Bicycle Tyremaker Ralson India Wants To Make Radials For Trucks, Buses
An Indian bicycle and two-wheeler tyremaker is planning capex to make truck and bus radials, at a time when the Indian automobile industry is facing its worst slowdown in more than two decades.
Ralson India Ltd. intends to spend nearly Rs 1,700 crore in three years for the new unit that would come up over 200 acres near Indore. “We’ve already acquired the land and are eyeing a 10 percent market share in the first phase,” Yogeshwar Sharma, vice president at Ralson India, told BloombergQuint in an interview.
That comes at a time when auto sales in India have been falling month after month as consumers cut back spending in an economic slump. Sales of trucks slid by nearly half in 2019, according to ICRA Ltd. Ralson India is, however, betting on the opportunity in the replacement market created by the anti-dumping duty India imposed on imports of radial tyres for trucks and buses from China nearly six months ago.
The company’s entry in the segment will pit it against Birla Tyres Ltd., Apollo Tyres Ltd., JK Tyre and Industries Ltd. and MRF Ltd., among others, who collectively had capex of more than Rs 34,500 crore on greenfield radial capacities in truck and bus segments in the 10 years through FY19, according to an ICRA report.
But there’s potential in the radial market as it’s growing, Srikumar Krishnamurthy, vice president and sector head at the ratings agency, told BloombergQuint over the phone. “At present, only 35-40 percent of the radialisation has happened.”
According to Sharma, that’s a huge opportunity for Ralson India. “We’ve been into tyre technology for a long time, so the competence, capability and experience is already there,” he said, referring to the company’s plant in Ludhiana that makes two-wheeler tyres and tubes. “The objective is to match the brand imagery and to match the perception the big boys enjoy.”
ICRA’s Krishnamurthy said while other manufacturers had announced capex plans of around Rs 20,000 crore in the past two years, largely towards radial tyres, they are now deferring them amid the prevailing market conditions and instead focusing on conserving cash. Still, according to him, it won’t be easy for Ralson India.
“There are enough capacities in the system based on the planned capex in radial and it will not be easy for Ralson to penetrate the market,” he said. The tyremaker could be targeting a market that was earlier served by the Chinese players, he said.