The document provides an overview of the Indian tyre industry. Some key points: - The Indian tyre industry had a turnover of Rs. 25,000 crores in 2009-2010, producing 13.5 lakh metric tons of tyres. The top 10 companies account for over 95% of production. - Raw materials like natural rubber, butyl rubber, and nylon account for 63% of industry costs. India imports some raw materials due to insufficient domestic production. - Growth in the automobile industry, driven by rising incomes, GDP growth, and infrastructure spending, is driving demand for tyres. Major automobile companies are expanding production. - Leading tyre manufacturers include MRF,

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

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.

14. The Commercial Vehicles segment grew at 4.07 %.

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

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

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

38. 9% margin in Cross –Ply

39. 25% plus margin in Radial Tyres

40. Higher capital required to protect marginsPlans

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