AllFreePapers.com - All Free Papers and Essays for All Students
Search

Indian Tyre Industry

Autor:   •  November 22, 2011  •  Case Study  •  5,724 Words (23 Pages)  •  1,986 Views

Page 1 of 23

1. Introduction

The origin of tyre industry in India can be traced back to 1926, with the advent of Dunlop in the state of West Bengal. Later by1946 Madras Rubber factory followed the suit. Over the years Indian tyre industry has grown into Rs 20,000 crore industries, manufacturing all kinds of tyres with the exception of snow tyres and aero tyres. India currently is second largest manufacturer of tyres with almost 13.45 lakh metric tonnage productions. The industry has more than 40 players, but majority of the market (85%) share are captured by top seven manufacturing firms.

The tyre industry with its direct relation with the development in the auto industry is very buoyant industry. The growth and profit from the industry has direct relation to the growth of the automotive industry. Apart from the automobile industry, tyre industry has various others determinants like the price fluctuation in natural rubber, the import policy of both raw material and the manufactured tyres, the customs and sales duty etc which play a important part in deciding the profit in this industry. Also the recent development like increased used of radial tyres are pushing the tyre industry to adopt new manufacturing technology to cope up with the change. Hence by undertaking the study on the tyre industry, we would like to understand the different strategy adopted by the competing firms in order to overcome so many determinants and remain competitive in the industry.

Another reason for analysing the tyre industry is the state of the industry in the current global economic turbulence. The Indian tyre industry was heavily affected by the global credit crisis of 2008. The Indian economy had appreciably slowed down and the automobile companies were struggling to increase sales. A consequent of this had been a distinct slow down the Indian tyre industry as well. Tyre industry had always been operating with low margins but managing with high volume of sales and getting their profits through economies of scale. Reduction in domestic demand had disturbed the operating margins of these firms significantly. In the current scenario when the world is on the verge of facing another global economic slowdown, the dynamics of the tyre industry would be interesting to comprehend.

Table 1: Evolutionary phases of the Tyre industry in India

Phase Period Characteristics Policy Regime

Phase I 1920-35 No domestic production. Demand met through imports. Key players included Dunlop (U.K), Firestone & Goodyear (USA) Liberal imports

Phase II 1936-60 Domestic production begins by erstwhile trading companies: Dunlop, Firestone, Goodyear and India Tyre & Rubber Company Imposition of tariff & non-tariff barriers on imports

Phase III 1961-74 Indian companies-MRF, Premier & Incheck- enter manufacturing

...

Download as:   txt (38.6 Kb)   pdf (400.5 Kb)   docx (28.7 Kb)  
Continue for 22 more pages »