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Tyre makers invest big to build capacities

Expecting a faster shift to radial tyres as auto sales boom in improved road infrastructure, tyre makers are building capacities to meet future demand from the commercial vehicle sector. Rachit Vats and Sumant Banerji report.

business Updated: Jun 16, 2010 22:46 IST

Expecting a faster shift to radial tyres as auto sales boom in improved road infrastructure, tyre makers are building capacities to meet future demand from the commercial vehicle sector.

According to industry estimates, 'radialisation' in commercial vehicles is around 14 per cent. It was under 1 per cent in 2005 and is projected to touch 25 per cent by 2013.

Tyre makers such as Michelin, Apollo, Ceat, Bridgestone and others are building capacities or setting up facilities and have lined up a total investment of around Rs 12,000 crore.

French tyre maker Michelin's India plan is gathering steam and the company has already lined up an investment of Rs 4,000 crore over the next seven years to open a manufacturing facility in the country by 2012-end. It has acquired 250 acres of land in Tamil Nadu for the same.

Earlier, in 2005, Michelin had planned to set up facility in Bangalore, but abondoned plans after the company felt that demand for radial tyres was yet to pick up in India. However, the company belives that the timing is just right now.

"Local truck and bus makers are moving at a very fast pace towards radialisation. There is tremendous potential in this segment," said Michel Rollier, managing general partner, Michelin. At present, the company imports tyres but will roll out products for every pocket once the facility is ready.

Bridgestone has invested around Rs 2,600 crore in its second plant in Pune. Apollo, too, has lined up investments worth Rs 2,300 crore till April 2012 for the Chennai Greenfield. The plant has already begun commercial production and will cater to both truck-bus radial and passenger radial markets.

"While passenger vehicle tyres are almost 100 per cent radials; the radialisation in commercial vehicles has seen the highest growth across all segments. There is a greater desire among transporters to achieve fuel savings by switching to radial truck tyres. We will cater to the fresh demand with our new capacity," Satish Sharma, chief, India operations, Apollo Tyres.

According to a projection by the Automotive Tyre Manufacturers Association, radial tyres will see a nearly 50 per cent jump in demand in 2011-12 at 62.5 lakh units per annum from the current 26.2 lakh units.