In India, Rajratan Global plans to add 60,000 TPA capacity to its Chennai plant to cater not only to demand from the southern automotive hub but also exports.
18 Jan 2022 | 31949 Views | By Shahkar Abidi
Sometime in mid-2020, when the Covid-19 had impacted global supply chains, Rajratan Global Wire had a freight flight waiting at Thailand's Suvarnabhumi international airport to airlift three containers with bead wires to a tyre manufacturer's facility in Europe. Yashovardhan Chordia, director, doesn’t see the same scenario this time around and says that ...
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Sometime in mid-2020, when the Covid-19 had impacted global supply chains, Rajratan Global Wire had a freight flight waiting at Thailand's Suvarnabhumi international airport to airlift three containers with bead wires to a tyre manufacturer's facility in Europe. Yashovardhan Chordia, director, doesn’t see the same scenario this time around and says that earlier waves of the Covid have helped the automotive system be better prepared to deal with an evolving situation.
Chordia’s confidence also emanates from the fact that market dynamics are changing in Asia. Several Chinese tyre OEMs are relocating to Thailand and this is expected to provide more opportunities to boost the company’s business. It already has a plan in place to tap this opportunity.
According to Chordia, the company’s two-pronged expansion strategy will see capacity go up to 60,000 TPA from 40,000 tonne per annum (TPA) in Thailand. As tyre OEMs look to setting up base in Thailand, Chordia says that this structural shift will enhance demand for bead wire in the Asian country even as the company is confident that this will increase its market share to nearly 40% from 25% at present. As local Thai demand increases, its exports from Thailand which at present accounts for around 43% of revenues may see a reduction as it attempts to cater to local demand first.
In India, Rajratan Global’s plans are equally ambitious as the company plans to add 60,000 TPA capacity to its Chennai plant to cater not only to demand from the southern automotive hub but also exports. An investment of around Rs 300 crore has already been earmarked for it. Its Indore plant has a production capacity of 72,000 TPA.
Diversifying their supply chain partners has enabled tyre part OEMs such as Rajratan Global to gain market share in the past two years. However, China’s decision to pull out of polluting downstream steel production by doing away with duties is changing market dynamics. China also offered a tax rebate of nearly 13-17% for export of bead wires making it difficult for other companies to tap business. The situation is now changing, says Chordia even as he says the company recently bagged new clients such as Prinx Tires and General Rubber. Prinx is the first brand of Prinx Chengshan (Shandong) Tire Co., a JV between Prairie Investment and Chengshan Group. Headquartered in Rongcheng City of Shandong Province in China, Prinx Chengshan has over the years has built two major production bases in China and Thailand. Global General Rubber (Thailand), a part of a large Chinese enterprise, inaugurated its factory, located in Rayong province, in early 2020.
Rajratan Global’s core product is tensile-grade bead wire which it currently supplies to almost all tyre manufacturers in India. Bead wires also have applications for earth-moving equipment, aircraft, and cycles. The product is critical as it holds the tyre to the rim and resists the impact of inflated pressure. This has implications for safety, strength and durability.