_______________________ Tire Maharajahs Case Study _______________________

TIRE MAHARAJAHS AGAINST CHINESE EXPORTERS

AND TIRE MULTINATIONALS.
THE STRUGGLE FOR LEADERSHIP IN THE INDIAN TIRE INDUSTRY
The Tire Industry in India: Growth, Trends and Technologies
“The Indian tyre industry is emerging as a Even for large Indian companies that have
force to reckon within the global tyre expanded their operations abroad, they
manufacturing ecosystem […]The industry remain greatly dependent on their home
has undergone a metamorphosis of sorts in market for their turnover, growth and
the last few years and has received global profitability. It remains their so-called “cash
recognition too […] As a fast-developing cow” market.
nation, being the fastest growing economy in
Among these uncertainties and risks looming
the world, India offers immense potential for
over the Indian tire industry, we can first
the growth of the tyre industry” (Anant highlight the variations in the raw material
Goenka’s interview, CEO of CEAT and
prices. Tire inputs, such as natural and
Chairman of the Indian Automotive Tyre
synthetic rubber and crude oil, have become
Manufacturers’ Association - ATMA)1.
more expensive due to their cyclical price
Indeed, in a 10-year period, the Indian tire increase, the depreciation of the Rupee and
production has increased from 80 to 180 the 25% customs duty imposed on imports by
million units; in the meantime, Indian tire
the Indian government5. Moreover, some tire
companies have thrived investing heavily manufacturing facilities cannot operate at
abroad and exporting annually Rs. 100,000 full scale as they are short of supply due to
million (US$ 1.5 billion). As a result, four bad crop of natural rubber in India6.
Indian tire companies are ranked among the
top 30 global tire makers by turnover2. For Second, the Indian tire industry is confronted
the coming years, India’s GDP is predicted to with tough competition from imported
grow at a pace of 7.4%, ahead of other Chinese tires, which are on average 50%
emerging economies. It would surpass China cheaper than domestic products7. The Indian
by one point while other BRICS economies government has recurrently imposed some
would stick to growth rate ranging from 1 to tariff and non-tariff barriers to imported tires
2%3. In the automotive industry, the Society with the aim to reduce the attractiveness of
of Indian Automotive Manufacturers low-cost foreign products, such as in
(SIAM) expects that the production will September 2017 and September 20188. But
increase by 3.5 to 4 times from 2016 to these measures have only partly deterred
20264. Boosted by this strong momentum, the price-sensitive Indian customers from
tire industry plans on growing from buying imported products.
Rs. 550,000 (US$ 8 billion) to 2,000,000 Third, a series of Indian government
million (US$ 30 billion). initiatives have been launched with mixed
Although India will experience high or and unforeseeable consequences. In July
hyper-growth, uncertainties and risks will 2017, the Indian government enforced a
also rise in such a fast pace that tire consumption tax known as the GST (Goods
companies could see their return on and Services Tax). This tax enforcement has
investment dented and their growth thwarted.

This case study was written by Dr. Alexandre Bohas (professor at ESSCA Business School and associate researcher
at Aix-Marseille Université’s CERGAM research center) and Dr. Pierre-Xavier Meschi (professor at IAE Aix-
Marseille). It is intended to be used as an illustration in class discussions. The authors gratefully acknowledge
Michelin’s irreplaceable cooperation in providing them complete access to world tire industry data. They wish to
thank in particular: Frédéric-Patrice Vincent (Vice-President Strategy & Development), Nathalie Goldaraz
(Corporate Data manager) and Thierry Anglade (Corporate Development & Progress manager).

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 _______________________ Tire Maharajahs Case Study _______________________

made it harder for low-cost imported tires to norms comes along with the increase in the
enter the domestic market. These imported price of cars and gas.
tires can no longer circumvent GST by
Fourth, recent rising protectionism from the
making cash deals. Along the same lines, the
US government under the initiative of
demonetization regulation, which led to the
President Donald Trump threatens the Indian
withdrawal of Rs. 500 and 1,000 bank notes,
tire industry: (i) directly, with the
has also caused a drop in massive imports by
enforcement of anti-dumping measures
diminishing excessive cash in the economic
against tire imports from emerging
system9. All these government measures
economies, including India. These measures
have triggered destocking behavior from tire
represent a major threat, given thatthe US is
dealers and garages. Besides, environmental
the first export country for Indian tire makers
and sustainable development concerns have
(especially, for JK Tyre, the third largest tire
raised pressures to curb air pollution. Since
maker in India). (ii) Indirectly, with the trade
2000, Bharat Stage (BS) emission standards,
war currently occurring between the US and
inspired from European “Euro” regulations,
China. This war could have adverse side
have been progressively imposed on all
effects for Indian tire makers since a decrease
motor vehicles. The BS-IV grade was
in Chinese tires exports to the US would
enforced for the whole country since April
mean an additional flow of discounted
2017. Faced with increased air pollution, the
Chinese tires diverted to India.
Indian government has decided to skip BS-V
and looked forward to implementing BS-VI All these headwinds increase the
in the short term10.It is worth mentioning the uncertainties and risks for the Indian tire
project of imposing fuel efficiency labelling makers, which explain the sharp decrease in
and threshold on tires which is currently stock prices for leading players such as
being considered by the Indian government11. Apollo Tyres and JK Tyre (see Figure 1) and,
The acceleration in enforcing environmental to a lesser extent, MRF, in 2018.

Figure 1 – Stock Market Price Variations in 2018 (in Rs., Apollo Tyres and JK Tyre)
300
275
250
225
200
175
Apollo Tyres
150
Jun-18

Aug-18

Nov-18
Oct-18
Feb-18

Apr-18
May-18

Jul-18

Sep-18
Jan-18

Mar-18

Dec-18

200
180
160
140
120
100
JK Tyre
80
Jun-18

Aug-18

Nov-18
Feb-18

May-18

Jul-18

Sep-18
Oct-18
Apr-18
Jan-18

Mar-18

Dec-18

Source: stock market prices for Apollo Tyres and JK Tyre are
available on the website: https://in.finance.yahoo.com/quote,
accessed on December 20, 2018.

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As regards technologies used for making textile and metal steel cords are braided
tires, one can distinguish two types, radially or at 90° (see Figure 2). The radial
corresponding to the tire body construction tire has gradually imposed itself in developed
and the combination of textile and metal steel countries with the increased performance of
cords (see Figure 2), namely, “diagonal” or cars and trucks. With soft sidewalls, the
cross-ply technology, and “radial” or radial- radial tire has better adhesion and greater
ply technology. In the cross-ply technology resistance to torsion than the cross-ply one.
(created in 1950), the textile and metal steel The imprint of the tire is wider and the
cords are braided diagonally on the external pressure is more equally distributed over the
surface of the tire. In the radial technology crowns of the tire, which insure better tread
(patented on June 4, 1946 by Michelin), the wear.

Figure 1 – Radial and Cross-Ply (“Diagonal”) Tire Technologies

Source: https://otrwheel.com/otr-blog/radial-vs-bias-need-know/ (accessed on December 17, 2018).

In India, 65% of tire sales are cross-ply (or sales in most segments, excluding the
“diagonal”). This situation is explained by passenger vehicle tire segment (see Table 1).
different factors inherent to Indian road
A later-than-expected and steady process of
infrastructures and consumer behavior,
“radialization” has taken place for a few
which can be observed in most emerging
years. Road infrastructures have improved
economies: the very unequal quality of the
and cheap radial tire imports from China
road infrastructure, the tendency to overload
have explained the switch to radial tire, in
vehicles and the cheaper buying-in price of
particular in medium and heavy commercial
cross-ply tires. Moreover, in rough
vehicle (M&HCV) tires. In this segment,
conditions where tire is easily punctured, the
between 2008 and 2018, the ratio of radial
cross-ply tire can have longer lifetime than
tires in the market has risen from 4 to 45%
radial tire although, by mileage’s standards,
(see Table 1). Another reason is that radial
the latter lasts longer. However, cross-ply
tires have a lower rolling resistance than
tire has poor road-holding at high speed and,
cross-ply tires in a country where air
when it is subjected to high torsion, there are
pollution has become an important concern
strong risks of it coming off the rim or
among public authorities. Due to its
blowing out. These various factors explain
construction specificities, the crown and
that cross-ply tires still represent the majority
sidewalls of radial tires can be composed

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differently, which brings about better is almost achieved in the passenger car tire
performance in rolling-resistance. segment while it has almost not started in the
two- and three-wheeler tire segment (see
In the other tire segments, the “radialization”
Table 1). This can be related to the
process is more contrasted. The market
customer’s price sensitiveness and the
transformation in favor of radial technology
difference in tire use.

