, is expected to grow at a CAGR of 4% (2017-21).

Heavy Duty Truck Segment

(Production in Million units)

7

Snapshot

Western & Eastern Europe

Higher efficiencies drive Articulated Truck market share:

o

Changing logistic fleet structures increasingly relying on large articulated trucks, e.g. in Italy

o

Favorable regulation, e.g. vehicle length in Italy and vehicle tonnage in France

o

Expected city regulation for medium duty trucks

o

Continuing pressure on long-haul transport efficiency

North America ·

Penetration already at high levels due to a large share of long distance transport

· Share expected to remain stable

Russia · Medium and stable share of the Russian truck market · No further increase in articulated tucks expected until 2021

China

·

Rapid development of the Chinese road network and professionalization of freight forwarders drives articulated trucks demand

·

Increase of articulated trucks is also driven by regulation change

India

·

Articulated trucks are gaining share in India as freight forwarders are professionalizing and road networks are improving

·

Increase of articulated trucks is also driven by regulation change

Asia Pacific

·

A further shift towards articulated trucks is expected until 2021

Brazil

·

Articulated trucks are already dominating the Brazilian market –

Share is expected to stay constant

Rest of Latin

America

·

Articulated trucks are expected to keep their very high share

ROW ·

Share of articulated trucks is expected to stay constant for ROW

Region

·

Key Trends in the Articulated Truck segment

Key drives of growth in the Medium/Heavy Duty Truck market

Macroeconomic

GDP

Short/mid-term GDP growth mainly in India and China, drives global truck and trailer demand. Rebound of Brazilian and Russian markets

Business climate

Short-term indicator with high impact on volatility of truck/trailer business, currently showing no direct source of crisis.

Construction sector

Growth of construction sector with positive impact on truck and trailer demand –

Chinese and Indian construction sectors

are clearly outgrowing other markets

Transport

Development of transport tonnage

km

Long-term factor of overall transport volume is the rapidly increasing transportation demand driving truck/trailer industry in China and India particularly

Road vs. other transport

Road transport vs. other modes of transport (e.g. rail, waterways) is overall expected to be stable

Fuel prices

With rising crude prices, fuel price is expected to increase in the short term but is expected to stabilize in the long run.

Socioeconomic

Emission regulations

Emission regulations are putting pressure on truck industry –High predictability for OEMs from long -term emission standard cycles

Regulatory

environment changes

Positive impact expected on truck and trailer demand from implemented/proposed regulatory changes in the US and China

Population

Population is expected to increase slightly in most regions –Marginal positive impact on truck and trailer demand

Factors Parameter Impact

8

Snapshot

Medium/Heavy Duty Truck Production by OEM by Region (2017)(Local Players dominate)

Mercedes Benz, 22%

Scania, 16%

Volvo, 15%MAN, 13%

DAF, 13%

Iveco, 12%

Others, 9%

Freightliner29%

Ford, 19%

International13%

Kenworth11%

Peterbilt, 7%

Volvo, 5%

Others, 16%Mercedes

Benz, 28%

MAN, 28%Ford, 14%

MAZ, 14%

Isuzu, 6%

Tatra, 4%Others, 6%

Kamaz, 41%

GAZ, 24%

Isuzu Ural, 9%

Mercedes Benz, 3%

Volvo, 2%

Others, 21% Dongfeng,21%

FAW, 19%

CNHTC, 13%Shaanxi, 11%

Foton, 9%

Lifan, 6%

Others, 21%

Tata, 52%Ashok

Leyland, 25%

Eicher Motors,

12%

Bhara Benz, 5%

M&M, 4% Others, 2%

Isuzu, 34%

Hino, 28%

Fuso, 24%

Hyundai, 5%

UD Trucks, 4%

Daewoo, 3% Others, 2%

VW, 19%

Mercedes Benz, 19%

Scania, 14%Ford, 13%

Volvo, 12%

Iveco, 4%

Others, 19%

MAN, 39%

Kamaz, 24%

Hyundai, 20%

Iveco, 12%

FAW, 3% Others, 2%

l In almost all key regional markets for Medium/Heavy Duty Trucks, the top 5 players account for > 70% of the market share.

l Regional markets are clearly dominated by local players in the Medium/Heavy Duty Truck segment.

l Tata Motors accounts for more than half of the market share of the Indian Medium/Heavy Duty Truck market.

l European OEMs have a worldwide presence in the Medium/Heavy Duty Truck market (across Europe, North America, Russia, India, Brazil and other parts of the world).

