Indian retreaders are anticipating opportunities as the central government is fast-tracking infrastructural development projects in various states. As part of improving infrastructure in the Jammu region, various new projects have been announced to develop as well as improve the infrastructure in North Indian union territory.
J&K Cold Positive about Prospect in Infrastructure Sector
While retreaders are upbeat about the new projects, fleets are finding the current business environment challenging due to rising fuel and new tyre prices. “Nationwide lockdowns to curb the spread of Covid last year have also posed a huge challenge to regain the peak of pre-Covid phase production levels, and now when we are making efforts to come out of it, fuel and tyre prices are maintaining an upward trend impacting retread volumes,” said Abhinandan Mahajan, Director, J&K Cold.
The Indag franchisee is regarded as the one of the biggest retreaders in Jammu, retreading in between 600-800 tyres each month and maintaining formidable clientele catering to oil companies like Indian Oil, Hindustan Petroleum Corporation Limited, Bharat Petroleum besides large fleets. The plant covers an area of 55 km up to the Samba district, which shares the border with neighbouring Pakistan.
The rising operational cost of fleets is directly impacting the expanding duration of the credit cycle, according to Mahajan. “Earlier, the credit cycle was 45 days long, now it has been further extended to 60 days, which also impacts our retread operation,” he said. The plant is based at Narwal, known as a fleet hub for the Jammu region, consumes about 8 tons of tread rubber each month.
The unit started operation in 1986 with one 11 tyre autoclave, a second 11 tyre chamber being added in 1994. “We still have unutilised capacity and could retread 1,200 tyres in a month, but we are only utilising half of the capacity,” said Mahajan. “We hope the market will improve once fuel prices stabilise, industrial production picks-up, the markets start functioning as in the pre-Covid phase and fleet movements improve.”
The central government has announced a development package for the Jammu & Kashmir region, which envisages investment of INR 80,000 crore. Under the package, the new Indian Institute of Technology, Indian Institute of Management and All Indian Institute of Medical Sciences are set to open in Jammu and Kashmir soon. A part of the money will be invested in building educational institutes apart from the development and widening of highways, power generation and irrigation projects.
“We hope the project announced by the government will have a positive impact on the retreading sector. The package announced in 2020 and a few additional projects are now underway, and once the construction work picks-up the steam, fleet movement will also improve,” concluded Mahajan.