Tyres

Annual Review
Summary CRISIL Research expects demand for tyres (in tonnage terms) to grow at a CAGR of 8-9 per cent from 2006-07 to 2011-12. The deceleration in OEM growth across categories is likely to result in slightly slower growth as compared with the 10.6 per cent CAGR recorded between 2001-02 and 2006-07. Radialisation is expected to increase in MHCV tyres on account of rising OE fitment. OPMs are expected to improve in 2007-08 and remain stable in 2008-09.

January 2008

Contents
Part A: Healthy demand growth amidst rising imports Executive summary Demand outlook Outlook on supply Outlook on profitability Outlook on costs Part B: State of the industry Industry structure Product characteristics Manufacturing process Demand Supply Competition in Indian tyre industry Profitability and credit profile Cost structure and industry economics Part C: Industry statistics Industry statistics A-1 A-3 A-11 A-15 A-19

B-1 B-9 B-15 B-21 B-29 B-33 B-48 B-53

C-1

This document has been prepared by Poonam Vimal, Prasanna Kanta and Sachin Mathur (Head of Research). For any queries please get in touch with our client servicing desk. (clientservicing@crisil.com. Ph -022-66913561)

Opinion
Sections
Executive summary Demand outlook Outlook on supply Outlook on profitability Outlook on costs A-1 A-3 A-11 A-15 A-19

1.0 2.0 3.0 4.0

Figures
1.0 01 02 03 04 05 06 07 08 Demand outlook Tyre off-take (by market) 2006-07 Category-wise tyre off-take 2006-07 CAGR growth in market segments Growth trend for commercial vehicle tyres Radial truck & Bus tyre imports Growth in Car & UV tyres Tubeless penetration in car tyres Growth in motorcycle tyre demand

A-3 A-3 A-4 A-5 A-6 A-7 A-8 A-8

2.0 Outlook on supply 01 Capacity utilisation trend 02 Imports as a percentage of off-take 3.0 01 02 03 04 05 Outlook on profitability Relationship between OPM & RM costs Import trends in Truck & Bus tyre Half-yearly OPM trends RoCE moving in line with OPM Asset turnover of the tyre industry

A-11 A-11

A-15 A-16 A-16 A-17 A-17

Continued

CRISIL RESEARCH TYRES ANNUAL REVIEW

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continued

Figures
4.0 01 02 03 04 05 06 07 08 09 Outlook on costs Break-up of operating cost and raw material cost 2006-07 Global production, consumption and stock position Quarterly international price Relation between domestic & landed cost of natural rubber Import-cosumption ratio of NTCF Trends in imports of NTCF from China Trends in international & landed NTCF price Trends in crude and carbon black prices SBR & Butadene prices move in line

A-19 A-20 A-20 A-21 A-22 A-22 A-23 A-23 A-24

Tables
1.0 01 02 03 04 05 Demand outlook Long term demand trend Truck and bus tyres Long term demand trend LCV tyres Radialisation levels in percentage Long term demand trend Car tyres Long term demand of various tyre categories (%)

A-4 A-5 A-6 A-7 A-9

2.0 Outlook on supply 01 Tyre industry Expected capacity additions 02 Player plans 4.0 Outlook on costs 01 Increase/(Decrease) in percentage

A-12 A-13

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CRISIL RESEARCH TYRES ANNUAL REVIEW

State of the industry

Sections
1.0 Industry structure - Industry overview - Product segments - Radialisation 2.0 Product characteristics - Functional characteristics of a tyre 3.0 Manufacturing process - Process flow 4.0 Demand 5.0 Supply 6.0 Competition in Indian tyre industry - Profile of major tyre manufacturers in India 7.0 Profitability and credit profile - Profitability - Credit profile 8.0 Cost structure and industry economics - Key operating costs - Excise duties - Raw materials - Natural rubber - Styrene butadiene rubber - Poly butadiene rubber - Carbon black - Nylon tyre cord fabric B-1 B-1 B-3 B-6 B-9 B-9 B-15 B-15 B-21 B-29 B-33 B-33 B-48 B-47 B-48 B-53 B-53 B-54 B-57 B-58 B-59 B-60 B-62 B-62

Boxes
2.0 Product characteristics 01 Radial tyres: Evolution and market acceptance 02 Radial tyres: Usage and handling norms 03 Tubeless tyres: Evolution and market acceptance 3.0 Manufacturing process 01 Tyre manufacturing characteristics 4.0 Demand 01 Retreading

B-11 B-12 B-12

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Continued

CRISIL RESEARCH TYRES ANNUAL REVIEW

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continued

Charts
1.0 Industry structure 01 Tyre Industry: Product Categories and Market Segments 2.0 01 02 03 Product characteristics Construction of a tyre Radial versus cross-ply tyres Cross-ply and radial tyre comparison

B-2

B-9 B-11 B-11

3.0 Manufacturing process 01 Manufacturing process 4.0 Demand 01 Commercial vehicle tyres Factors affecting demand 02 Passenger vehicle tyres Factors affecting demand

