Off The Road Tyres

Detailed Project Report

 Group Members
• Prashant Deshinge (05)
• Vijoyendra Goswami (09)
• Piyush Jhaveri (12)
• Yatish Patali (27)
• Deepak Salian (35)
• Rohit Salunke (36)
• Varad Shetty (41)
• Chetan Mav (54)
• Nawalkumar Agarval (55)
• Nipun Mehra (58)
 Agenda
• Introduction
• Indian tyre industry statistics
• Radialisation and Tyre Retreading
• Off the Road Tyres
• Marketing
• Porter’s Five Forces Model
• SWOT Analysis
• Peculiar Features of the Tyre Industry
• Commercialisation of the Project
• Financial Projections
 Introduction
• The Indian Tyre Industry produced 13.5 lakhs tonnes
of tyres garnering Rs. 25,000 crores in FY10.
• The Indian tyre industry is characterized by its:
– Raw material intensity(70% of operating income)
– Capital intensity
– Cyclicality
– Fierce competition among the top players
– Low bargaining power and resulting low margins
• Demand derived from the automobile Industry both
OEM and replacement
• The main category of tyres produced in the country
is that of Truck & Bus tyres (57% of the total tyre
tonnage production in FY10 )
Indian tyre industry statistics
Overview of Financial Year 2009-2010 (Est.)
Turnover of Indian Tyre Industry  Rs. 25,000 Crores

Tyre Production (Tonnage) 13.50 lakh M.T.

Tyre Production – All Categories (Nos.) 971 Lakh

Tyre Export from India (Value) : Rs. 3625 crores

Number of tyre companies: 36

Industry Concentration 10 Large tyre companies account

for over 95% of total tyre
production.
Radialisation Level - Current  Passenger Car tyres: 98% 
(as a % of total tyre production)  Light Commercial Vehicles: 18%
Heavy Vehicles ( Truck & Bus ): 12%
 Indian tyre industry statistics
Production 2003 - 04 2004 - 05 2005 - 06 2006 - 07 2007 - 08 2008 - 09 2009 - 10
Truck & Bus 10821 11092 11941 12367 13137 12839 14811
Passenger Car 9959 11862 13605 14264 16437 16571 20047
Jeep 1440 1462 1272 1368 1467 1469 1402
Light Comml.
3271 3945 4529 4820 5320 5298 5739
Veh. (L.C.V.)
Tractor Front 1148 1311 1383 1754 1814 1842 2386
Tractor Rear 842 1096 1134 1296 1234 1315 1634
Tractor Trailer 415 408 596 823 886 758 903
A.D.V. 295 197 325 381 409 281 294
Scooter 9274 9992 9519 9643 11604 10882 13558
Motor Cycle 16688 18127 21053 26079 27921 30148 35664
Moped 168 124 55 0* 0* 0 0
Industrial 295 377 514 635 733 568 538
O.T.R. 74 89 106 115 141 136 161
Aero 0 0 0 0 0 0 0
TOTAL 54690 60082 66032 73545 81103 82107 97137
Radialisation and Tyre Retreading
• Radialisation:
– Radialisation can be aptly classified as the most
important innovation in tyre technology with
several advantages like additional mileage, fuel
saving and improved driving
– It however did was not initially accepted, but has
picked momentum in recent years
– The future of radialisation will be governed by the
following factors:
• Cost - Benefit Ratio
• Road Development
• Overload Control
• User Education
• Retreading Infrastructure
Radialisation and Tyre Retreading
• Tyre Retreading:
– Tread is the portion of the tyre which meets
the road surface
– In the manufacture of a new tyre,
approximately 20%-25% of the cost is incurred
in mfg of the Tread and the rest in body
– Thus retreading can save a lot of costs for the
user instead of changing the whole tyre
– Retreading is primarly done in the Truck and
Bus trye segment. On an average a Truck/Bus
trye is retreaded 1.5 times.  
 Off the Road Tyres
• The OTR tire classification includes tires for
construction vehicles such as wheel loaders,
backhoes, graders, trenchers, and the like; as well
as large mining trucks
• Manufacturersof tyres:
– The major players consist of MRF, Apollo Tyres, Ceat
and JK Industries, which account for 63 per cent of the
organised tyre market
– The other key players include Modi Rubber, Kesoram
Industries and Goodyear India, with 11 per cent, 7 per
cent and 6 percent share respectively
– Dunlop, Falcon, Tyre Corporation of India Limited
(TCIL), TVS-Srichakra, Metro Tyres and Balkrishna Tyres
are some of the other players
 Marketing
• Segmentwise Tyre Supplies:
– Tyre supplies are broadly to the following segments:
• Replacement Market (aftermarket)
• Original Equipment Manufacturers (OEMs), i.e.
vehicle manufacturers
• Export
• State Transport Undertakings (STUs) (primarily for
Bus tyres)
• Government Purchases

