Your SlideShare is downloading. ×
Final tyre
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Introducing the official SlideShare app

Stunning, full-screen experience for iPhone and Android

Text the download link to your phone

Standard text messaging rates apply

Final tyre

9,669
views

Published on

Tyre Industry, sector analysis

Tyre Industry, sector analysis


1 Comment
4 Likes
Statistics
Notes
No Downloads
Views
Total Views
9,669
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
837
Comments
1
Likes
4
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide
  • Two wheelers - Majority of exports are to Bangladesh, Sri Lanka, Bhutan and Nepal• PV - Exports are made to South America, Africa, Europe, Latin America and the Middle East.CV - Major portion of the exports are to Sri Lanka, Gulf countries and Africa 3 Wheelers Auto exports to Sri Lanka, Egypt, Nepal, Bangladesh among other countries
  • Tyre industry set for structural shift: Currently, manufacturing radial tyres is farmore capital intensive than cross-plys. Investment per tonnes per day (tpd) is3.2x of cross-ply at Rs6.1cr/tpd. On the other hand, the selling price of radialtyres is around 20% higher than the cross-ply tyres. Taking into account thedifference in capital requirements and consequent impact on asset turnover,interest cost and depreciation, to generate similar RoCE and RoE, the tyrecompanies would need to earn EBITDA margins of around 21% compared toaround 9% being earned on cross-ply tyres. Thus, higher capital requirementswill help protect margins from upward bound input costs, as the businessmodel evolves bearing in mind final RoEs rather than margins. With the sectorset for a structural shift and apparent pricing flexibility, it will result in animprovement in RoCE and RoE of the tyre manufacturers going forward.
  • Transcript