Table 1 – Tire Market “Radialization” in India

Radial tire market share (in volume) 1995 2008 2018
Passenger vehicle 28% 95% 98%
Light commercial vehicle (LCV) 9% 12% 40%
Medium and heavy commercial vehicle (M&HCV) 1% 4% 45%
Two- and three-wheeler (motorcycle, scooter and “tuk-tuk”) 0% 0% 1.5%
Source: (i) Michelin in the Land of the Maharajahs (A): Note on the Tire Industry in India (Case Study, Ivey
Publishing, Ivey Business School, 9B07M030). (ii) ATMA (2017b) ATMA Review. Indian Automobile Industry,
FY2016-17 (Apr-Dec), ATMA Periodicals (http://www.mohitnarang.in/atma/wp-content/uploads/2018/03/Atma-
Periodicals_17-4-17.pdf, accessed on December 6, 2018). (iii) FY2018 Apollo Tyres’ annual reports
(https://corporate.apollotyres.com/en-in/investors/financial-reporting/, accessed on December 1, 2018).

The Tire Industry in India: Markets and Products

New tire distribution corresponds to three tire industry is much less dynamic due to
main channels in India. First, tires are better tire mileage and improved road
directly sold to carmakers through a infrastructure. It is also much more uncertain
business-to-business channel, also known as since it annually varies according to tire
OEM (Original Equipment Manufacturers) imports.
(see Figure 3). Second, the replacement The OEM market consists of the major
market takes place once the tires get worn-
Indian and non-Indian carmakers. The main
out or punctured. It consists of garages and
tire buyers are presented below:
tire dealers, including small retailers and
large distribution networks. Third, tires  In the passenger vehicle market,
produced by the Indian tire industry are Maruti Suzuki (Maruti Udyog group) is
exported abroad. In 2018, unit sales are India’s oldest and largest carmaker. Owned
broken down across these three markets as by the Japanese Suzuki and the Indian
follows: 43% for OEM market, 51% for State, it detains a 47% share of the
replacement market and 6% for export passenger vehicle market14. Although it has
market12. This sales breakdown is distinct lost some market share since 2005 (51%), it
from that observed worldwide: 25-30% for remains the dominant player with 1.3
OEM market and 70-75% the replacement million cars sold in 2016. Its closest
market. This is specific to emerging competitor is Hyundai whose market share
economies where the level of household is only 17%.
equipment, still low, is booming by high  In the commercial vehicle market,
growth. It is worth mentioning that Tata Motors (Tata group) is the market
penetration of passenger vehicles is below 20 leader with a 55% market share15. It started
per 1,000 people in India compared to 786 in to build cars in 1954 in partnership with
the US13. But, in value, the market is skewed Daimler Benz. Its closest competitor is
toward the replacement segments which Ashok Leyland with a 31% market share.
account for 70% of total sales. In the coming While Tata Motors has balanced sales
years, the considerable OEM distribution across the commercial vehicle market,
channel will not only maintain but may Ashok Leyland is more focused on
strengthen its position since it is nurtured by commercial vehicles ranging from 12 to
the structural growth of customer’s original 16.2 tons.
equipment. The replacement market for the

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 As regards two- and three-wheelers, issue as regards customer satisfaction. These

the segment is highly concentrated around last considerations are all the more relevant
the following players: Hero Moto (32%), in the passenger vehicle and commercial
Honda (24%), Bajaj (18%) and TVS vehicle segments.
(14%)16. It is worth noting that these As regards the replacement market, it
companies have crossed the 20 million-unit consists of thousands of independent garages
sales in 201817. Among them, the Hero and tire dealers. Some are exclusive
Moto, formerly linked with Honda until (franchised or not) distributors, while others
2010, is the world largest two-wheeler are multi-branded. The trend is towards
maker. vertical integration of distribution and
 As regards tractors and agriculture development of online distribution by tire
vehicles, OEM in India forms the world’s makers. This is notably the case for JK Tyre,
largest industry in this domain. It is with the development of “JK Tyre Steel
dominated by Mahindra Motors with more Wheels,” and for CEAT, with “CEAT
than a quarter of market share, TAFE Shoppes.” Concerning customer
(19%), which produces and sells under its expectations and needs observed in this
brand name and Massey Ferguson brand, market, there are some stark differences
and Swaraj (16%), part of Mahindra group across passenger vehicle, commercial
since 200718. vehicle and two- and three-wheeler tire
 Various foreign carmakers such as buyers. These differences are directly related
Toyota, Ford and Nissan have entered the to each tire buyer’s profile and context. In the
Indian automotive industry to reach the passenger vehicle segment, the first customer
consumer markets but also to use it as a need is safety given that these vehicles drive
platform for export in Asia. Nissan
at high speed. Moreover, there are some
dedicates 73% of its vehicles manufactured emotional and socio-economic relationships
in India to export; Ford 58%. In stark
with cars. Personal vehicles carry children
contrast, the Indian commercial vehicle
and family. They also remain a social-status
industry exports 10% of its production
symbol for urban medium-upper-class
while 19% of passenger vehicle production
customers20. Consequently, there is a higher
is exported.
acceptance of technology despite an increase
As their OEMS are heavily concentrated in of price and a higher brand awareness21. The
competitive segments, they have obtained average price of passenger vehicle tire is
large price cuts from suppliers such as tire Rs. 3,400 around which premium and budget
companies while these latter have been tires can widely vary positively or negatively
unable to pass on higher raw material prices, by at least 30%22.
fearing market share losses. This strong
Concerning the commercial vehicle segment,
negotiation lever is increased by the strong the context is a competitive business-to-
brand loyalty observed when customers need business market. Safety but also fleet
to replace their tires: they usually tend to efficiency, including reliability and
purchase the same tire brand in the turnaround time, are key customer needs,
replacement market as the one that was implying that tire quality awareness
initially mounted by OEMs. This is programs can result in a change in rationale
particularly true in the passenger vehicle in favor of a total cost of tire ownership
segment19. Still, their business needs in terms beyond the sole concern for the price23. In
of regulatory norms and brand image explain
this respect, a substantial change is
that OEMs usually only accept good quality underway, which signals the “radialization”
products. These tires are mounted on new
process in favor of more expensive radial
vehicles, which must follow stringer
tires24, the orientation towards bigger trucks
regulations about safety and must be adapted
and the increase in the average distance
to drive at high speed on motorway. Also,
travelled on highways25. The average price of
OEMs will be held responsible if there is any

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 _______________________ Tire Maharajahs Case Study _______________________

medium and heavy commercial vehicle tires average to raw material cost (or input cost)
is estimated at Rs. 22,000 among which whereas SG&A (sales, general &
Chinese tires are sold at least 30% cheaper26. administration) and personnel cost amounts
As far as the two- and three-wheeler segment to 13 to 26% of sales (see Figure 5).
Nevertheless, these average input costs can
is concerned, the price of tires is a key
purchase criterion for customers, particularly hide wide differences across Indian tire
for those who have a motorcycle, a scooter or makers (see following section on
a three-wheeler (“tuk-tuk”). The context is competitors). In addition, as illustrated in
less favorable for a change than in the Figure 5, the price of raw materials tends to
passenger vehicle segments. Customers are cyclically change according to stock market
usually less wealthy and live in more rural speculations, political contexts but also
economic dynamics linked to each raw
areas where roads remain in poor conditions.
Also, tire quality awareness programs material industry. In addition to this, Indian
implemented by tire makers have been less companies are faced with specific issues of
impactful. Revealingly, “radialization” is import tax on raw materials from the Indian
government. Consequently, the major
marginal in this segment. The average price
challenge for this industry is to reach
of this segment is Rs. 1,660 around which
prices vary by 20%27. profitability despite the ups-and-downs of
the supply market and its dependence on
At the other end of this capital-intensive large customers.
industry, 60 to 65% of sales are devoted on
Figure 3 – Vehicle Production in India (2013-2018)
30

25

20
Million units

15

10

0
Passenger vehicles Commercial Three wheelers Two wheelers Grand total
vehicles

2012-13 2014-15 2017-18

Source: Society of Indian Automobiles Manufacturers (SIAM), 2018

(http://www.siamindia.com/uploads/filemanager/47AUTOMOTIVEMISSIONPLAN.pdf, accessed on December 3, 2018).

