Apollo Bullish on Evolving Retread Scenario
Improving road infrastructure and a clampdown on overloading is most likely to drive growth in the Indian retreading industry, according to Apollo. The tyre major’s retread division is currently looking at the growth prospects for the near future and is planning to spread its franchisee network across the country as well as hike tread rubber production soon.
“Overall, the retreading scenario has improved in India with the government announcing a major thrust on infrastructure development with a focus on repairing and laying down new roads. This is likely to bring required impetus to the retreading sector,” said Gautam Roy, Division Head (Retreading), Apollo Tyres Ltd. The Indian government is planning to pump INR 170,000 crore into developing new roads and repairing the existing ones.
Currently, Apollo Tyres has 22 franchisees across the country and is set to add eight more in the next fiscal starting from April 2018. It plans to expand franchisee presence in the North, Western, Central and Southern part of the country. “The eight are coming up in the states of Himachal Pradesh, Rajasthan, Orrisa, Kerala, Maharashtra and Chhattisgarh,” he informed. The franchisee network has been developed under the name of “Apollo Retread Zone”.
On the sourcing of plant equipment, Roy added, “We are working with 3-4 vendors like Coimbatore based Rajmahaal, Glisten etc and get plant equipment customised as per our specification for installation at the franchisee’s premises.”
Commenting on the retread volumes in the country, Roy estimated; “Around 600,000 tyres are being retreaded in the country each month and the market is registering 6-7% growth annually.” With the government’s investment in improving infrastructure, the growth is likely to double to 12-13% in the years to come.
In addition, the market penetration of radials is surging, and is estimated to improve its share to 30-35% of overall tyre volumes in the country. “Radial are good for three retreads and their increased usage will bring good casings to retreaders also.”
On the entry of tyre manufacturers in the retreading sector Roy commented; “The entry of tyre makers is a very positive signal for an industry coping with unorganised low-quality retreads. Tyre companies are improving the retread standards in the country, for instance the mileage of the average retread tyre has increased from 30,000 km to 50,000 km.”
Apollo produces 500 tons of tread rubber each month at its Chennai facility. “We are considering hiking production by another 100 tones next fiscal considering the new franchisees entering our fold,” said Roy.
Apollo is also considering entering into tread rubber exports in the next fiscal. “Our tyre business is expanding in the far-east region and Apollo is opening offices in Thailand, Malaysia, Indonesia and in the Middle East. We are also considering promoting or marketing tread rubber from these offices,” he revealed. The company plans to start exporting with its existing range of tread patterns which it promotes in the Far East market and the Middle East.