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B-21 B-23

Figures
1.0 01 02 03 04 05 06 07 08 4.0 01 02 03 04 Industry structure Tyre industry Segment-wise production (1988-89) Tyre industry Segment-wise production (2006-07) Tyre industry Segment-wise sales (2006-07) Tyre industry - Break-up of sales revenue (2006-07) 2006-07 - Category-wise sales (MHCV Tyres) 2006-07 - Category-wise sales (passenger car tyres) Global tyre industry - Market share Global tyre industry - Product mix Demand Break-up of exports (2006-07) Tyres Export trend (in value) Tyres Export destination (2006-07) MHCV tyres Domestic sales versus exports

B-3 B-4 B-4 B-5 B-5 B-5 B-6 B-7

B-25 B-25 B-25 B-26

5.0 Supply 01 Tyres Production growth 6.0 01 02 03 04 05 Competition in Indian tyre industry Tyre companies Market share (2006-07) MRF product mix (2006-07) Apollo Tyres product mix (2006-07) JK industries product mix (2006-07) Ceat product mix (2006-07)

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B-33 B-37 B-37 B-38 B-39

Continued

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continued

06 07 08 09 10 11 12 13 14 15

Goodyear India product mix (2006-07) Birla Tyres product mix (2006-07) TVS Srichakra product mix (2006-07) Falcon product mix (2006-07) Tyre companies Market share in MHCV tyres segment (2006-07) Tyre companies Market share in passenger car tyres segment (2006-07) Tyre companies Market share in motor cycle tyres segment (2006-07) Tyre companies Market share in tractor front tyres segment (2006-07) Tyre companies Market share in tractor rear tyres segment (2006-07) Tyre companies Share of exports in total sales

B-39 B-40 B-40 B-41 B-42 B-42 B-43 B-43 B-44 B-44

7.0 Profitability and credit profile 01 Tyre industry Raw material costs versus operating profits 02 Tyre Industry Operating margins versus net margins (as per cent of operating income) 03 Tyre industry Asset utilisation levels 04 Tyre industry Return on capital employed (RoCE) 05 Tyre industry Credit profile 06 Tyre industry Working capital funding 8.0 Cost structure and industry economics 01 Tyre industry Break-up of operating costs (2006-07) 02 Tyre industry Trends in raw material costs (as per cent of operating income) 03 Break-up of raw material costs Domestic industry 04 SBR international prices (1712 Grade) 05 SBR international prices (1502 Grade) 06 PBR Domestic prices 07 PBR International prices 08 Carbon black Domestic prices 09 NTC fabric Domestic prices 10 NTC fabric International prices

B-47 B-48 B-48 B-49 B-49 B-50

B-53 B-54 B-57 B-60 B-60 B-61 B-61 B-62 B-63 B-64

Tables
1.0 01 02 03 04 05 Industry structure Tyre industry overview Tyre industry - Financial aggregates (2006-07) Tyre companies 6-year market share trend Radialisation levels in per cent International and Indian tyre industry - Category-wise share

B-1 B-2 B-3 B-6 B-7

Continued

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continued

3.0 Manufacturing process 01 Minimum economic size 4.0 01 02 03 04 05 5.0 01 02 03 04 6.0 01 02 03 Demand Tyres - Off-take by market segment Tyres Demand trend (2006-07) Tyres - Export trend (in units) Retreading costs Attractiveness of categories Supply Tyres Tyres Tyres Tyres

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B-23 B-24 B-24 B-27 B-28

Capacity trend Production trend Import trend Physical aggregates

B-29 B-30 B-31 B-31

Competition in Indian tyre industry Tyre companies Comparison of product mix Tyre companies Trend in exports Tyre producers Financial comparison

B-34 B-44 B-45

7.0 Profitability and credit profile 01 Tyre industry Working capital management 02 Tyre industry Company-wise working capital management 8.0 01 02 03 04 05 06 07 08 09 10 11 12 Cost structure and industry economics Tyre industry Absolute cost structure for the last 7 years Tyre industry Duties on tyres Tyre industry Company-wise comparison of cost per tonne Tyre industry Cost aggregates Tyre industry Company-wise comparison of absolute cost Tyre industry Raw material prices Raw material: Demand Supply Raw material Consumption by tyre units Tyres Duties on raw material Customs duty structure on raw material imports Tyres Product norms Tyres Value additions

B-50 B-51

B-53 B-55 B-56 B-56 B-57 B-65 B-65 B-66 B-66 B-67 B-67 B-68

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Industry statistics
Sections
1.0 Industry statistics C-1

Tables
1.0 01 02 03 04 05 06 07 08 09 10 11 Industry statistics Tyre industry Player-wise trends in capacities, production and sales volumes C-1 Tyre companies Comparison summary 2006-07 C-1 Financial snapshot Apollo Tyres Ltd C-3 Financial snapshot Ceat Ltd C-3 Financial snapshot Falcon Tyres Ltd C-3 Financial snapshot Goodyear India Ltd C-4 Financial snapshot JK Industries Ltd C-4 Financial snapshot M R F Ltd C-4 Financial snapshot T V S Srichakra Ltd C-5 Tyre industry Latest available annual results C-5 Tyre industry Latest available quarterly results C-9

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