Page 14 - RB-85-18-2

INDIA
India's Improving Retread Scenario Set to Drive Equipment Industry
Surging commercial vehicle sales, improving road infrastructure and increasing radialisation in the commercial vehicle segment are expected to drive India’s retreading industry in the future. Recent government initiatives like the
and this has helped the retread equipment industry gain ground in the region,” explained Shankar. Tamil Nadu and Kerala are major retread equipment and rubber hubs in the South, while Gujarat in the west has also had a significant
and outside the countr y.
Retread market structured in organised and un-organised sectors
The size of the organised retread sector in India is expected to swell in the years to come, and in the long run only serious players in the industry are likely to be able to sustain their position, while low technology plants will be forced to shut their operations if they do not invest in equipment. This, in turn, will have an impact on the market for retreading machinery and the large number of companies in India supplying all kind of equipment to the sector.
The Indian retread market on the equipment, tread rubber and tyre retread side is largely divided among organised and unorganised sectors. The organised sector has surged in terms of importance during the last decade as organised retreaders have begun to associate themselves with quality equipment suppliers in order to provide good after sales and back up services.
On the other hand, the unorganised sector, although currently shrinking, still has a huge base, largely driven by cost and operating on low quality machiner y.
Growing radialisation an advantage for organised sector
It is considered likely that growing radialisation will not necessarily bring volume to existing retread plants, whilst the ongoing improvements in road infrastructure will only increase the lifespan of tyres. Nonetheless, this is surely an advantage for the organised sector. “In the short term, the retreading industry may not grow much since increased radialisation will lead to increased mileage and, hence, less frequent retreading,” stated Shankar Vadivel of Elgi Rubber Company. Improved road conditions will also contribute towards reduced wear and tear and, hence, a longer cycle of retreading. However, with improved regulations like load restrictions and a continued increase in quality-oriented customers, retreading volumes are considered likely to increase for the organised sector at the cost of the
grey industry.
India is a price-sensitive market Although the demand for quality retreads and its associated equipment is surging, there is still a major chunk of the market, which is price-sensitive in nature, slowing the pace of penetration of quality equipment.
“The Indian market is characterised by price sensitive customers, who remain focused on price rather than the true cost of their purchases. Consequently, low priced products which are not necessarily of the same quality rule the market; we have actually lost volumes to competition on this account since we are unable to drop prices while
Sushil Sarcar, Glisten Equipments
Shankar Vadivel from Elgi
implementation of a countrywide single taxation system GST (Goods & Services Tax) are narrowing the price differential between the organised and un-organised sectors of the retreading industry and are expected to improve retreading standards in the country. Considering economic reforms like introduction of GST and improving road infrastructure and positive impact on India’s retreading industry, Karun Sanghi, Managing Director, Tyresoles feels, “There is a great future for this industry, and manufacturers with quality equipment will fare well. Similarly, demand for good quality high- priced tread rubber will also increase.”
Meanwhile, S Shankar Vadivel, General Manager, Elgi Rubber Company, cautions against over- optimism and calls for streamlining policy initiatives for market correction aimed at halting the “continued slump in the transport industry, poor liquidity, transporters not being allowed credit of GST, and the apparent survival of the grey industry in retreading.”
Coimbatore - the hub of precured retreading equipment
Coimbatore headquartered Elgi pioneered precured retreading equipment production in India, making the city the centre of the modern retread machinery industry in the country, and the company’s continued presence continues to help nurture the equipment industry in the city.
“Namakkal District in Tamil Nadu is a major hub for the body building of truck, trailor, tanker and rig units,
equipment production base over the last three decades due to the ship breaking industry in Alang, from where equipment makers source their steel.
The expansion of Coimbatore as an equipment sector is largely down to the fact that Elgi built up a competent supplier base, as it sources some components and sub- contracts some assembly line job work from outside. These vendors and former employees, mostly with engineering background, have later expanded into building their own businesses with the knowledge acquired during their association or internship with the iconic Indian brand.
The growth in the sector has also been boosted by the growth of the precure sector over time. “The mould cure industr y dominated the market for a long time but this has been replaced largely with the precure system of retreading concentrated in Thrissur in Kerala,” informed Sushil Sarcar, Glisten Equipments, himself an ex-Elgi employee.
According to independent industry estimates, there are approximately 100 equipment manufacturers, both big and small, ranging from those making a few machines to larger operations supplying turnkey plants and distributing throughout the whole country. Of these, about 15 are based in Coimbatore.
Today, India’s prominent equipment suppliers such as Rajmahaal, Glisten, Gemini etc. have their direct roots in Elgi. Many others in various parts of the country have some kind of connection with Elgi, but these three are the most prominent and recognised inside
at the same time maintain quality,” explained Shankar of Elgi. Organised retreaders are hence faced with the double whammy of being non-competitive in the market vis-a-vis the unorganised retreaders as well as having to provide extended credit accompanied by the risk of bad debts.
The price-sensitive nature of the market remains a major challenge, believes Kunal Chaudhry, GM, Unipatch Rubber Limited. “India is a price conscious and fragmented market, hence quality products are difficult to sell,” he said.
Low breakeven levels responsible for low technology
The Indian retreading industry is largely dominated by small scale retreaders. Operations are small with breakeven levels as low as 100- 150 tyres per month.
“International players produce
14 Retreading Business