Western Europe Eastern Europe North America

Russia China India

Asia Pacific Brazil ROW

9

Snapshot

Global Regulations / Emission Standards in the Medium/Heavy Duty Truck Industry

Country

/ Region

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

EPA 10

EPA 13

EPA 14

EPA 16

EPA 17

EPA 21

EU V EUVI

EU V

EU VI

EU V

EU VI

EU V

EU III EU IV EU V EU III EU IV EU VI

EU III EU IV EU V

USA

Europe

Japan

South Korea

Brazil

Russia

India

China

Key Regulatory changes in major Truck markets and their impact on demand

Time period

Country/Region

Regulation

Decided/Proposed

Impact

Sep. 2016

China

Overload

Restrictions

Decided

New "Truck Overload Restriction"

policies are expected to foster demand

especially for HDTs

Jan. 2017 Germany Gigaliner Trucks Decided

Regulatory change allows extra long

trucks which is expected to slightly

foster demand in the short -term

2018-19

USA

Infrastructure Spending Plan

Considered

Intended government spending plan

may boost freight activity if put in place

Dec. 2017

USA

Electronic logging device (ELD)

Decided

ELD may strain fleet capacity and boost freight rates since non-

compliant fleets will be removed from the

market

2018-19

USA

Mandatory Speed limiting

Proposed

NHTSA considers introducing mandatory

speed limiting devices which are

likely to increase truck demand

India Stats

10

Port Traffic up 5% in India during Apr-Jan FY18

Major ports in India handled a total traffic of more than 5600 lakh tonnes during Apr - Jan, FY18, an increase of 5% vs. last year. Amongst majpr ports, the top five (namely, Kanlda, Paradip, JNPT, Mumbai and Vishakhapatnam) accounted for 60% of total port traffic in the country.

Indira Gandhi International (IGI) Airport, Delhi, was the busiest airport in FY17 in terms of international passengers handled. IGI, Delhi, handled 15.5 million interntional passengers in FY17, followed by Chhatrapati Shivaji Int'l Airpirt, Mumbai, which handled 12.44 million international passengers in FY17. Within the top 10 busiest airports in India, Delhi & Mumbai together handled more than 50% of total international passengers.

Revenue of the Indian Railways, during FY16, increased at a CAGR of 6.4 per cent to US$ 25.2 billion. Revenues from the sector are estimated to reach to US$ 44.5 billion by the end of FY20/ Revenues would expand at a CAGR of 9.07 per cent during FY07–20E. In March 2017, Railways started a new segment of revenue generation channel through auctioning for advertising and branding contracts on 1000 trains. The front running brands are to sign this contract for 5 years.

IGI Delhi - India's busiest Airport

Indian Railways revenue moves up at a CAGR of 9% (FY07 till FY16)

88

47

0

72

90

2

51

45

5

52

94

5

50

98

9

41

49

4

42

20

8

32

40

8

32

16

3

24

85

6

20

45

5

26

07

2

90

98

9 (3

%)

84

57

2 (1

6%

)

54

51

8 (

6%

)

52

70

8 (

nil)

52

44

3 (

3%

)

47

08

3 (1

3%

)

43

57

8 (

3%

)

34

79

8 (

7%

)

29

93

5 (-

7%

)

24

79

1 (n

il)

24

21

0 (1

8%

)

21

35

1(-

18

%)