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 _______________________ Tire Maharajahs Case Study _______________________

Figure 4 – Tire Cost Structure in India

Margin and
depreciation
9-22% Natural
rubber cost
Personnel cost 23-26%
7-14%

SG&A cost
6-12%

Synthetic
rubber cost
10-13%
Other raw
material costs
16-20% Other crude derivative
cost 16-20%

Source: Alphà Invesco, Understanding the Indian tyre industry, key players and the road ahead, 2018
(https://www.alphainvesco.com/blog/understanding-the-indian-tyre-industry/, accessed on December 16, 2018).

As Indian customers are highly price- Tire exports have reached Rs. 100 million in
sensitive, they are attracted by tires imported 2017. Recording a 20% increase, the US has
at low prices from China. These imported emerged as the biggest market for Indian
tires have an average price that is more than tires exports. The US market has imported 28
30% lower than tires sold by Indian million tires from India, accounting for 15%
companies. Besides, some Indian companies of all Indian exports28. Indian tire companies
(JK Tyre, Apollo Tyres and CEAT) have are also present in other emerging economies
tried to team up with Chinese tire makers in in Latin America, South-East Asia, the
order to jointly produce radial tires and Middle East and Africa.
match the lower-priced imported Chinese
tires.

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Figure 5 – Variations in Input Costs
(Brent Crude Oil, Carbon Black, Natural Rubber and Synthetic Rubber Costs)

Source: from top left to bottom right, brent crude oil, carbon black, natural rubber and synthetic rubber. (i) For
synthetic rubber, crude oil and carbon black, Federal Reserve Economic, monthly, not seasonally adjusted. (ii)
For synthetic rubber, Data index Jun 1981=100. (iii) For carbon black Dec. 1983=100. All data available on the
website: https://fred.stlouisfed.org, accessed on December 16, 2018. (iv) For natural rubber, US Dollar per
kilogram, monthly, not seasonally adjusted (www.indexmundi.com, accessed on December 16, 2018).

Figure 6 – Breakdown of Market Sales and Volume by Tire Segment (FY2016)

VOLUME SALES

1% Others 54% Truck & bus

5% Farm Passenger vehicle

14%
5% LCV
2- and 3-wheeler
13%
13%
Truck & bus
LCV
9%
23%
Passenger vehicle
Farm
8%

54% 2- and 3-wheeler 2% Others

Source: ATMA (2017b) ATMA Review. Indian Automobile Industry, FY2016-17 (Apr-Dec), ATMA Periodicals
(http://www.mohitnarang.in/atma/wp-content/uploads/2018/03/Atma-Periodicals_17-4-17.pdf, accessed on December 6, 2018).

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Table 2 – Breakdown of Tire Sales in India by Market and Product (FY2017, in volume)
Medium & heavy commercial vehicle
Passenger vehicle
(M&HCV)
OEM Replacement Export OEM Replacement Export
Volume 43% 51% 6% 15% 71% 14%
Two- and three-wheeler Light commercial vehicle (LCV)
OEM Replacement Export OEM Replacement Export
Volume 51% 47% 2% 27% 53% 20%
Source: (i) Michelin’s Internal Data on the World Tire Market (2018). (ii) ATMA (2017b) ATMA Review. Indian Automobile
Industry, FY2016-17 (Apr-Dec), ATMA Periodicals, available on the webpage: http://www.mohitnarang.in/atma/wp-
content/uploads/2018/03/Atma-Periodicals_17-4-17.pdf, accessed December 6, 2018).

These three markets (OEM, replacement and Passenger vehicle (or car) tire sales represent
export markets) concern several lines of 14% of total tire sales by volume and around
products: M&HCV tires (mainly bus and 23% by value (see Figure 6). This difference
truck tires), car tires, two- and three-wheeler is explained by the increase in car
tires, and LCV tires (see Table 2). performance, the development of the radial
tire and the emergence of strong brands in the
In the fiscal year 2015-16 (or FY2016),
Indian market. In the coming years, both
commercial vehicle tires accounted for 18%
of all tires sold in India while their sales replacement and OEM markets are expected
constitute 63% of the revenue (see Figure 6). to grow annually in line of years 2015-17, at
This is explained not only by the cost a pace above 5% (Michelin’s Internal Data
production but also by truck driver’s and on the World Tire Market, 2018). OEM
fleet manager’s business needs. They market will lead the way as passenger vehicle
demand a robust tire at a good price, market is forecast to grow yearly at 10%
withholding the load all the way. They have rate30.
been led to think in terms of cost per In stark contrast to the commercial vehicle
kilometer rather than the tire buy-in cost, tire segment, two- and three-wheeler tires
which prompts them to include the tire represent 54% of all tires sold in India
mileage and retreading in their cost whereas its forms 13% of sales (see Figure
calculation. Furthermore, some sense of 6). There is strong competition in this
relationship between the tire and fuel segment, with a strong focus of customers on
consumption has grown since several years. price, which results for tire makers in regular
From this point of view, the radial tire is drops in prices and margins. Due to its
much more economical than the cross-ply affordability and low maintenance cost, this
tire. From the tire industry’s standpoint, all means of transport should grow at a faster
these factors mean at best a stagnant demand, pace than passenger vehicle. As this tire
which has even decreased in the years 2015- market is quasi-exclusively made up of
2017, especially in the replacement segment cross-ply tires, it is sheltered from Chinese
(Michelin’s Internal Data on the World Tire imports. Consequently, the domestic
Market, 2018). The only increasing market industry will fully benefit from this demand,
will be the OEM, driven by commercial which explains that all major tire companies
vehicle sales, which are correlated with the have lately invested this segment31.
GDP growth29.

The Tire Industry in India: Market Shares and Competition

In FY2018, the Indian tire market locally 60 manufacturing facilities along
amounted to approximately Rs. 595,000 with dozen of importers (mostly
million. This market is made up of 39 Chinese). However, four Indian tire
Indian and foreign companies operating makers alone―MRF (leader), Apollo

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 _______________________ Tire Maharajahs Case Study _______________________

Tyres, JK Tyre and CEAT―stand out industry concentration is even stronger,

with cumulated sales accounting for especially in the commercial tire segment
around 65% of the entire tire market (see (see Table 3).
Figure 7). In terms of volume, the
Figure 7 – Market Shares (in Value) of Tire Makers in India (FY2018)

MRF
24%
Others
35%

Apollo Tyres
18%
CEAT
11% JK Tyre
12%

Nota Bene: we estimated the market shares of tire makers in this figure by dividing their respective
FY2018 total sales (minus foreign sales) by the FY2018 total value of the Indian tire market
(amounting to approximately Rs. 595,000 million).

Table 3 – Market Shares (in Volume) by Product (FY2018)

Passenger Commercial
Tire maker
vehicle vehicle
MRF 10.9% (leader) 21.5%
Apollo Tyres 8.9% 24.9% (leader)
JK Tyre 6.0% 20.1%
Other Indian tire makers 33.4% 22.2%
Global tire makers* 32.6% 7.0%
Chinese exporters** 3.9% 4.3%
Other Asian exporters*** 4.3% -
* Cumulated market shares of the five world’s largest tire makers
(Bridgestone, Goodyear, Michelin, Continental and Pirelli).
** This category also includes Taiwanese tire makers such as Maxxis.
*** Cumulated market shares of Hankook (South Korea), Nexen (South
Korea), Kumho (South Korea), GITI (Singapore), Toyo (Japan),
Sumitomo (Japan) and Yokohama (Japan).
Source: Michelin’s Internal Data on the World Tire Market (2018).