• Dealers (Single and Multi Brand)

– Dealers are an important link between the tyre
companies and the end consumers
– Dealers of commercial vehicle tyres also financing
purchase of tyres for commercial vehicles and
agricultural tyres
 Marketing
• Distribution
– The distribution system consists of
distributors, followed by large dealers and also
small/sub dealers
• Other channels are:
– Replacement Market
– OEM
– Govt
– Export
– Import
Porter’s Five Forces Model

supplier Bargaining power of

Bargaining power of buyers

Competitive
Rivalry

Threat of substitute
Threat of new entrants
Threats Opportunity
• Increase in • Growing
Rubber Weakness
Economy Strengths
prices • Cost
• Infrastucture • Brand name
• Cheaper • Price
•
• Global Distribution
Imports Sources
• Capital
•
• R&D
Ban on • Increase in involved
Overloadin Radial Tyres
g
SWOT Analysis
Peculiar Features of the Tyre
Industry
Cyclical
Retreading

Technology
Incentive

Features
Distribution
Network
High
Capital
Cost
Commercialisation of the Project
• Brilliant future for the tyre manufacturing
sector:
– Higher rate of consolidation of the Indian
automobile industry
– Growing rate of infrastructure development
– Increased consumption levels
• As the Indian tyre manufacturers are less
differentiated, for a startup company is better
to focus on a particular aspect - The ‘Off
Road Tyres’
• The current demand from Indian market is
64,400 MT of the OTR tyres
Commercialisation of the Project
• The location chosen – State Industries Promotion
Corporation of Tamil Nadu (SIPCOT)
– natural resource availability
– skilled man power availability
– complementary SME availability
– proximity of the biggest automobile OEM hub of India
• The approximate investments required for
starting and ramping up the production facilities
at the selected location are:
Year Year1 Year 2 Year 3 Year 4 Year 5
Capacity (MT) 10,000 11,900 14,161 16,850 20,050
Plant Investment
88.2 18.2 22.2 27.51 34.6
(Cr)
 Financial Projections
• Project & Component Cost
Particulars Unit Cost/MT Total
Capacity MT   10000
LAND & BUILDING Cr   52.45
Land Cr 43200 43.2
Building Cr 9254 9.25
PLANT & MACHINERY Cr 23761 23.76

MISCELLANEOUS FIXED ASSETS Cr   0.48

Furniture and Fixture Cr 142 0.14
Vehicles-Delivery LCV Cr 230 0.23
Others Cr 111 0.11
Contingencies   15% 11.50
TOTAL Cr   88.20
 Financial Projections
• Expense Sheet
Expense Sheet Cost Rs/MT Total Rs Cr.
Material 170424 170.42
Cost of Traded Goods Sold 16313 16.31
Personnel Cost 19268 19.26
Other Expense 46540 46.54
Total Expense   252.54

• Projected Profit & Loss Statement

PARTICULARS RS Cr.
Net Revenue Realisation 332
Total Expenses 252.54
Gross Profit 79.45
Depreciation 20.67
Interest 13.32
Preliminary Expense W/O 1.02
Profit Before Tax 44.44
Tax 13.35
Profit After Tax 31.09
Projected Balance Sheet (in Rs Cr.)
SOURCES OF FUNDS
EQUITY CAPITAL 32.00
TERM LOAN 76.70
Secured Loans 51.20
Unsecured Loans 25.50
108.70
APPLICATION OF FUNDS FIXED ASSETS
Gross Block 88.20
Less: Depreciation (20.67)
Net Block 67.53

CURRENT ASSETS, LOANS AND ADVANCEMENTS 70.38

Inventories 39.84
Sundry Debtors 7.30
Cash & Bank Balances 23.24
Less :
CURRENT LIABILITIES & PROVISIONS 29.22
NET CURRENT ASSETS 41.17
108.70
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