Tyre production and sales to grow 12-14% in FY07

New Delhi, Nov 26 (UNI) The healthy growth in automotive production coupled with strong export demand and increase in domestic demand is expected to result in a 12-14 per cent growth in tyre production and sales during the current financial year.

However, the volatility in prices of rubber and other derivatives of crude oil continues to be a concern for the players.

There has been a consistent increase in the cost of inputs inluding rubber, nylon tyre chord fabric etc which coupled with limited price increases has affected the margins of prominent players in the tyre industry.

The prospects of tyre exports from India appear healthy, following efforts by the Indian companies to enter into outsourcing agreements with tyre producers in South East Asia, Eastern Europre and Latin America, an ICRA analysis shows.

Overall, the tyre manufacturers are likely to increasingly tap the export market in an effort to boost sales.

The futuer growth in tyre production for Original Equipment Manufacturers (OEMs) would be critically dependent on growth in automotive production, which is expected to be healthy in short-term, the analysis says.

However, part of the OEM demand could be met from imports, especially in the premium segment.

The replacement market has remained stagnant at around 30 million units per annum during the last three years, according to the analysis.

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