Despite a growing tire market, several commercial vehicle radial and two- and
incumbents have recently encountered three-wheeler tires), to JK Tyre on April
tougher competitive conditions and 2016. It is also worth mentioning the
subsequently faced financial distress, acquisition of the Indian leader in OTR
leading to company restructuring and tires, Alliance Tires, by the Japanese tire
industry consolidation. For instance, maker, Yokohama, in 2016 32.
Falcon Tyres, a full-range tire maker,
Many factors may explain the difficulties
filed for bankruptcy in 2017 and Birla
faced by some Indian tire makers,
Tyres, a highly indebted tire maker, sold
especially in the commercial vehicle
off one of its subsidiaries, Cavendish
radial tire and passenger car radial tire
Industries (specialized in manufacturing
segments (see developments in the

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introductory section) but the aggressive tires have grown at a faster pace (12.7%
pricing of Chinese and Taiwanese CAGR) during the same period 33. On
exporters (Maxxis, Shandong Linglong September 2018, the Indian government
Tyre and Hangzhou Zhongce Rubber) in responded to this trend by imposing
the replacement market seems to be a key another set of customs duties (15%) on
destabilizing factor. Chinese tire makers imported passenger car radial tires.
started exporting commercial vehicle These higher customs duties will
radial tires for the OEM market at the end probably lead Chinese exporters to
of the 1990s, as the local capacity was not modify their Indian market strategy and
sufficient to fulfil the Indian truck
to favor equity entry modes over mere
makers’ needs. Over time, Indian truck exports. A good illustration is the recent
makers considerably reduced their greenfield investment decision made by
Chinese tire purchase, as they were not one of the world’s largest two-wheeler
satisfied with the tire quality. Chinese
tire maker, the Taiwan-based Maxxis
exporters have redirected their sales to group. Targeting 15% (in volume) of the
the replacement market where end Indian two- and three-wheeler tire
customers are more sensitive to tire price.
segment in five years, Maxxis has locally
Today, they grab a record 14.9% share for
set up a manufacturing facility with a
commercial vehicle radial tires sold to the yearly capacity of 7.3 million tires in
replacement market (see Table 4). March 2018.
Consequently, Indian tire makers have Facing with these threats, Indian tire
lobbied their government to increase makers are currently reviewing their
customs duties on tire imports. In competitive strategy and pursuing new
September 2017, the Indian government directions for growth: (i) extending their
took a first step against Chinese imports, product range and striving to become full-
known as the Anti-Dumping Duty range tire makers, (ii) expanding abroad,
(ADD): customs duties on commercial especially in emerging economies, and
vehicle radial tires imported from China (iii) developing their online distribution.
and Taiwan rose from 10 to 15%. Over As regards this last growth direction,
time, the ADD enforcement has had Indian tire makers have devised distinct
opposite impacts on the Indian tire online distribution strategies: some tire
market: on one side, it has led to slowing
makers sell tires on their own e-
down the flows of imported Chinese commerce website (Bridgestone India,
commercial vehicle radial tires in India
GoodYear India, Michelin India, MRF
but on the other side, it has diverted these and Apollo Tyres) while others favor
flows to the passenger vehicle radial tire
independent and specialized websites
segment. While total tire imports have
such as tires.cardekho.com or consumer
risen by 6.1% (compound average growth
goods shopping websites such as
rate, CAGR) between FY2015 and
Snapdeal or Flipkart.
FY2018, imported passenger car radial

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Table 4 – Market Shares (in Volume) by Product / Market (FY2018)

Passenger vehicle Commercial vehicle
Tire maker
OEM Replacement OEM Replacement
MRF 20.4% (leader) 15.2% 22.9%
Apollo Tyres 16.6% 31.2% (leader) 23.5% (leader)
64.3%
JK Tyre 11.2% 26.2% 18.7%
Other Indian tire makers 6.7% 23.5% 21.9%
Global tire makers* 32.6% 32.6% 3.1% 8.0%
7.1% (7.2% in the 5.0% (14.9% in
Chinese exporters** - 0.8%
radial segment) the radial segment)
Other Asian exporters*** 3.1% 5.4% - -
* Cumulated market shares of the five world’s largest tire makers (Bridgestone, Goodyear, Michelin, Continental and Pirelli).
** This category also includes Taiwanese tire makers such as Maxxis.
*** Cumulated market shares of Hankook (South Korea), Nexen (South Korea), Kumho (South Korea), GITI (Singapore), Toyo
(Japan), Sumitomo (Japan) and Yokohama (Japan).
Source: Michelin’s Internal Data on the World Tire Market (2018).

Table 5 – Market Shares (in Volume) by Product / Technology (FY2018)

Passenger Commercial vehicle
Tire maker
vehicle radial Cross-ply Radial
MRF 10.7% (leader) 26.6% (leader) 13.7%
Apollo Tyres 8.9% 23.7% 26.7% (leader)
JK Tyre 5.9% 19.4% 21.1%
Other Indian tire makers 33.4% 30.3% 14.6%
Global tire makers* 32.9% - 13.2%
Chinese exporters** 3.8% - 10.7%
Other Asian exporters*** 4.4% - -
* Cumulated market shares of the five world’s largest tire makers (Bridgestone, Goodyear,
Michelin, Continental and Pirelli).
** This category also includes Taiwanese tire makers such as Maxxis.
*** Cumulated market shares of Hankook (South Korea), Nexen (South Korea), Kumho (South
Korea), GITI (Singapore), Toyo (Japan), Sumitomo (Japan) and Yokohama (Japan).
Source: Michelin’s Internal Data on the World Tire Market (2018).

The Tire Industry in India: Competitors

■ MRF (in value) in India hovers around 24.1% (see
Figure 7). MRF is a full-range tire maker (see
Table 6), which occupies a leading position
in most product segments in India (passenger
vehicle, two- and three-wheeler, agriculture
and OTR tires).
CEO (FY2018): K.M. Mammen MRF has eight manufacturing facilities
Sales (FY2018): Rs. 156,956.2 million ($US 2,396 (mostly located in the south of India) and a
million) distribution network of 5,000 dealers in India
Indian and world market shares (in value, (including 4,200 directly-operated
FY2018): 24.1% (ranked 15th world tire maker) stores―MRF TireTok, MRF MuscleZone
Listed on the Bombay Stock Exchange: Yes and MRF FASST―and 800 MRF T&S
franchised stores). In 2017, the Indian tire
The creation of Madras Rubber Factory company started distributing its products
(MRF) in Chennai (Tamil Nadu province) online through its website and the MRF T&S
dates back to 1946. The company has been network.
leading the Indian tire industry for 40 years
and ranks 15th among the 30 largest tire The first international move of the Indian tire
makers in the world. Its current market share company occurred in 1964 with the opening

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of a commercial representative office in Middle East countries. Over the FY2013-18

Lebanon. Today, the Indian tire company period, MRF’s sales in its export markets
achieves 8.6% of its sales abroad through have stagnated following the intense price
exports. Its main geographical markets are competition imposed by Chinese tire makers.
Sri Lanka, Indonesia, the Philippines and
Table 6 – MRF: Product and Technology (FY2018)
Passenger Commercial Two- and three- Agriculture and
LCV
vehicle vehicle wheeler OTR vehicle
Cross-ply ■ ■ ■ ■
Radial ■ ■ ■ ■
Source: FY2018 MRF’s annual report (www.mrftyres.com/financial-results, accessed on November 26, 2018).

Table 7 – MRF: Market Shares (Value) (FY2005 and FY2018)

Passenger Commercial Two- and three- Agriculture and
LCV
vehicle vehicle wheeler OTR vehicle
2005 25% 19% n.a. 42% leader
2018 23% (leader) 25% n.a. 37% (leader) leader
Source: FY2018 MRF’s annual report (https://www.mrftyres.com/financial-results, accessed on November 26, 2018).

Table 8 – MRF: Financial Data (in Rs. m)

2013-14 2014-16 2016-17 2017-18
(FY 2014) (18 months) (FY2017) (FY2018)
Total sales 133,961.9 228,146.1 152,601.8 156,956.2
Foreign sales 13,320.0 18,560.0 13,160.0 13,530.0
Total assets 98,339.9 132,538.1 150,484.7 164,784.8
Shareholder equity 45,395.5 72,243.4 85,444.2 96,042.0
CSR expenses n.a. 225.5 392.4 94.9
R&D expenses 340.8 548.9 1,996.8 1,108.6
Input cost 82,989.0 111,629.1 76,799.5 89,853.8
Net profit 9,083.2 24,870.8 14,862.2 11,316.1
Market-to-book ratio 3.05 2.25 2.98 3.15
Note Bene: Before 2014, financial data of MRF were estimated over a yearly period ranging from
September N-1 to September N and from 2016, over a yearly period ranging from March N-1 to
March N.
Source: (i) Orbis (https://orbis.bvdinfo.com, accessed on November 26, 2018). (ii) MRF’s
annual reports (2014, 2015, 2016, 2017, and 2018; https://www.mrftyres.com/financial-results,
accessed on November 26, 2018).