Kandla Paradip Jnpt Mumbai Visakhapatnam Kolkata Chennai New Mangalore V.O. Chidambaranar

Kamarajar (Ennore)

Cochin Mormugao

(Apr-Jan), FY17 (Apr - Jan), FY18*

*tentative

1.79

2.21

2.23

2.31

3.37

3.6

5

5.21

12.44

15.5

Sardar Vallabhbhai Patel Int'l Airport, Ahmedabad

Calicut Int'l Airport, Calicut

Netaji Subhas Chandra Int'l Airport, Kolkata

Trivandrum Int'l Airport, Thiruvananthapuram

Rajiv Gandhi Int'l Airport, Hyderabad

Kempegowda Int'l Airport, Banglaore

Cochin Int'l Airport, Kochi

Chennai Intí Airport, Chennai

Chhatrapati Shivaji Int'l Airport, Mumbai

IGI Airport, Delhi

(million no. of international passengers handled)

14.418.2 17.7 18.8

21.2 22.7 23.2 23.826.4 25.2

44.5

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY20(P)

CAGR: 9%

‘000 tonnes

Railways revenue in US $ Bn

11

Focus

India third largest defense spender in 2017

Global defense spending increased to US$1.57 trillion in 2017 and is expected to further increase to US$1.63 trillion, the highest since cold war period, in 2018. US, the largest defense spender, accounted for 41% of global defense spending followed by China (@12% of the global defense spend) and India (@ 3% of global defense spend). US and China together accounted for more than half of the total global defense spending.

India overtakes US to become 3rd largest producer of Crude Steel

China alone is responsible for over 40% of global renewable capacity growth. In fact, China already surpassed its 2020 solar PV target, and the IEA expects it to exceed its wind target in 2019. China is also the world market leader in hydropower, bioenergy for electricity and heat, and electric vehicles. By 2022, India is expected to more than double its current renewable electricity capacity.

China leads global renewable enegry capacity growth

India has replaced US as the 3rd largest producer of Crude Steel in 2017. India produced 101.4 million MT of Crude Steel in 2017, an increase of 6.2% YoY. China remains the largest producer of Crude Steel in the world with a production level of 831.7 million MT in 2017 (8 times that of India) followed by Japan at a production of 104.7 million MT in 2017.

US643, 41%

China193, 12%

India52, 3%

UK51, 3%

Saudi Arabia51, 3%

Russia47, 3%

France46, 3%

Japan45, 3%

Germany38, 3%

South Korea35, 2%

Others379, 24%

(Defence spend in US$ bn)

786.9

104.8 95.5

831.7 (5.7%)

104.7 (-0.1%)

101.4 (6.2%)

China Japan India

2016 2017

31

8

86

35

16

0

43

32

16

36

3

12

3

10

7

10

6

26

21 3

7

China USA India EU Japan Brazil Africa & Middle

East

2011 -16 2017 -22

(million MT)

Capacity growth in Gigawatts

12

ATMA Convention charts out road map for Tyre Industry

ATMA Annual Convention 2018, the flagship event of Tyre Industry in India, concluded with a call for closer col laborat ion between tyre industr y and i ts stakeholders especially the Auto OEMs for unfolding mega potential of tyre industry’s rich value chain.

As one of the largest conferences on the automotive calendar of India, ATMA Convention brought together automotive and tyre industry leaders, top policy makers, government officials, thought leaders and consultants. The deliberations helped chalk out the agenda for the future while discussing current realities of the tyre industry.

In his welcome address, Mr Satish Sharma, Chairman ATMA said, “Having played its well deserved role as a lead sector of manufacturing, Tyre Industry in India is at the cusp of a significant growth. At a time when private investment cycle in India is yet to be revived, Indian tyre industry has invested over Rs. 45000 crore ($7 billion) in recent years.

