Despite competition hotting up in the recent past, Chennai-based tyre maker MRF believes that it will continue to lead the automotive aftermarket segment in India.
14 Apr 2014 | 7776 Views | By Kiran Bajad
Despite competition hotting up in the recent past, Chennai-based tyre maker MRF believes that it will continue to lead the automotive aftermarket segment in India. The company, which sees about 80 percent of its revenue come from the aftermarket, currently has all its eight plants running at full capacity with ...
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Despite competition hotting up in the recent past, Chennai-based tyre maker MRF believes that it will continue to lead the automotive aftermarket segment in India. The company, which sees about 80 percent of its revenue come from the aftermarket, currently has all its eight plants running at full capacity with 38,000-40,000 tonnes of tyres rolling out every month.
To de-risk itself from the underperforming economy, MRF is focusing its growth paradigm on the aftermarket – at present, it draws around 50 percent of its turnover from the commercial vehicle aftermarket. The company has a 28 percent market share in the CV and passenger car segment and 45 percent in the two-wheeler aftermarket.
Meanwhile, in a bid to hedge the downturn and poor vehicle OEM sales since the past two years, rivals such as Bridgestone, Michelin and Continental are also aggressively looking to target the aftermarket segment. On April 1, Continental launched four CV truck and bus tyres for the aftermarket.
Talking on the sidelines of MRF’s launch of the main wheel tyres for the Sukhoi Su-30 MKI super-maneuverable air superiority fighter for the Indian Air Force, Koshy Varghese, executive vice-president (marketing) said, “We don’t see competition as a threat to our market share in the aftermarket as MRF will continue to have an edge. Our strength remains the strong network across the country and the value-for-money proposition to our customers.”
He added that the two years of de-growth in the passenger car segment is a matter of concern for the tyre industry as a lower offtake has resulted in excess capacity and also put pressure on margins. However, Varghese is of the opinion that the CV industry has seen the worst and things should get better for CV manufacturers. Furthermore, demand from two-wheeler market (which notched 7.31 percent growth in 2013-14) for MRF is on the higher side and will continue to grow.
Commenting on the level of truck radialisation in India, Varghese said it is 25 percent in the CV aftermarket segment and 75 percent in the OEM CV segment. CV radialisation is expected to increase in India as vehicle overloading is gradually getting controlled and truck and fleet owners are increasingly becoming aware of the benefits that radial tyres offer.
According to Varghese, right now, MRF is not very keen on making an acquisition, is awaiting the right opportunity. He said the company would prefer to make an acquisition in the ASEAN or Africa because it is strong in these regions and not in Europe.
Without sharing numbers, Varghese said the company is also looking to expand its T&S (Tyre &Sales) stores across the country from the current 350 across the country.
MRF, which already supplies Chetak helicopter tyres to the IAF, is the sole Indian tyremaker making aircraft tyres. The ones for the supersonic Su-30 MKI have been tested for ground speed of up to 420kph with loads in excess of 18 tonnes per tyre. These tyres are being produced at the company’s plant at Medak in Andhra Pradesh.