The Hindu Business Line : Tyre companies may roll back prices

Prices rollback
Rubber prices have fallen from as high as Rs 115 to Rs 82 a kg

MRF's bus-truck tyres are cheaper by almost Rs 2,000 a pair over all other brands
These two factors are combining to force the tyre industry to roll back prices

Kolkata , Sept. 15

After witnessing a series of price escalations between January and July, the tyre market is finally hoping to roll back prices. The driving forces are mainly two: MRF and a fall in natural rubber prices from as high as Rs 115 to Rs 82 a kg.

MRF - one of the country's largest tyre manufacturers - did not join the rest of the industry during the 7 to 8 per cent price increase effected during the second half of July, this year. The move was initially considered to be of a short-term nature.

However, a sharp fall in natural rubber prices in the following days has allowed the company to enjoy an edge in prices over others. As things stand today, MRF truck-bus tyres are cheaper by almost Rs 2,000 a pair over all other brands.

`No price-rise'

Moreover, unfortunately for its competitors, MRF now finds no reason to escalate its prices as tapering season for rubber has begun and October future prices are now ruling at Rs 78 a kg.

"The natural rubber prices have come down and there is no justification for a price rise at this juncture," Mr Philip Epen, ED (Sales) of MRF, told Business Line when asked whether they would go for a price rise at a later date. On the future movement of rubber prices, he said that generally prices remain low after the rains.

Fall in input cost

Though all other major manufacturers are still putting up a bold face, MRF's stand has strengthened the argument of tyre dealers who were asking for a roll back in prices keeping in tune with the fall in input cost. The rise in prices allegedly impacted the dealers due to higher capital requirement and lower rate of return.

"There is a general consensus among our members to restrict the off-take of all other brands but MRF during September," Mr S.P. Singh, Convenor of All India Tyre Dealers Federation (AITDF), told Business Line.

Customer preference

According to him, the pricing anomaly has created a clear customer preference among the truck bus operators towards MRF, imported tyres and cold-retreaded tyres.

AITDF is expecting the tyre industry, especially the relatively smaller players, to reduce prices shortly.

When contacted Mr S. Sarkar, Chief Strategy and Marketing of Apollo Tyres, however, maintained that his company was not considering any such price reduction. Apollo is one of the largest players in tyre industry.

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