“FY18 has been a breakthrough year for the Tyre Industry. The Government has supported the Tyre sector by way of imposing Anti Dumping Duty (ADD) on Truck and Bus Radial Tyres from China and by increasing the Customs Duty on Tyres to 15% (from 10%) in the Union Budget”, said Mr Sharma.

Speaking on the occasion, Chief Guest Inaugural Session Mr Suresh Prabhu, Union Minister of Commerce & Industry said, “All stakeholders (producers and consumers of Rubber) need to work together along with the Government to arrive at a Policy that is conducive to the growth of the Indian Rubber Sector and meets the needs of both Rubber growers and consumers of Rubber” . Tyre Industry is the engine of mobility and is truly the soul of the auto sector. Growth in the Tyre sector indicates a growing auto sector and in-turn a growing economy, he said.

That tyre industry is globally competitive and geared to take on the world came out clearly in the high profile

Event

13

panel discussion on tyre industry participated by Mr. Neeraj Kanwar, VCMD Apollo Tyres, Dr. Raghupati Singhania, CMD JK Tyre & Industries & Mr. Arun Mammen, VCMD MRF. In one voice, industry leaders showed their commitment for continuing manufacturing excellence and make a mark globally.

Mr Rakesh Batra, Partner and National Leader Automotive, Ernst and Young made a theme presentation on Redefining Tyre Industry – OEM Partnership. In a panel discussion, four top executives of Tyre Industry with years of experience of partnering with Auto-OEMs discussed about future of mobility and the respective roles of Tyre and Auto sectors. The panelists included Mr Ajay Sevekari, Director Bridgestone India, Mr Minaz Hassam, CFO and MD Continental India, Mr V K Misra, Technical Director, JK Tyre and Mr Koshy Varghese, Executive VP, MRF Ltd.

While terming Indian Tyre Industry as a mature and established industrial segment, Chief Guest of the Valedictory Session, Mr Amitabh Kant CEO NITI Aayog exhorted the industry to take disruptions in automotive sector in its stride and continue to remain focused on manufacturing excellence.

In his theme address on Tyre Industry – Government Partnership, Mr Anant Goenka, MD CEAT & Vice Chairman ATMA said, Tyre industry and the Govt have been working in sync with each other and in the coming days, the industry looks forward to much closer cooperation. He emphasized on the need to accelerate the process of Natural Rubber Policy formulation for optimum growth of Rubber value chain and addressal of Inverted duty structure.

Event

14

Event

Release of Repor ts & Commemorative Volumes

An important highlight of the first ATMA Convention was the release of a series of reports and studies. A Tyre Industry Research Report titled “Turning the Wheels of Progress” was released by Mr. Suresh Prabhu. Prepared by Thought Arbitrage Research Institute (TARI) (headed by Mr Kaushik Dutta), the report underlines tyre industry's competitiveness, export achievements and the policy enablers which could accelerate industry's growth. Mr Amitabh Kant released a Study on Corporate Social Responsibility (CSR) by Tyre sector in India. A commemorative volume on Indian Tyre industry’s Journey over the Years was also released on the occasion.

Launch of ATMA Fleet Management Awards

Fleet Management Companies have been playing a key role in improving competitiveness of transportation sector. On the occasion of first Convention, ATMA launched Fleet Management Awards to recognize the excellence in the sector. Five Fleet Management awards were conferred in the fields of Drivers’ Training & HR Practices; Safety Initiatives; Adoption of Technology/ Telematics; Adoption of Efficiency Measures and Corporate Social Responsibility. A special award was conferred upon Mrs Shanti Devi, first woman truck mechanic in India. Mr Amitabh Kant, CEO NITI Aayog presented the awards to the winners in a glittering ceremony.

15

Event

Amid launch of state-of-the-art models by Auto & Tyre majors at Auto Expo 2018, the Tyre Safety Pavilion set up by Automotive Tyre Manufacturers’ Association (ATMA) at Hall 8 emerged as a centre of attraction amongst visitors.

