Kochi, Oct 12 (UNI) While the Indian tyre industry is set to grow at about eight to ten per cent over the next five years, the rise in the price of natural rubber is squeezing margins, Apollo Tyres Ltd.
Chairman Onkar S Kanwar said here.
Addressing a press conference last night, Mr Kanwar said at least three to five per cent of profit margin had been shaved off by the increase in the prices of natural rubber in recent months.
Stating Indian companies had to compete against cheaper tyres from China, Mr Kanwar called for a reduction in the import duty on natural rubber.
In fact, the import duty on natural rubber was higher at 22.5 per cent compared to 20 per cent duty on imported tyres, he said.
While the industry was not against the rubber growers getting a remunerative price, unreasonably high prices become counter-productive as almost 50 per cent of the cost of production in the tyre industry was spent on rubber, the basic raw material, he said.
Apollo Tyres presently uses nearly 15 per cent synthetic rubber in its products and this can go up to 30 per cent, he said.
Welcoming futures trading in rubber, he said it was good for the industry.
At present the total consumption of rubber by the tyre industry was about 8.5 lakh tonne per year. Apollo Tyres consumed about 15 per cent of this, he said.
Stating the company's turnover was about one billion US Dollar at present, he said it was targeting to double it in the next three years.
Asked about inorganic growth, he said prospects in India were limited for such proposals. However, the group had been able to acquire the ailing Dunlop Tyres in South Africa and turn it around.
Mr Kanwar said that 20 per cent of the company's production was exported.