tyre industry
TRANSCRIPT
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By:Jaimin Patel(12)
Sudeep Bhatt(18)Adhikar Gupta(09)
APRESENTATION
ofMANAGEMENT RESEARCH PROJECT - 1
ON
TYRE INDUSTRY IN INDIA
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INDUSTRY OVERVIEW
• Dunlop Rubber Company (India) was incorporated in 1926 as a First Indian tyre company.
• The size of Indian tyre industry is estimated at about
Rs.14250 crore.
• Comprising 43 players with an aggregate installed
capacity of over 655 lacks tyre.
• The 10 large tyre companies account for over 95% of the
total production.
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Cont…….
• The industry is raw material intensive with raw material constituting over 55 per cent of the sales turnover.
• Raw material cost about 70 per cent of production cost.
• Rubber accounts for the major share of the material cost.
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• The major demand comes from the replacement market accounting for around 48.70 per cent, the growth driver of industry.
• 42.80 per cent from the Original Equipment manufacturers (OEM) and 8.50 per cent from the exports.
• The Indian tyre industry has witnessed a CAGR of 7.7 per cent over the last decade.
Cont…….
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Market Profile
The Indian tyre industry is Two Tiered
Tier-I players (top 5 tyre companies)
Account for over 80% of industry turnover and have a well diversified product-mix and presence in all three major segments
i.e. : replacement market, original equipment manufacturers (OEM's) and exports
Tier-II companies
Small in size, mainly concentrating on production of small tyres (for two/ three-wheelers, etc.), tubes & flaps and the replacement market.
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TYRE MANUFACTURING PROCESS
• Mixing the materials
• Extruding the tread
• Weaving the plies
• Preparing the bead core
• Building process
• Vulcanisation
• Trimming
• Final inspection
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Raw Materials
• Natural Rubber
• Synthetic Rubber
• Carbon Black
• Nylon Tyre Cord
Raw materials By Value (%)
By Weight (%)
Rubber 52 49
Carbon Black 23 10
Nylon tyre cord
8 24
Chemicals 15 12
Others 2 5
Total 100 100
Source : Way2Wealth.com
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DEMAND SCENARIO
Classification of Demand
BY Type:
Bus and TruckScooterMotorcyclePassenger CarTractor
BY Market:
OEM
Replacement
Export
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18%7%
1%21%
2%2%2%
47%
Category wise Sales FY07(%)
Truck/Bus LCV Tractor-trailerPassenger Car Tractor Front JeepTractor-rear Others
Source : ATMA
Source : ATMA
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General Economic Scenario
Growth of Automobile Industry
Fluctuations in Raw Material Prices
Relative Importance of Road Transport
Retreading
Radialisation
Demand- Supply Gap
Demand Determinants
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MAJOR PLAYERS IN INDUSTRY
MRF
Apollo Tyres (ATL)
JK Industries
CEAT
Goodyear India
BRIDGESTONE
Falcon Tyres
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The demand of most raw material especially rubber is high, while supply is restricted
Threat of Substitutes- Low
• No direct substitutes
• Here we consider retread tyre as a substitute for new tyre
Competitive Pressure-High
Top six players enjoying over 80% of total market share
Buyer Power- High
High competition pressure due to high bargaining power of OEMs and wide brand choice in the replacement market.
Barriers to New Entrant-High
¨ Capital- intensive¨ Distribution Network¨ Low operating Margin¨ Branding
Supplier Power-HighSupplier Power-High
Threat of Substitutes- Low
Competitive Pressure-
High
Buyer Power- High
Barriers to New Entrant-High
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PEST ANALYSIS
Political Factors
Trade Policy
Tariff – Duties
Excise Duty
Budget Impact On Tyre Industry
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Cont……
Technological FactorsTechnology LadderTyre with Cotton Tyre with Nylon Radial Tyre Tubeless Tyre Run Flat (Puncture Proof) Tyre Fuel economy/low rolling resistance tyre Green Tyre
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SWOT ANALYSIS
Strengths• Growth of automobile Industry• Cheaper Raw material
Weaknesses• Lack of technology• Number of Player
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Opportunities
Growing Economy - --Growing Automobile Industry ----Increasing OEM demand ----Subsequent rise in replacement demand
Development of infrastructure
Global sources for raw materials
Cont…..
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Cont…..
Threats
Increase in prices of natural rubber
Cheaper imports
Crude prices scaling upwards
Ban on Overloading
Cyclical nature of automobile industry.
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KEY SUCCESS FACTORS
Technology up gradation
Growth Of Automobile Industry
Introduction of new Concepts
Favorable Government Policy
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FUTURE OF TYRE INDUSTRY
India is no more an isolated economy, and the continued economic liberalization, and relaxation of import duties and laws, makes competition from overseas inevitable.
Unique road conditions, and consumer behavior in India, provides a window of opportunity.
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Conclusion
• Performing well in the Indian economy
• Provides very good amount of the employment and technology innovations
• Tyre companies face competition, together with price and cost pressures.
• Tyre companies would definitely show improvement in the margins, sequentially, and if prices remain at these levels, profitability would improve
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Cont…….
• The main problem to the industry is the price of its raw materials, most of which are petroleum by-products
• Overall Indian Tyre Industry is enjoying the fruits of more sales in the replacement market when the input cost is comparatively lower.