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INDIA
Highway Focuses on Quality Retreads
Indag to Focus
on Domestic Market
Colonel Joginder Singh Kahlon of Highway Tyres (P) Ltd.
The city of Amritsar is about 525 km from the India’s Capital New Delhi and is the country’s frontline state bordering Pakistan. Renowned over the world for its famous Sikh shrine, it is also home to Treadsdirect franchisee Highway Tyres (P) Ltd.
Established in 1991, Highway has been a reliable partner of Treadsdirect from the day it started operation. “We never thought to opt for any other brand when we joined the business,” said ex-army man Colonel Joginder Singh Kahlon of Highway Tyres (P) Ltd. “Both our equipment and plant are from Treadsdirect.”
The company is engaged solely in cash business. “We could do much more, but we do not want our payments to be caught up in the market and never recovered,” said Kahlon. The plant is situated in Amritsar’s industrial area called Focal Point, which is located on the highway that goes from Amritsar to Delhi. “We retread 300 tyres in a month. If we offer credit, we could easily retread 1,000 tyres in a month,” Kahlon stated.
When asked about the reasons for low volumes at the plant, Kahlon said, “We are competing with a number of ‘fly by night’ operators close by who have no knowledge about retreading. These small companies charge less than half of what we charge and operate with virtually no overheads and very primitive equipment.” According to K ahlon, the smaller players are not paying any taxes and are responsible for killing the business as they just operate with small bonders. “They somehow stick the tread on the casing, which falls apart when it takes pressure and give a bad name to established
retreaders doing clean business with branded equipment.”
Moreover, most of the trucking community in the hinterland are not well-educated and do not understand quality retreads and the cost per km concept. “Instead of asking which brand we are using, they insist on asking how much we charge. Therefore, the price determines where and how to get the tyre retread and that is the worst part,” he explained.
Highway retreaded more than 500 tyres per month a couple of years back but increasing competition from the low end players has spoiled the business for established retread outlets. Despite all the challenges in the business, however, there is a silver-lining as there are companies which have been regular clients for the last two decades. “People who come to us, stays with us, and they never go anywhere else,” stressed Kahlon.
Retreading is firmly entrenched and accepted as an alternative to new tyres in India. However, price remains the major factor in determining the quality of retread preferred by the transporter. “We do have examples where transporters gets their tyres retreaded by us as many as three times and get the optimum value of their tyres. They are our valued clients and we are in the business due to them only,”
K ahlon emphasised.
Highway retreads both radials and bias-ply tyres but over the years the share of radials has overtaken bias- ply. The company, however, is not able to say when production will return to earlier levels. “We continue to focus on quality retreads and not on gaining bigger volumes,” stressed K ahlon.
According to K K Kapur, CEO, Indag Rubber Limited, the last year has been tough for every business in India due to pending elections and the fact that major policy decisions have been on hold for the beleaguered Congress government embroiled in various corruption scandals. “The last 12-14 months have been very difficult for every business, and the sales of every company have gone down,” he said. The mining sector has been badly affected due to the Supreme Court of India banning mining and cancelling a number of mining contracts of various coal blocks given by the previous government when irregularities came into light in their allocations. “The slowdown in the mining sector has adversely impacted the growth of the retreading industry,” said Kapur. “With the mining activity on hold, this has affected transporters in several states, leading to a slowdown in the
have been supplying to these customers for many years. We are very much open to the idea of exports but we are always looking for good parties keen on forging long term working relations,” he added. Indag says it has no capacity expansion plans until the market picks up. “We are optimistic that the market will improve with the installation of a new government in Delhi following the recently concluded general election,” believes Kapur. With the economy showing signs of recovery, mining activity is also expected to recover, leading to transport movement by end of this year. Market Analysts largely forecast the economy will pick up in the next 8-10 months.
Indag produces about 1,000 tonnes of tread rubber in a month, but has the capacity to manufacture 1,200 tonnes per month. When asked by when Indag’s expansion plan would mature, Kapur stated, “Once the
K K Kapur, CEO, Indag Rubber Ltd
44 Retreading Business
retreading industry.”
Indag’s sales have increased by 15- 20 per cent annually for quite some time, but the slowdown has led to marginal growth of 4-5 per cent during the last year. Kapur, however, remains positive.“We consider it a good sign that we continue to grow despite difficult market conditions,” he added.
Interestingly, Indag remain keen on focusing on the Indian market. The company strongly believes that India is a big market and not still exploited fully. “Our focus is on the domestic market, which is packed with lots of potential,” Kapur stressed. Moreover, Indag firmly believes that the company should be in a strong position in the domestic market before it embarks on export ventures. Indag exports a small quantity of rubber to markets like Kenya and the Middle East. “But they are in very small quantity,” stressed Kapur. “We
market conditions improve in the next six months, we will be in a position to take some concrete decision over a capacity hike.” Whenever, the market show signs of positivity, Indag would likely hike the capacity by 600 tonnes to bring it to the 1,800 tonnes per month level. Indag has a mix of dedicated large and small dealers that have worked with the company for more than two decades, selling tread rubber in the open market. “We have about 25 big dealers and around 75 small dealers sourcing around 3 tonnes per month,” he informed.
The tread maker is keen on expanding its network all over the country. The company had previously had little presence in the Southern part of the country, but in the last couple of years it claims to have been able to open up in this market as well.