■ Apollo Tyres tire makers in the world. Initially, Apollo

Tyres was specialized in manufacturing and
selling truck tyres. Building on a leading
competitive position in the commercial
vehicle segment (27% market share in value
and 24.9% in volume), Apollo Tyres has
CEO (FY2018): Onkar S. Kanwar
followed two directions for growth: product
Sales (FY2018): Rs. 152,119.5 million ($US 2,322 range extension and internationalization.
million) Throughout its history, the Indian tire maker
Indian and world market shares (in value, has strived to expand into all tire segments,
FY2018): 17.7% (ranked 17th world tire maker) with its latest entry into the two- and three-
Listed on the Bombay Stock Exchange: Yes wheeler tire segment in 2016 (see Table 9).
Created in 1972, Apollo Tyres ranks 2nd in Today, Apollo Tyres is a full-range tire
the Indian tire industry (with a 17.7% market maker with a strong focus on the replacement
share in value) and 17th among the 30 largest

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market where it achieves the largest share of While its internationalization strategy is
its sales in India. unique in the Indian tire context, Apollo
Tyres has also suffered notable setbacks in
As regards its internationalization, Apollo
this matter. First, the rising level of South
Tyres differentiates itself from most of the
Africa’s political and economic uncertainty,
Indian tire makers, which rely on exports to
which was observed at the beginning of the
expand abroad (except JK Tyre). First,
Apollo Tyres is today the Indian tire maker 2010s, produced operational disruptions,
sharp labor cost increase and financial issues
with the highest internationalization intensity
with a 30.5% foreign sales-to-total sales ratio for the Apollo Tyres’ local subsidiary. As
stated by the tire maker’s Chief Business
(see Table 11). The Indian tire maker sells its
products in 102 countries with a majority Officer, Sunam Sarkar, in Forbes India: “post
the 2010 Fifa World Cup in South Africa,
proportion of foreign sales achieved in the
European market. Second, the tire maker has there was a lot of industrial unrest.
Electricity rates rose rapidly and the entire
leveraged its foreign sales mostly through
tyre industry went on strike for a month.
taking over local tire makers and setting up
Cheap Chinese imports to South Africa also
wholly-owned manufacturing and
caused a lot of pain to domestic tyre
distribution subsidiaries. These different
internationalization features explain why manufacturers”35. Finally, Apollo Tyres
decided to sell off Dunlop Tyres South
Apollo Tyres is often cited as an example of
Africa and the “Dunlop” brand rights to
“emerging multinational.”
Sumitomo Rubber in 2014. Second, Apollo
Apollo Tyres started its internationalization Tyres attempted to enter the US tire market
by taking over Dunlop Tyres South Africa in by launching a takeover bid on Cooper Tire
2006. This acquisition allowed the Indian tire & Rubber (ranked 12th world tire maker) in
maker to benefit from a manufacturing base 2013. However, after a long negotiation
in South Africa and the “Dunlop” brand process, the bid ended up negatively with the
rights for 32 African countries. After this first bid rejection from the US tire maker’s
international entry, Apollo Tyres accelerated shareholders and after a strong opposition
its international expansion pace with the expressed by Cooper subsidiary’s employees
takeover of the Dutch tire maker, Vredestein, in China.
in 2009. Lastly, Apollo Tyres consolidated
Apollo Tyres has four manufacturing
its European position with a record
facilities (with two additional manufacturing
investment (Rs. 40,000 million) to set up a
facilities in Europe) and a distribution
wholly-owned manufacturing facility in
network of 5,300 dealers in India (including
Hungary. As emphasized by the tire maker’s
1,700 franchised exclusive stores: “Apollo
CEO, Onkar S. Kanwar, during the
Zone” “Apollo CV Zone” and “Apollo
inauguration: “this is the first time the
Point”). Its main ambition for the next years
company has set up a plant outside India
is to dethrone MRF as the leader of the Indian
from scratch”34. Fully operating in 2018, this
second manufacturing base in Europe (the tire industry. To this purpose, Apollo Tyres
first one is the Vredestein’s manufacturing has unveiled an ambitious 5-year investment
facility in the Netherlands) allowed Apollo plan (Rs. 38,000 million), aiming to set up a
Tyres to supply the local OEM and new manufacturing facility in India with a
replacement markets with an additional 5.5 capacity of 5.3 million passenger vehicle
million passenger vehicle tires and 675,000 tires and 1 million commercial vehicle tires.
commercial vehicle tires.

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Table 9 – Apollo Tyres: Product Mix, Type and Technology (FY2018)

Passenger Commercial Two- and three- Agriculture and
LCV
vehicle vehicle wheeler OTR vehicle
Sales 39% 42% 7% 2% 10%
Cross-Ply ■ ■ ■ (since 2016) ■
Radial ■ (since 2000) ■ ■ ■ (since 2016) ■
Source: FY2018 Apollo Tyres’ annual reports (https://corporate.apollotyres.com/en-in/investors/financial-reporting/,
accessed on December 1, 2018).

Table 10 – Apollo Tyres: Market Shares (Value) (FY2005 and FY2018)

Passenger Commercial Two- and three- Agriculture and
LCV
vehicle vehicle wheeler OTR vehicle
2005 13% 26% 26% - 23%
27% (leader)
and 24% in the
2012 17% n.a. 2% n.a.
radial segment
(leader)
Source: FY2018 Apollo Tyres’ annual report (https://corporate.apollotyres.com/en-in/investors/financial-reporting/,
accessed on December 1, 2018).

Table 11 – Apollo Tyres: Financial Data (in Rs. m)

2013-14 2014-15 2015-16 2016-17 2017-18
(FY2014) (FY2015) (FY2016) (FY2017) (FY2018)
Total sales 135,098.2 128,692.2 129,195.1 143,217.6 152,119.5
Foreign sales 50,526.7 35,905.1 34,624.2 42,965.2 46,457.3
Total assets 90,455.8 91,352.2 116,538.2 152,961.1 201,532.4
Shareholder equity 45,746.2 54,190.3 66,046.1 72,899.5 97,766.7
CSR expenses n.a. 56.8 129.3 185.0 215.6
R&D expenses 757.5 1,042.7 1,712.5 1,749.4 1,559.7
Input cost 71,067.4 64,188.4 53,142.1 53,132.2 62,811.5
Net profit 10,050.5 9,776.0 11,229.6 10,989.9 7,238.8
Market-to-book ratio 1.76 1.70 1.35 1.46 1.61
Nota Bene: Apollo Tyres’ financial data were estimated over a yearly period ranging from March N-1 to March N.
Source: Orbis (https://orbis.bvdinfo.com, accessed on November 26, 2018) and Apollo Tyres’ annual reports (2014,
2015, 2016, 2017, and 2018; https://corporate.apollotyres.com/en-in/investors/financial-reporting/, accessed on December
1, 2018).

■ JK Tyre JK Tyre is a subsidiary of JK Industries,

which is a conglomerate operating in
different Indian industries: cement (JK
Lakshmi), paper (JK Paper), food processing
(Umang Dairies), biotech (JK Agri
Genetics), insurance (JK Risk Managers &
CEO (FY2018): Raghupati Singhania Insurance Brokers) and tires. JK Industries
created its tire business unit in 1972. The
Sales (FY2018): Rs. 66,109.5 million ($US 1,009
million) company ranks 3rd in the Indian tire industry
(with a 12.2% market share in value) and
Indian and world market shares (in value,
22nd among the 30 largest tire makers in the
FY2018): 12.2% (ranked 22nd world tire maker)
world. Throughout its history, JK Tyre has
Yearly manufacturing capacity (FY2018): 31.8 privileged the acquisition mode to expand
million tires (7.9 million in Mexico and 23.9 million
in India)
quickly in the tire industry, both locally and
internationally.
Listed on the Bombay Stock Exchange: Yes
Pioneer of radial tires in India, JK Tyre has
built a strong competitive position in the

