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B. Krishnakumar

MRF: Buy Goodyear India: Buy Apollo Tyres: Buy JK Ind: Hold Ceat: Hold

THE trend of growing popularity for radial tyres is apparent over the past few years. These tyres are quite popular in the passenger car market, but are yet to gain popularity in the commercial vehicle segment. The extent of radialisation is pegged at 85 per cent.

Radial tyres are technogically superior to the traditional cross-ply or bias tyres. Due to such inherent advantages as better ride comfort, higher mileage and longer life, they are expensive by 30-40 per cent compared to the bias tyres. While the passenger car users have switched over to radials, such a trend is yet to catch-on in the truck and bus segment.

Factors such as unhealthy loading practice, higher cost and poor road conditions have inhibited the usage of radial tyres in the commercial vehicles. This trend is likely to undergo a change if the recent developments are any indication. The growing preference for higher tonnage trucks for freight movement and the improving conditions of the roads and highways are likely to propel demand for truck radials. Realising the growth potential of truck radials, companies have already shifted their focus towards this segment.

While Apollo Tyres has entered into a joint venture with Michelin for making truck and bus radial (to be commissioned next year), Ceat recently announced the launch of radial tyres for commercial vehicles. MRF and JK Industries have facilities in place for the manufacture of truck radials.

Apart from truck radials, tubeless tyres may be another focus area for producers. With quite a few passenger car producers preferring to use tubeless tyres as original equipment fitment, the popularity of such tyres is likely to improve.

Top companies such as MRF, Goodyear, JK Industries and Ceat have facilities to produce such tyres. Apollo has launched tubeless tyres and the recent technological association with global major, Michelin, would place Apollo in a position to offer contemporary tyre models.

Apart from these factors, the possibility of a reduction in excise duty on tyres sold in the replacement market could be another positive. These tyres currently attract a excise duty of 24 per cent.

The tyre industry has made a representation to the government for reduction of duty to the mean rate of 16 per cent.

Any reduction in duty would have positive impact for tyre producers, to the extent the concession is not passed to the consumers in the form of reduction in price.

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