Besides distribution of safety booklets and one-on-one interaction with visitors on ways to improve safety, what grabbed the attention was interesting animation films which presented sequences from day-to-day life and underlined the message of tyre safety.

Auto Expo visitors were encouraged to play a creatively designed short quiz “How Tyre Smart You Are” on a specially launched app on Tyre Safety. The participants got prizes and a certificate of recognition landed in their inboxes appreciating their contribution to Tyre Safety.

ATMA Tyre Safety Pavilion comes alive at Auto Expo

16

Event

ATMA Tyre Safety Pavilion comes alive at Auto Expo

“Sensitizing road users about safety is not an easy task. ATMA has designed an engaging way of spreading awareness on Tyre Safety through the launch of an app. Participation in the quiz and Instant recognition through certification acts as a major morale booster and helps motorists take pride in keeping their tyres in shape besides acting as a constant reminder”, said Mr Satish Sharma, Chairman ATMA.

“ There are severa l benef i ts of wel l -maintained tyres including efficient braking, good ride and handling and fuel economy. Worn out and poorly maintained tyres are a big safety hazard. It is gratifying to note that visitors are responding to our call for Tyre Care & Safety and we are overwhelmed by the large turnout. We are sure this exercise will really help spread the awareness on safety and prevent accidents” added Mr Sharma.

Over

2000participateinthetyresafetyquiz

Quotable Quotes

17

Quotable Quotes

n all likelihood India is going to register higher Igrowth rate than other major emerging market economies in the next decade. So, I wouldn't

focus on the short-term numbers. I would look at the big picture for India and big picture is telling us that it has enormous potential.

- Ayhan KoseDirector, Development Prospects Group, World Bank

“he players that are necessarily the leaders… Tthat are the leaders today... will not necessarily remain leaders after electric

vehicle dust settles down and new players who are either non-existent or are small players today could become leaders after the dust settles.

- Pawan GoenkaMD, Mahindra & Mahindra

“ he current outlook is one of cautious Toptimist. There is still some turbulence and it is not clear how some of the known

uncertainties will play out. However, FY19 is likely to be a better year, based on our current assessment.

- R ChandrashekharPresident, NASSCOM

“

here should be constant checks on old vehicles Tin the national capital with those flouting the environment norms need to be taken off the

roads. The future lies in zero emission vehicles. As a special provision in the Union Budget 2018-19 for curbing pollution in Delhi, a scheme of Rs 1,200 crore will be executed with the Delhi government and adjoining states to address the rising air pollution in the national capital.

- Amitabh KantCEO, NITI Aayog

“e need to have a message that is Wnuanced between where Trump is likely to position himself and where China

positioned itself last year. India is no longer a salesman to the world and we need to position ourselves as the statesman now.

“- Uday Kotak

CMD, Kotak Mahindra Bank

ybrids will be important, not only for us Hbut for the industry as well. If we have to address the challenges our country is

facing – the fuel bill, pollution and the factor of bringing in more viability in business – it has to continue with hybrids. We’ll have to work on it to see out the challenges, because with EVs, the main challenge is infrastructure, charging stations, charge times – all this has solutions in hybrid. We are largely dependent on government support in this direction.

- N RajaDeputy MD, Sales & Service, Toyota and Chairman, Lexus India

“CV growth, as we have always been Lsuggesting, that in India the LCV market is suppressed. In most markets like India the

LCV to HCV ratios 3:1, 4:1 and even 6:1, here we had reached a level of 2:1 somewhere around in 2012 and then because of the recession and to some extent a bit of overcapacity in the Ace type of vehicles last year--this year for instance, it might end up only 1:1. So there is a lot of growth waiting to happen in LCV.

- Ravi PisharodyExecutive Director, TATA Motors

“

n India, we project 7.5% growth next year, Iwhich is sizeable compared to other countries. Ultimately, it's about the opportunity to invest

in India and right now the world is very positive about India.

- Brian T MoynihanCEO, Bank of America

“here are a lot of challenges, but you know TIndia is where the future growth is going to come from. I want to show that India is a

right place to be and make it also successful for the business where others have struggled.