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LCV and commercial vehicle tire segment. JK Tyre has nine manufacturing facilities
The Indian tire maker enjoys the second (with three additional manufacturing
largest share for commercial vehicle radial facilities in Mexico) and a distribution
tires (with 21.1% market share in volume, network of 3,700 dealers in India (including
see Table 5) and commercial vehicle tires 400 directly-operated stores: 60 “JK Tyre
sold in the OEM market (with 26.2% market Xpress Wheels” stores for two- and three-
share in volume, see Table 4). It is also the wheeler tires, 300 “JK Tyre Steel Wheels”
volume leader in the LCV (cross-ply and stores for passenger vehicle tires and 40 “JK
radial) tire segment with 32% market share. Tyre Truck Wheels” stores for commercial
This strong focus on the LCV and vehicle tires).
commercial vehicle tire segments is reflected
JK Tyre expanded abroad early in its history.
in the company’s total sales: this segment
In 1974, it signed a distribution agreement
accounts for 60% of the company sales.
with General Tire & Rubber to sell its tires in
Another focus of the tire maker is the
the US. This was its first international move.
replacement market where it achieves 58%
Today, JK Tyre exports its products in over
of its sales (with 19% for foreign sales and
100 countries and achieves 14.7% of its sales
23% for OEM).
abroad. The acquisition (completed on April
While strengthening its competitive position 11, 2008) of the Mexican tire maker, Tornel,
in the LCV and commercial vehicle tire was a milestone in its international expansion
segment, JK Tyre has sought new directions strategy. It has allowed JK Tyre to access the
for growth. First, it recently entered the two- Central and South American tire market and
and three-wheeler tire segment: on April 18, to gain greater access to the North American
2016, it completed the acquisition of the two- tire market benefitting from the North
and three-wheeler tire maker, Cavendish American Free Trade Association (NAFTA)
Industries (from the financially distressed agreement. JK Tyre has steadily invested in
Birla Tyres). This acquisition brings JK Tyre its Mexican subsidiary, growing the yearly
three manufacturing facilities with a yearly manufacturing capacity from 4.5 million
capacity of 8.5 million tires. This acquisition tires (FY2008) to 7.9 million tires (FY2018).
adds manufacturing capacities in the This acquisition can be viewed as a success
commercial vehicle radial tire segment and with regard to the foreign sales growth
allows JK Tyre to enter the two- and three- reported from 2007 (year prior to the
wheeler tire segment. Second, attracted by acquisition) to 2018. Over this period, the
the high growth in the Indian aircraft foreign sales grew from Rs. 4,810 million
industry, JK Tyre intends to develop new (15% of total sales) to Rs. 12,580 million
product lines for this industry in the near (19%) (see Table 14).
future.

Table 12 – JK Tyre: Product Mix, Type and Technology (FY2018)

Passenger Commercial Two- and three- Agriculture and
LCV
vehicle vehicle wheeler OTR vehicle
21% (including See passenger
Sales 60% 3% 16%
LCV) vehicle
Cross-ply ■ ■ ■ (since 2016) ■
Radial ■ ■ ■ ■
Source: FY2018 JK Tyre’s annual reports (https://www.jktyre.com/annualreports.aspx, accessed on November 28, 2018).

Table 13 – JK Tyre: Market Shares (in Value) (FY2005 and FY2018)

Passenger Commercial Two- and three- Agriculture and
LCV
vehicle vehicle wheeler OTR vehicle
2005 18% 25% n.a. - n.a.
2018 14% 32% n.a. 3% n.a.
Source: FY2018 JK Tyre’s annual report (https://www.jktyre.com/annualreports.aspx, accessed on November 28, 2018).

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Table 14 – JK Tyre: Financial Data (in Rs. m)

2013-14 2014-15 2015-16 2016-17 2017-18
(FY2014) (FY2015) (FY2016) (FY2017) (FY2018)
Total sales 82,609.7 80,428.5 76,069.8 83,832.8 85,434.1
Foreign sales 10,400.0 8,440.0 5,810.0 9,370.0 12,580.0
Total assets 60,426.1 67,321.9 70,781.3 104,351.9 105,674.6
Shareholder equity 10,971.2 14,010.1 17,514.3 21,097.9 21,031.1
CSR expenses n.a. 20.7 47.5 43.5 45.5
R&D expenses 290.3 381.3 478.1 570.1 609.6
Input cost 48,843.3 44,346.5 37,893.2 44,514.0 52,466.5
Net profit 2,630.2 3,296.6 4,696.1 3,602.2 576.3
Market-to-book ratio 0.67 1.71 1.09 1.41 1.74
Nota Bene: JK Tyre’s, financial data were estimated over a yearly period ranging from March N-1 to March N.
Source: (i) Orbis (https://orbis.bvdinfo.com, accessed on November 26, 2018). (ii) JK Tyre’s annual reports (2014, 2015,
2016, 2017, and 2018; https://www.jktyre.com/annualreports.aspx, accessed on November 28, 2018).

■ CEAT Historically, CEAT has expanded over time

by focusing on two product segments:
commercial vehicle and two- and three-
wheeler tires. Recently, it shifted its focus
more on the passenger vehicle tire,
CEO (FY2018): Anant Goenka agriculture and OTR segments as these
Sales (FY2018): Rs. 64,291.4 million ($US 981
recorded increasing margin and growth (see
million) Table 16). The CEAT’s market mix follows
a standard pattern for the largest Indian tire
Indian market share (in value, FY2018): 10.8%
makers, with a strong emphasis on
Yearly manufacturing capacity (FY2018): 34.6 replacement (61% of its sales with 12% for
million tires
foreign sales and 27% for OEM).
Listed on the Bombay Stock Exchange: Yes
CEAT has six manufacturing facilities (five
The CEAT brand originates from the in India and one in Sri Lanka) and a
Italian CEAT group (Cavi Electrici Affini distribution network of 4,500 dealers in
Torino), which created a wholly-owned India (including 280 directly-operated two-
subsidiary in India in 1958, CEAT Tyres of wheeler stores and 500 exclusive franchised
India. RPG group took over the tire maker stores, “CEAT Shoppes”).
in 1982. RPG group is an Indian
conglomerate operating in communication In 1981, CEAT initiated its first
technology (KEC International), software international move by signing a worldwide
(Zensar Technologies), biotech (RPG Life distribution agreement with Pirelli. Today,
Sciences), and tea and rubber plantations CEAT exports its products in over 100
(Harrisons Malayalam). While being part of countries, achieving 12% of its sales abroad
the Indian RPG group, CEAT has kept (see Table 17). It has established
strong ties with Italy: in 1981 and 2011, it representative offices in Indonesia,
signed an agreement with the Italian tire Germany and the United Arab Emirates,
maker, Pirelli, for transferring its and has set up a 50:50 manufacturing joint
worldwide rights for the CEAT brand; and venture (CEAT Kelani) in Sri Lanka where
in 2018, it became the official sponsor of the it now occupies a leading market position.
Italian football team, Torino FC.

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Table 15 – CEAT: Product Mix, Type and Technology (FY2018)

Passenger Commercial Two- and three- Agriculture and
LCV
vehicle vehicle wheeler OTR vehicle
7% (agriculture)
Sales 14% 32% 12% 31%
and 4% (OTR)
Cross-ply ■ ■ ■ ■
Radial ■ ■ ■
Source: FY2008 CEAT’s annual report (https://www.ceat.com/corporate/investor/financials, accessed on November 30, 2018).

Table 16 – CEAT: Market Shares (in Value) (FY2005 and FY2018)

Passenger Commercial Two- and three- Agriculture and
LCV
vehicle vehicle wheeler OTR vehicle
2005 11% 18% 22% 11% 16%
2018 8% 11% n.a. 28% n.a.
Source: FY2018 CEAT’s annual report (https://www.ceat.com/corporate/investor/financials, accessed on November 30, 2018).

Table 17 – CEAT: Financial Data (in Rs. m)

2013-14 2014-15 2015-16 2016-17 2017-18
(FY2014) (FY2015) (FY2016) (FY2017) (FY2018)
Total sales 55,679.7 57,747.3 61,735.9 64,599.4 64,291.4
Foreign sales 11,135.9 10,394.5 8,025.6 7,751.9 7,714.9
Total assets 35,400.5 37,816.7 41,079.5 49,169.4 51,609.9
Shareholder equity 10,286.1 17,461.1 20,869.8 24,441.0 26,294.6
CSR expenses 37.8 34.4 77.3 101.1 107.1
R&D expenses 187.0 215.5 532.8 1,331.6 1,008.0
Input cost 35,649.9 33,626.1 29,537.8 33,088.8 36,521.4
Net profit 2,707.8 3,139.2 4,357.1 3,592.2 2,332.9
Market-to-book ratio 1.49 1.90 2.09 2.19 2.31
Nota Bene: CEAT’s financial data were estimated over a yearly period ranging from March N-1 to March N.
Source: (i) Orbis (https://orbis.bvdinfo.com, accessed on November 30, 2018). (ii) CEAT’s annual reports (2014, 2015,
2016, 2017, and 2018; https://www.ceat.com/corporate/investor/financials, accessed on November 30, 2018).

