The Hindu Business Line : `High input costs to push up tyre prices'

HIGH input costs, following increase in natural rubber and crude oil prices, might compel the tyre industry to raise the prices of tyres this year also, according to Mr Neeraj Kanwar, Chief Operating Officer, Apollo Tyres Ltd (APL).

Talking to media persons here on Wednesday on the occasion of the company completing 30 years of operations of its first tyre manufacturing unit in the country at Perambra in Kerala's Thrissur district, he said 50-80 per cent of the raw material was crude oil based products and the remaining is natural rubber.

The rise in the prices of these raw materials has led to an increase of 16-17 per cent in input price last year and this phenomenon in turn had forced the company to raise its selling price by 5-6 per cent. As the same trend is prevailing this year and the rise in input prices is expected to be around 14-15 per cent, an increase in selling price is also likely, he said.

Import of tyres has gone up of late and it is around 5-6 per cent of the Indian market. There is a demand of six lakh truck tyres a month in the country. Import prices of Korea and Thailand are comparable to Indian prices while that of China is much less, he said.

Another peculiar anomaly is that while tyres could be imported at paying duty at 10 per cent, the duty levied for the import of the raw material, natural rubber, is 20 per cent, he pointed out. This issue had also been taken up with the Centre, he said.

He said APL would be investing around Rs 150 crore this fiscal in its plants in the country for quality upgradation and expansion and of which, Rs 25-30 crore would be in the Perambra unit. APL would be coming out with "ultra high power tyre" soon in the country, he said.

Given the high cost of production in its Kerala units due to comparatively low productivity, the company is planning to resort to outsourcing in non-critical areas. It is also studying the possibility of introducing VRS in the units at Perambra, which employs 2,500 workers and 1,300 in Premier Tyres at Kalamassery near here.

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