- Thomas KuehlPresident, Nissan Motor India

“

Across the Great Wall

China Column

Beijing invests $78b in transport in past 5 yrs

Beijing invested 492.2 billion Yuan ($77.9 billion) in transport over the past five years. The investment represented a 44-percent increase from the 340 billion Yuan in the five-year period to 2016 as the city sought to ease traffic jams and improve transport networks connecting neighboring regions, as per the Beijing Municipal Commission of Transport.

Seventy-five percent of the money was spent on public transport, and authorities attracted 57.8 billion yuan of investment through public-private partnership and build-operate-transfer modes.With 22 subway lines in operation, the total length of rail transit in the Chinese capital had increased to 608 km by the end of 2017 from 442 km five years ago.

Meanwhile, the total length of expressways had increased to 1,017 km from 922 km while that of arterial roads had increased to 1,365 km from 1,226 km. As the authorities seek to integrate Beijing with its neighbors Tianjin and Hebei, they have been building more high-speed railways and highways in the region.

18

Beijing Transport Spend (last 5 years)(bn. yuan)

340

492

2011 2016

44%

Beijing Rail Transit length (last 5 years)

(km)

442

608

2012 2017

38%

Beijing Expressways length (last 5 years)(km)

992

1017

2012 2017

3%

Beijing Arterial Road length (last 5 years)(km)

1226

1335

2012 2017

9%

China's tourism revenue posts double digit growth in 2017

China earned 5.4 trillion yuan ($850 billion) from tourism in 2017, an increase of 15.1 percent, as per the China Tourism Academy. Chinese tourists made 5 billion domestic trips and 131 million overseas trips in 2017, up 12.8 percent and 7 percent respectively.

Last year saw 139 million inbound trips, a rise of 0.8 percent from 2016, of which 75 percent were from Asia.

Preliminary data showed the industry contributed 9.13 trillion yuan to GDP, accounting for 11 percent of economic output. Tourism created 80 million jobs.

China is the world's largest source of outbound tourists and the fourth largest destination of inbound tourists.

China Tourism Revenue(trillion Yuan)

4.7

5.4

2016 2017

(15.1%)

19

China Column

China mulls policies to regulate NEV battery recycling

Chinese authorities are in the process of formulating policies on the recycling of batteries due to the rapidly-expanding new energy vehicle (NEV) market.

The Ministry of Industry and Information Technology (MIIT) is expected to roll out policies to clarify industrial standards and regulate battery recycling this year. The new policies will "focus on bringing batteries to formal recycling enterprises, as per China Automotive Technology and Research Center (CATRC).

China expects the total production and sales of NEVs to hit 5 million by 2020. A total of 777,000 NEVs were sold on the Chinese market last year, up 53.3 percent year on year.

As the average lifespan of the batteries is about five to eight years, so China is likely to see explosive growth in battery disposal in the next two years. Lithium batteries, commonly used in NEVs, pose a decreased hazard to the environment than lead-acid batteries. Copper, cobalt and nickel in the batteries also have high recycling values.

The CATRC estimated that China would see 120,000 to 200,000 tonnes of batteries disposed off between 2018 and 2020, and 350,000 tonnes in 2025.

In 2016, China's State Council said NEV makers should be responsible for building a recycling network for used batteries, and use an after-market network to recycle used batteries.

Total No. of New Energy Vehicles (NEVs)sold in China

502,283

770,000 (53.3%)

2016 2017

China's R&D Spend up 11.6% in 2017

China's spending on research and development (R&D) grew faster in 2017 as the country continued to push for innovation-driven development.

China's R&D spending rose 11.6 percent year-on-year to 1.75 trillion yuan ($280 billion) in 2017, as per the National Bureau of Statistics (NBS)

The spending accounted for 2.12 percent of China's gross domestic product.