■ TVS Srichakra Srichakra manufactures and sells the full

range of two- and three-wheeler tires and
has recently expanded into the OTR and
agriculture tire segment. The two- and
three-wheeler tire specialist has a leading
CEO: Shobhana Ramachandhran
position in the OEM market where it
Sales (FY2018): Rs. 22,181.3 million ($US 339 achieves most of its sales (see Table 18).
million)
As regards its international expansion, the
Indian market share (in value, FY2018): 3.3%
Indian tire maker exports its products in 65
Yearly manufacturing capacity (FY2018): 26.0 countries (mostly in Africa and South
million tires
America), achieving 9.4% of its sales
Listed on the Bombay Stock Exchange: Yes abroad (see Table 20).
The TVS automobile distribution group
created TVS Srichakra in 1982. TVS

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Table 18 – TVS Srichakra: Tire and Technology (FY2018)

Passenger Commercial Two- and three- Agriculture and
LCV
vehicle vehicle wheeler OTR vehicle
Cross-ply ■ ■
Radial ■
Source: FY2018 TVS Srichakra’s annual report https://www.tvstyres.com/financial/annual.php, accessed on December
6, 2018).

Table 19 – TVS Srichakra: Market Shares (in Value) (FY2005 and FY2018)
Passenger Commercial Two- and three- Agriculture and
LCV
vehicle vehicle Wheeler OTR vehicle
2005 - - - 21% n.a.
2018 - - - 26% n.a.
Source: FY2018 TVS Srichakra’s annual report https://www.tvstyres.com/financial/annual.php, accessed on December
6, 2018).

Table 20 – TVS Srichakra: Financial Data (in Rs. m)

2013-14 2014-15 2015-16 2016-17 2017-18
(FY2014) (FY2015) (FY2016) (FY2017) (FY2018)
Total sales 19,393.0 21,805.1 23,606.0 21,355.3 22,181.3
Foreign sales 2,237.5 2,065.7 2,044.8 2,005.1 2,102.0
Total assets 10,252.2 9,695.5 9,617.3 13,909.6 14,250.7
Shareholder equity 2,134.1 2,822.8 4,121.4 5,534.3 6,312.4
CSR expenses n.a. 8.8 15.6 31.2 41.8
R&D expenses 296.2 171.5 235.9 250.8 295.9
Input cost 11,009.0 11,487.6 10,624.4 11,411.6 12,299.1
Net profit 565.8 996.3 1,862.2 1,496.9 1,173.4
Market-to-book ratio 0.95 3.76 4.29 4.76 3.03
Nota Bene: TVS Srichakra’s financial data were estimated over a yearly period ranging from March N-1 to March N.
Source: (i) Orbis (https://orbis.bvdinfo.com, accessed on November 30, 2018). (ii) TVS Srichakra’s annual reports (2014,
2015, 2016, 2017, and 2018; https://www.tvstyres.com/financial/annual.php, accessed on December 6, 2018).

■ Goodyear India 1961 and corresponds to the first entry of

the Goodyear Tire & Rubber group into the
Indian tire market.
Goodyear India operates two plants, which
CEO (FY2018): Rajeev Anand manufacture radial (passenger vehicle,
commercial vehicle, LCV and agriculture
Sales (FY2018): Rs. 17,426.2 million ($US 266
and OTR) tires. The Indian tire maker is the
million)
leader (in value) in the radial agriculture tire
Indian market share (in value, FY2018): 2.9% segment (see Table 22).
Listed on the Bombay Stock Exchange: Yes
Goodyear India achieves the majority share
Goodyear India is the Indian wholly-owned of its sales in the OEM market. It also
subsidiary of the US Goodyear Tire & distributes its products through a multi-
Rubber group, the third largest tire maker in brand dealer network.
the world. This subsidiary was created in

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Table 21 – Goodyear India: Tire and Technology (FY2018)

Passenger Commercial Two- and three- Agriculture and
LCV
vehicle vehicle wheeler OTR vehicle
Cross-ply
Radial ■ ■ ■ ■
Source: FY2018 Goodyear India’s annual report (https://www.goodyear.co.in/investor-relations; accessed on December 5,
2018).

Table 22 – Goodyear India: Market Shares (in Value) (FY2005 and FY2018)
Passenger Commercial Two- and three- Agriculture and
LCV
vehicle vehicle Wheeler OTR vehicle
2005 10 to 14% 4% - - 10 to 14%
Leader in the
radial
2018 n.a. n.a. - - agriculture
segment
Source: FY2018 Goodyear India’s annual report (https://www.goodyear.co.in/investor-relations; accessed on December 5,
2018).

Table 23 – Goodyear India: Financial Data (in Rs. m)

2015-16 2016-17 2017-18
(FY2016) (FY2017) (FY2018)
Total sales 18,969.7 16,600.1 17,426.2
Total assets 9,349.6 10,895.7 12,975.7
Shareholder equity 6,141.2 7,070.8 8,021.9
Input cost 6,245.2 5,736.1 6,998.6
Net profit 1,196.6 1,262.8 1,298.1
Market-to-book ratio 1.90 2.76 3.20
Nota Bene: Goodyear India’s financial data were estimated over a yearly period
ranging from March N-1 to March N.
Source: (i) Orbis (https://orbis.bvdinfo.com, accessed on November 30, 2018). (ii)
Goodyear India’s annual reports (2014, 2015, 2016, 2017, and 2018;
https://www.goodyear.co.in/investor-relations, accessed on November 30, 2018).

■ Bridgestone India manufacturing facility in 1996. Today,

Bridgestone India operates two plants,
which manufacture 5.4 million radial
(passenger vehicle, commercial vehicle and
CEO: Parag Satpute two- and three-wheeler) tires. This
manufacturing capacity allows Bridgestone
Yearly manufacturing capacity (2018): 5.4 million
tires India to meet 90% of its Indian tire demand
(the remainder is covered with imports).
Listed on the Bombay Stock Exchange: No
Bridgestone India has a balanced approach
Bridgestone India is the Indian wholly- to the Indian tire market with 53% of its
owned subsidiary of the Japanese sales in the OEM segment and 47% in the
Bridgestone group, the world’s largest tire replacement segment.
maker.
Bridgestone India has a distribution
The Japanese group entered the Indian tire network of 3,000 dealers in India (including
industry by setting up its first 500 exclusive “Bridgestone” stores).

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 _______________________ Tire Maharajahs Case Study _______________________

Table 24 – Bridgestone India: Tire and Technology (FY2018)

Passenger Commercial Two- and three- Agriculture and
LCV
vehicle vehicle wheeler OTR vehicle
Cross-ply
Radial ■ (since 1996) ■ (since 1996) ■ (since 2016)
Source: FY2018 Bridgestone India’s annual report (http://www.bridgestone.co.in/Investors_Information.aspx; accessed on
December 5, 2018).

Table 25 – Bridgestone India: Market Shares (in Value) (FY2005 and FY2018)
Passenger Commercial Two- and three- Agriculture and
LCV
vehicle vehicle Wheeler OTR vehicle
30% in the
2005 n.a. - - -
radial segment
19% (leader in
2018 the radial n.a. - n.a. -
segment)
Source: FY2018 Bridgestone India’s annual report (http://www.bridgestone.co.in/Investors_Information.aspx; accessed on
December 5, 2018).

Table 26 – Bridgestone India: Financial Data (in Rs. m)

2015-16 2016-17
(FY2016) (FY2017)
Total sales 28,088.7 26,963.4
Total assets 38,063.3 41,314.6
Shareholder equity 27,121.3 30,217.2
Input cost 11,268.0 9,730.4
Net profit 1,942.3 3,101.8
Nota Bene: Bridgestone India’s financial data were estimated
over a yearly period ranging from March N-1 to March N.
Source: Orbis (https://orbis.bvdinfo.com, accessed on
December 5, 2018).

