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INDIA
Rajesh S, CEO, Eastern Treads
achieve high quality product finishing.
Creating a trained retreading workforce
One of the major challenges for the Indian retreading industry remains trained manpower. Six months back, Eastern quietly forayed into creating a pool of trained workers by tying-up with various institutes and universities for the retreading industr y. The tread maker realised that the lack of trained manpower is one of the major hindrances to the modernisation of the Indian retreading industry.
“The first batch of 14 Industrial Training Institute (ITI) graduates trained at our Chennai retread plant, with half of them absorbed in production and several others placed within our growing franchisee network,” confirmed Rajesh. The company owns a retread plant in Chennai, which has the capacity to retread about 300 tyres each month. Opened in 2014, the site operates as a process evaluation centre, where Eastern tests its compounds and also organises training capsules for young graduates trained in the art of retreading.
Rajesh, however, denied that the group has any plans to expand into retread production itself. “We have no plans to have multiple retreading outlets as our focus remains on tread production. The Chennai unit has been built so we can have our own testing centre to gather first hand reports on our product performance.”
Targeting 300 franchisees in the next 5 years
To have a better grip over its compounding business, Eastern introduced its own franchisee model about two and a half years ago. Currently, the business is divided among dedicated
franchisees operating as ‘Infinity Zone’; exclusive product retread outlets; state transport undertakings and exports.
“We have 108 franchisees with an almost 50:50 split between dedicated Infinity Zones and exclusive product retread outlets. Infinity zones have excess to exclusive hi-end products with 25 per cent revenue generated from the Infinity Zones and 75 per cent from exclusive product outlets, state transport undertakings and export business,” he explained.
Eastern is targeting its franchisee network to expand to three times its current strength. “We are looking at achieving 300 franchisees in the next 4-5 years, with each franchisee retreading 2,000 tyres each month, which means 600,000 tyres retreaded with Eastern tread alone every month. This presents a huge business opportunity.”
With the Indian retreading business becoming more structured, the Kerala based company believes that in the longer run, only the organised franchisee model will survive as consumer expectations rise, quality products are preferred, and businesses becomes more transparent due to the increasing focus on digitalisation.
“We are working on creating a whole new eco-system where all stake holders will make money. We are in the midst of creating a model whereby Eastern provides a 360- degree solution covering product, training, manpower and service,” emphasised Rajesh.
Technology absorption key to future growth
The future lies in absorbing technology and focusing on an online system that ideally supports the B2B model. “The current distribution channel and intermediaries may not survive for long, and there would be direct interplay among tread producers
and franchisee retreaders,” said Rajesh.
Eastern is increasingly focusing on carr ying out structural reforms in the company to align the business with the changing times. “We are introducing changes in the company as well as streamlining the franchisee network by extending technology support, staff training and helping them to transform their businesses into one-stop tyre care centres,” he said.
The company is attempting to convince its franchisees to change with the times if they wish to survive in the business for the next fifteen years. “The objective is to convince franchisee retreaders that India is no longer the same market as it was. It is time to accept change,” he emphasised.
Eastern Retreads production facility
Indian retreading industry to consolidate in the future
Zones only.
“Each time a casing comes for retread, it gets weaker, and heavier tread liners cannot be pressed and held on properly. But with lighter and thinner tread liner, it holds on properly and effectively reduces rolling resistance, increases fuel efficiency and benefits the fleet owners. “We have received positive feedback from the market as well as retreaders,” he claimed.
Fleet Management in 2019
Eastern is also working on a fleet management system, which it is likely to introduce in 2019. “This is going to be another game-changer and is aimed at providing an end- to-end solution for the entire value chain from product to fleet- owners,” claimed Rajesh.
“It will also remove intermediaries in the whole distribution chain and is targeted to improve margins for tread producers, franchisees and
Eastern Retreads production facility
44 Retreading Business
Citing the US retread market example, where there used to 12,500 retreaders and now their number has shrunk to merely 500, Rajesh commented; “With the rules of the business changing swiftly, the Indian retreading industry is heading for similar consolidation.” Moreover, the tread maker is keen
to strengthen its own distribution network to service its franchisees swiftly. “We are planning to expand our network of satellite depots to service 4-5 franchisees with orders delivered in 24 hours,” he said. This would help improve cash-flow in the business, as the smallest of the orders are delivered swiftly, and the company does not have to wait for months to realise the payment.
Game changing lighter tread
Meanwhile, Eastern has introduced a game-changing thin lighter tread liner recently. It has the same compounding properties as existing tread liner but is 2-3 kg lighter or 15-20 per cent less in weight. After successful trials, the product has been launched through Infinity
fleet operators alike. “The objective is to improve cash liquidity in the whole eco-system, which has been drastically stemmed with introduction of GST,” he stated. The company feels it the right time to introduce a fleet management system as net-connectivity is penetrating deeper into India.
Plans to warehouse in Europe
Eastern has harboured plans to enter the European market for quite some time and will soon have its product available in Europe and Russia. The company is also considering opening a warehouse in Europe, although the exact location has not been finalised, as yet. “A cost benefit analysis is already ongoing, and we are evaluating the viability of such an operation,” he informed. The company says it has already had preliminary discussions with several parties in Europe and Russia, but nothing has been confirmed as yet.
He further added; “Europe was in bad shape, but now it is picking up, opening up an opportunity for us to