Chinese enterprises spent more than 1.37 trillion yuan on R&D last year, up 13.1 percent from 2016, while R&D spending at government institutions and colleges increased 7 percent and 5.2 percent, respectively.

Some 92 billion yuan, or 5.3 percent of the total spending, was put into fundamental research in 2017, up 11.8 percent from a year earlier.

According to the 13th five-year plan for national science and technology talent development (2016-2020), China will increase its annual per capita spending on R&D to 500,000 yuan by 2020, up from 370,000 yuan in 2014.

China had 5.35 million people working in R&D at the end of 2015, the world's largest pool of R&D personnel.

China's R&D Spend

1.57

1.75 (11.6%)

2016 2017

(trillion Yuan)

Units

20

Kruzr targets easing Smartphone related road safety concerns

Smartphones are becoming an intrinsic part of our lives and can pose a distraction assuming dangerous proportions while riding/driving a vehicle. Various global studies have revealed that mobile phones cause around 25-30 % of road accidents. Such distractions have necessitated the need for solutions that enhance the safety of road users without having to bother about their mobile devices.

Bengaluru-based start-up Kruzr has been focusing on using technology to ease growing phone-related road-safety concerns.

Kruzr is a technology-powered driving assistance system that was launched in January 2017 for both two- and four-wheelers. A completely automatic driving assistant, it is installed as a mobile app on the user's handset and turns on automatically, by detecting riding/driving movements. Once the app turns itself on, it will start handling all communications for the rider/driver intelligently, as well as assuring the user that any important call or message will be conveyed immediately. This app is currently only available for Android OS-equipped mobile phones with the company working on the Apple iOS system. Kruzr app's uniqueness lies in its complete automation, and can handle various platforms (calls, messages and chats).

The app learns about the user's movement through the use of sensors in the mobile phone. Android phones come with varying range of motion sensors, but two sensors – accelerometer and gyroscope are available throughout. There are also gravity, linear acceleration and rotation vector sensors, etc. Kruzr runs pattern recognition on the data from these sensors to take a decision and once it is certain that the device is in motorised motion, it also verifies this with GPS (if location services are available).

Globe Watch

Globe Watch

Schwalbe Takes Airless Tyres To Next Level

Schwalbe's Airless System consists of an outer tyre combined with an airless inner one. It's not only targeting bicycle 'fleet owners' or public bikes but also cycling commuters or regular cyclists and even e-bikers as Schwalbe claims that it offers puncture free riding and is also capable to easily handle the higher speeds and weights of e-bikes.

The Airless System brings an intuitive feel of an air pressure of around 3.5 bar making the driving characteristics comparable to those of an inner tube.

With regard to comfort, longevity and maintenance-free system, Schwalbe’s Airless System offers a real alternative to the inner tube for the first time.

Solid inner tube systems already exist. What makes this new Airless System so extraordinary are the technical properties of the foam particles, consisting of thermoplastic polyurethane (E-TPU), known under the Infinergy brand of BASF. Incidentally, it is the same material that is used in the soles of Adidas BOOST running shoes. The Airless tube has excellent damping and flexibility characteristics and offers lots of comfort.

These suspension characteristics makes the difference in comparison with the foams used for solid tubes so far. The physical force with which the compressed material returns to its original shape is more than twice as high with this E-TPU foam than with existing systems. The cause: the E-TPU foam consists of thousands of sealed air balls. Together they form a highly elastic air cushion. That presents great advantages over current materials for solid inner tubes and makes it a real alternative to the inner tube.

The technical advantages only cause a slight loss of performance, so the rolling resistance and the weight are slightly higher than for inner tubes. However, wherever a 100% maintenance-free system has the priority, the Airless System beats the inner tube.