End Notes
1
RubberAsia, Indian tyre industry has big growth potential; interview of Anant Goenka, ATMA Chairman, May 18, 2018
(https://www.rubberasia.com/2018/05/18/indian-tyre-industry-big-growth-potential-anant-goenka-chairman-atma/, accessed
on December 3, 2018).
2
TyreAsia, Changing face of Indian tyre industry, November 5, 2018 (http://tyre-asia.com/2018/11/05/changing-face-of-
indian-tyre-industry/, accessed on December 3, 2018).
3
International Monetary Fund, World Economic Outlook: Challenges to Steady Growth, October 2018,
(https://www.imf.org/en/Publications/WEO/Issues/2018/09/24/world-economic-outlook-october-2018, accessed on December
3, 2018).
4
Society of Indian Automotive Manufacturers (SIAM), Automotive Mission Plan 2026,
(http://www.siamindia.com/uploads/filemanager/47AUTOMOTIVEMISSIONPLAN.pdf, accessed on December 3, 2018).
5
The Economic Times Auto, Imported car tyres to become dearer; Govt hikes custom duty by 5%, September 26, 2018
(https://auto.economictimes.indiatimes.com/news/tyres/imported-tyres-to-become-dearer-govt-hikes-custom-duty-by-
5/65968616, accessed on December 16, 2018.
Commodity Online, Indian tyre industry hit by weak Natural Rubber supplies, December 4, 2017
(https://www.commodityonline.com/commodity-news/indian-tyre-industry-hit-by-weak-natural-rubber-supplies/news-
now/18049, accessed on December 17, 2018).
6
The Financial Express, Natural rubber output may decline by 20% due to Kerala Floods, adversely impact Indian tyre
industry, September 7, 2018 (https://www.financialexpress.com/industry/natural-rubber-output-may-decline-by-20-due-to-
kerala-floods-adversely-impact-indian-tyre-industry/1305061/, accessed on December 17, 2018).
7
Money Control, Not after volume, but after profitable growth, says Neeraj Kanwar of Apollo Tyres, May 24, 2018
(https://www.moneycontrol.com/news/business/companies/not-after-volume-but-after-profitable-growth-says-neeraj-kanwar-
of-apollo-tyres-2575311.html, accessed on December 17, 2018).
8
The Economic Times Auto, Imported car tyres to become dearer; Govt hikes custom duty by 5%, September 26, 2018,
(https://auto.economictimes.indiatimes.com/news/tyres/imported-tyres-to-become-dearer-govt-hikes-custom-duty-by-
5/65968616, accessed on December 16, 2018).

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 _______________________ Tire Maharajahs Case Study _______________________

9
The Economist, The dire consequences of India’s demonetization initiative, December 3, 2018
(https://www.economist.com/finance-and-economics/2016/12/03/the-dire-consequences-of-indias-demonetisation-initiative,
accessed on December 17, 2018).
10
The Economic Times, Bharat Stage VI norms: Know how they will impact you, October 25, 2018,
(https://economictimes.indiatimes.com/industry/auto/cars-uvs/bharat-stage-vi-norms-know-how-they-will-impact-
you/articleshow/66362907.cms, accessed on December 17, 2018).
11
Pwc (2018) Standards and labelling programme for passenger car tyres, April (https://shaktifoundation.in/wp-
content/uploads/2018/07/Fuel-Efficiency-through-Vehicle-Tyres_Summary_Web.pdf, accessed on May 17, 2019); India
Transport Portal (2013) Special issue: Rolling Resistance Thresholds. An opportunity for Indian sustainable transportation.
August (http://www.indiaenvironmentportal.org.in/files/file/RR_thresholds_2013.pdf, accessed on May 17, 2019).
12
ATMA (2017b) ATMA Review. Indian Automobile Industry, FY2016-17 (Apr-Dec), ATMA Periodicals
(http://www.mohitnarang.in/atma/wp-content/uploads/2018/03/Atma-Periodicals_17-4-17.pdf, accessed on December 6,
2018).
13
Alphà Invesco, Understanding the Indian tyre industry, key players and the road ahead, 2018, available on the webpage:
https://www.alphainvesco.com/blog/understanding-the-indian-tyre-industry/. Accessed on 12/16/2018.
14
ATMA (2017b) ATMA Review. Indian Automobile Industry, FY2016-17 (Apr-Dec), ATMA Periodicals,
( http://www.mohitnarang.in/atma/wp-content/uploads/2018/03/Atma-Periodicals_17-4-17.pdf, accessed December 6, 2018).
Frost & Sullivan, Indian Passenger Vehicles Market, Forecast to 2020. New Models Launched in the Super-compact, Mid-size,
and Compact Sports Utility Vehicle Segment at Aggressive Pricings are Responsible for Driving the Indian Passenger Vehicle
Market, January 2018.
15
Frost & Sullivan, Indian Commercial Vehicles Market Trends and Forecasts Business Model Impact in the Face of Impeding
Segmental Shifts and Demand Drivers, September 2016.
16
ATMA (2017b), ATMA Review. Indian Automobile Industry, FY2016-17 (Apr-Dec), ATMA Periodicals,
(http://www.mohitnarang.in/atma/wp-content/uploads/2018/03/Atma-Periodicals_17-4-17.pdf, accessed on December 6,
2018).
17
Autocar Professional, India’s 2-wheeler industry sells over 20m units for the first time in a fiscal, April 4, 2018
(http://www.autocarpro.in/news-national/india-wheeler-industry-sells-20m-units-fiscal-28927, accessed on December 16,
2018).
18
Team-BHP, Tractor sales figures in India, May 5, 2018 (https://www.team-bhp.com/forum/commercial-vehicles/198172-
tractor-sales-figures-india.html, accessed on December 16, 2018).
19
Frost & Sullivan, Indian Tire Aftermarket, December 2006, p. 61
20
Frost & Sullivan, Mobility Trends in Select Indian Cities. Increased Congestion and Explosive Growth of Private Vehicles
is Envisaged for Major Indian Cities, July 2013, p. 46.
21
Frost & Sullivan, Indian Tire Aftermarket, December 2006, p. 61.
22
Author estimate.
23
Frost & Sullivan, Indian Commercial Vehicles Market Trends and Forecasts Business Model Impact in the Face of
Impeding Segmental Shifts and Demand Drivers, September 2016, p. 50, 58.
24
Frost & Sullivan, Indian Tire Aftermarket, December 2006, p 42.
25
Frost & Sullivan, Indian Commercial Vehicles Market Trends and Forecasts Business Model Impact in the Face of
Impeding Segmental Shifts and Demand Drivers, September 2016, p. 27.
26
Areeba Falak, Low quality Chinese tyres hurt Indian manufacturers, SundayGuardianLive, August 28, 2016
(https://www.sundayguardianlive.com/news/6274-low-quality-chinese-tyres-hurt-indian-manufacturers, accessed on May 7,
2019).
27
Author estimate.
28
RubberAsia, Enhance anti-dumping duty on Chinese tyres: Anant Goenka, Chairman, ATMA, October 11, 2018
(https://www.rubberasia.com/2018/10/11/enhance-anti-dumping-duty-chinese-tyres-anant-goenka-chairman-atma/, accessed
on December 17, 2018).
29
Frost & Sullivan, Indian Commercial Vehicles Market Trends and Forecasts Business Model Impact in the Face of Impeding
Segmental Shifts and Demand Drivers, September 2016.
30
Frost & Sullivan, Indian Passenger Vehicles Market, Forecast to 2020. New Models Launched in the Super-compact, Mid-
size, and Compact Sports Utility Vehicle Segment at Aggressive Pricings are Responsible for Driving the Indian Passenger
Vehicle Market, January 2018.
31
TyreAsia, 2 wheeler tyre market gets busy, January 3, 2017 (http://tyre-asia.com/2017/01/03/2-wheeler-tyre-market-gets-
busy/, accessed on December 16, 2018).
32
Guido Gambassi (2016) ATG raises with Yokohama, pneurama, September 2, 2018
(https://www.pneurama.com/en/rivista_articolo.php/ATG-raises-with-Yokohama?ID=27221, accessed on May 17, 2019).
33
The Times of India, PCR tyre hike won’t have major impact, September 28, 2018 (accessed through Factiva on December 7,
2018).
34
TyreAsia, Apollo Tyres’ global growth journey, May 2, 2018 (accessed through Factiva on December 3, 2018).

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35
Forbes India, Apollo Tyres quest for a global grip, October 12, 2016 (http://www.forbesindia.com/article/northen-
giants/apollo-tyres-quest-for-a-global-grip/44429/1, accessed on December 12, 2018).

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