    • 1. Tyre Industry Analysis
      By :
      Gagan Pareek
    • 2. Economic growth drivers….
      GDP growth as per RBI is 8.5% .
      Robust industrial growth backed by improvement in consumption demand
      Increase in infrastructure spending.
      Substantial improvement in domestic demand.
      Increased thrust of the government on infrastructure projects.
      All time high sales growth of few major automobile companies
      eg: Maruti Suzuki India Limited sold a total of 10,18,365 vehicles in 2009-10.
    • 3. Indian tyre Industry
      Indian tyre industry
      Passenger vehicles
      Commercial vehicles
      Others
      MHCV
      HCV
      LCV
      Farm Vehicle
      OTR
      Industrial vehicle
      Cars
      Motor Cycles
      scooters
    • 4. AN OVERVIEW OFINDIAN TYRE INDUSTRY
      Financial Year 2009-2010
      Turnover of Indian Tyre Industry Rs. 25,000Crores
      Tyre Production (Tonnage) 13.50 lakh M.T.
      Tyre Production – All Categories (Nos.) 971 Lakh Tyre Export from India (Value) :Rs. 3000 crores
      Number of tyre companies: 36
      Industry Concentration 10 Large tyre companies account for over 95% of total tyre production.
    • 5. Raw Materials of  Tyre Industry - Overview    
      Tyre Industry is highly raw-material intensive. Raw materials cost accounts for approx. 63% of tyre industry turnover and 72% of production cost.
      62% of total Natural Rubber consumption is by the Tyre Sector, balance by rubber based non-tyre industries.
      Total weight of raw-materials consumed by tyre industry – 15.50 Lakh M.T.
      Total Cost of Raw Materials consumed by tyre industry – Rs.16,000 Crores
      Raw Material Availability  
      No domestic Production of Butyl Rubber and Styrene Butadiene Rubber of tyre grades, i.e., 1502 and 1712.
      Production of Nylon Tyre Cord Fabric, Polybutadiene Rubber, Rubber Chemicals, Steal Tyre Cord, Polyester Tyre Cord insufficient to meet domestic demand.
      Tyre industry imports raw materials on account of the following factors:
    • 6. Demand Cycle
    • 7. Indian Auto Industry
      Facts
      • Second Largest two wheeler manufacturer in the world
      • 8. Largest tractor and three wheeler manufacturers in the world
      • 9. Fourth largest Commercial vehicle market in the world
      • 10. Eleventh largest passenger car market in the world
      • 11. Growth Potential
      • 12. Can become World’s third largest automobile market in 2030.
      • 13. By 2016, Automotive sector can DOUBLE its percentage contribution to GDP from current levels of 5% (US$50 billion) to 10% ($180 billion).
      Trends
      • Growth of exports of 22.30 FY 2009-10.
      • 14. The Commercial Vehicles segment grew at 4.07 %.
      • 15. Light Commercial Vehicles recorded a growth of 12.29 percent.
    • The Growth Journey
    • 16. Category wise numbers
      Two Wheeler
      Dominated by Motorcycles 80% , Scooters 14% Mopeds 6%
      Domestic - 7.25mn units . Hero Honda 42% & Bajaj 27% share CAGR – 9.5%
      Exports 819000 units (07-08) . Bajaj Auto 59% TVS 17% share CAGR – 41%
      Passenger Vehicles
      Dominated by Cars 78% , MUV/SUV 22%
      Domestic – 1.5mn units Maruti-46% Tata-15% Hyundai 14% CAGR -14.8%
      Exports - 217000 units (07-08) Maruti 66% Hyundai 24% CAGR – 26%
      Commercial Vehicles
      Dominated by M&HCV – Goods 48% Passenger 38% , Rest by LCV -14%
      Domestic – 487 thousand units , Tata-62% Ashok Leyland -15% CAGR- 22%
      Exports – 59 thousand units, Tata 67% Ashok Leyland 12% CAGR -30.6%
      Three Wheeler
      Dominated by Passenger Carriers with 64% share , Goods Carrier -36%
      Domestic – 365 thousand units , Bajaj -42% Piaggio-41% CAGR- 10.5%
      Export – 141 thousand units , Bajaj -97% CAGR -44.5%
    • 17. Automotive Companies in India
      Major Multi-national companies
      Major Indian Companies
    • 18. India : A Developing Hub for Compact Cars
      • Compact cars account for 70% of the total car market.
      • 19. Compact car sales increasing at about 20% each year
      • 20. Excise duty on small cars slashed from 24% to 12% in last three years
      • 21. Maruti Suzuki :
      • New car plant to make 250,000 cars per
      annum (total 800,000 cars/annum)
      • 10 new Component JVs to support new
      Diesel Engine Plant.
      • Hyundai :
      • 22. Already a big player in the small car segment
      • Increase capacity to 600,000 cars per
      annum over next 1 year.
      • Nissan :
      • Micra, UK  India
      • Four more models in India, involving a total investment of over Rs 2,000 crore. 
      • 23. Ford :
      • Plans to unveil its small car with 1.2 ltr engine by 2010
      • Honda :
      • 24. Investing US $ 250 million in a new plant in
      Rajasthan with capacity of 60,000 car per
      year (First car to roll out in 2009).
      • Tata Motors :
      Tata Nano became a big success gaining worldwide popularity with Tata planning to increase capacity
      • Toyota :
      • Toyota Kirloskar motors planning to launch its own small car in India by 2011
      • General Motors :
      • New Capacity to manufacture small cars at its Talegaon, Maharashtra plant with 80% local inputs.
      • Brought in Spark small car in 2007
      • 25. Nissan-Renault :
      • 26. 50:50 JV, to make 400,000 cars a year with an investment of over US $ 1 billion.
      • 27. Coming up with the $2500 car to compete with Tata Nano in 2011
      • 28. VW :
      • Investing 400 million euro in a new plant in
      Pune. Operations are to start in second
      half of 2009.
    • 29. Key Growth Drivers
    • 30. Growth Drivers of Indian Automobile Market
      Rising industrial and agricultural output
      Rising per capita income
      Favourable demographic distribution with rising working population and middle classUrbanisation
      Increasing disposable incomes in rural agri-sector
      Availability of a variety of vehicle models meeting diverse needs and preferences
      Greater affordability of vehicles
      Easy finance schemes
      Favourable government policies
      Robust production
    • 31. Socio Cultural
      Environment
      Explosion in the number of nuclear families
      As the joint-family system crumbles and the number of nuclear families explode, more small families seem to be demanding a two/four wheeler for themselves. This has directly resulted in higher sales of tyres in the past decade.
      Higher car density per family
      The number of upper-class and upper-middle class families with more than one car per family seems to be increasing exponentially. This is especially true in cities where Brand Strategy Analysis working couples find it difficult to survive without more than one car for transportation. With higher disposable incomes, these families are finally able to afford this need.
      Shifting away from Savings, to EMI culture
      Another notable trend that seems to be fuelling car sales (and therefore tryre sales) is the shift in the middle-class consumers saving habits. The Indian middle-class family has long been known for its savings frenzy. But with a younger workforce, higher disposable incomes, lower unemployment and the influence of globalization, the average Indian middle-class family is slowly warming up to the idea of EMI and
      buying on credit. This has helped in furthering the sales of passenger cars significantly.
      Enviorment Analysis
    • 32. SWOT
    • 33. MRF
      Market leader among tyre manufacturers in India, with a 24% share in terms of revenues.
      Its leadership position, coupled with its strong brand recall and high quality, MRF commands the price-maker status.
      MRF has a strong presence in the T&B segment, the largest segment of the tyre industry, and commands
      around 19% market share in the segment.
      The Company has a distribution network of 2,500 outlets within India and exports to over 65 countries worldwide.
      Apollo Tyres (ATL)
      Apollo Tyres is the second largest player in the Indian tyre industry, with a market share of 22%, in terms of
      revenues, and the largest player in the T&B segment, with around 22% market share and 82% of its product mix
      coming from this segment.
      It also enjoys a strong brand recall. ATL derives 80% of its revenues from the replacement market, where the EBITDA margins are higher; hence, at operating levels, Apollo Tyres has better
      JK Industries
      JK Industries has a 17% market share, in terms of revenue, making it the third largest player in the industry. The
      Company ranks first in the MHCV and Passenger Car tyre segments, with 79% and 7% of its product mix coming
      from these segments, respectively. Exports account for approximately 17% of its gross sales.
      CEAT
      CEAT has a 14% market share, in terms of revenues, and is an average player across categories. 68% of its
      product mix comes from the MHCV segment.
      In terms of profitability, CEAT has lower margins compared to its peers, in spite of deriving 60% of its revenues from the replacement market
      Leading Market Players
    • 34. Analysis : Five Forces
    • 35. Value Chain
    • 36. Current Trends
    • 37. - Radial Tyre to Replace Cross – Plys
      • Margins in Radial higher by 25% than Cross – Plys
      • 38. 9% margin in Cross –Ply
      • 39. 25% plus margin in Radial Tyres
      • 40. Higher capital required to protect margins
      Plans
    • 41. Thank You