21

Stat-O-Sphere


Stat-O-Sphere

l The Indian diaspora is the world's largest, with over people from India living 15.6 million

overseas. The Indian diaspora constitutes of the total number of international migrants 6%

(people living outside the country of their birth).

l As on 31st Jan '18, total 1,729,363 companies have been registered under the Companies

Act. Of these, 538,340 companies were closed; 5,975 companies are under (31%) (0.3%)

liquidation, 32,597 companies are in the process of being struck-off from the (1.9%)

register, 111 companies were in the process of being re-activated and 1,184 (0.01%)

(0.07%) companies have so far obtained the “dormant” status. Taking the above into

account, there were 1,151,153 active companies as on 31st Jan '18.

l The global market for robotic process automation software and services is expected to

grow to by 2021 at a rate of . $1.2 billion 3%

l India became 3rd largest market for compact SUV in 2017 with growth of as compared 49%

to 2016. China and US, respectively, are two biggest markets for this segment.

l The United States of America has the highest SDR quota and voting right in International

Monetary Fund i.e. and respectively, followed by Japan and China. India 17.46% 16.52%

has increased its quota and voting rights to and respectively. 2.76% 2.64%

l A per World Bank, the SAO or “Surgical” workforce is extremely small in low-income

countries (1 SAOs per 100,000 population) and lower middle-income countries (10 SAOs per

100,000 population) whereas there are SAOs per 100,000 population in high-income 69

countries. Life expectancy tends to be higher in countries with a surgical workforce larger

than workers per 100,000 people.20

l Global wealth grew by between 1995 and 2014 to a total of over 66% 1,140 Trillion

dollars. The share of the world's wealth held by middle-income countries increased from

19% 28% to during the same period, while the share of high-income OECD countries fell

from to75% 65%.

22

Stat-O-Sphere


Stat-O-Sphere

l Global emissions of carbon dioxide, a major greenhouse gas and driver of climate change,

increased from metric tons in 1990 to in 2013, a rise of . The 22.4 billion 35.8 billion 60 %

increase in emissions of CO2 and other greenhouse gases has contributed to a rise of about

0.8 degrees Celsius in the mean global temperature above pre-industrial times.

l An electric vehicle typically has 1/10th the number of moving parts: correspondingly, its

maintenance expenses are lower by . Also, running costs are approx 1/10th . Hence 60%

customers are likely to recover their initial investment through fuel and maintenance

savings within 3 years.

Disclaimer:Automotive Tyre Manufacturers’ Association (ATMA), has taken due care and caution in preparing this Report based on the information/data obtained by ATMA from sources which it considers authentic and reliable. However, ATMA does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. This Report is not a recommendation to invest / disinvest in any company or sector covered in the Report. No part of this Report may be published / reproduced in any form without ATMA’s prior written approval.

ATMA Research Automotive Tyre Manufacturers’ AssociationMarch. 2018

ATMA Research

ATMA Research is a specialized in-house resource of Automotive Tyre Manufacturers’ Association that aims at compiling, and analyzing information on automotive tyres as well as upstream (Natural Rubber and other raw materials) and downstream (Automobile) sectors in India. The information for analysis is sourced from authentic and reliable sources including tyre majors, Government departments, regulatory bodies, other industry associations and apex industry chambers.

About ATMA

Headquartered in New Delhi (India), Automotive Tyre Manufacturers’ Association (ATMA) is amongst the most active and well known national industry bodies in the country. Being a representative body of eleven large tyre companies in India accounting for over 90% of tyre production, ATMA has been accorded status as the true voice of the Indian tyre industry.

ATMA works towards promoting and safeguarding the interests of the tyre industry in India primarily by acting as conduit between the Government and the industry. The Association strives to be an active participant in policy making process and holds frequent meetings with the Government departments to discuss the challenges being faced by the industry in the ever-changing economic environment.

The Association acts as the industry’s interface with the media, opinion leaders, NGOs and other Industry associations around the world so as to present the perspective of Indian tyre industry on different issues.

Source : kruzr.com, Indiastat.com, Statista.com, IBEF, iea.org, World Steel Association (WSA), IHS Jane's Defense Report, 2017, Roland Berger Market Study, May 2017, bike-eu.com

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