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Feb 21, 2024
Natural rubber production in NE states making headways, but long road ahead for tyre industry

India's ambitious plan to boost natural rubber production in its northeastern states is making headways, but it is a long road ahead. It will take some time before the project delivers on its promise, as the Rs. 1,100 crore initiative, aimed at cultivating rubber on 200,000 hectares of land, faces a gestation period of around seven years.

Anuj Kathuria, President, India at JK Tyre, stated that the project called 'Inroad', which was initiated about a couple of years ago, is "progressing well", but it will take seven years for the trees to start yielding rubber.

While India's Northeast rubber project gains traction, the tyre industry is rolling up its sleeves in Kerala, the country's traditional rubber heartland. The goal? To Boost domestic production and wean India off its reliance on imports.

Echoing Prime Minister Narendra Modi's recent call for collaboration with industry and farmers at the Bharat Mobility Show, the industry is partnering with growers and processors in Kerala to get more yield and quality from existing plantations.

"The goal is to eventually produce most of the rubber required domestically, but it may take some time", Kathuria told Autocar Professional. The task is daunting. India currently imports over 500,000 metric tonnes of natural rubber annually to meet its demand, with Kerala contributing over 60-70% of domestic production. While the state boasts the largest rubber acreage, yields lag behind global benchmarks.

That's where the collaboration comes in. Tyre companies are investing in training programmes, providing high-yielding planting material, and promoting best practices among farmers. The aim is to not only increase output but also improve rubber quality, which fetches higher prices.

Global rubber prices have been volatile, impacting tyre manufacturers and ultimately, vehicle buyers. Reducing dependence on imports would bring much-needed stability to the industry.

Based on the existing and new product offerings, increasing premiumization, cost efficiency, and capacity utilization, JK Tyre recorded a net revenue of Rs. 3,700 crore during Q3 FY24 and achieved an EBIDTA of Rs. 563 crore, clocking a remarkable growth of 61% compared to the same period last year. The company's net profit jumped by 240% to Rs. 227 crore on a year-over-year basis.

According to Kathuria, OEM as well as replacement demand is robust across most segments, including light commercial vehicles in the back-of-the-last-mile delivery segment. Similarly, the infrastructure push is leading to good demand and growth in the bus, construction, and mining segments. "The demand for bus tyres is particularly strong", he noted before adding that the only slightly sluggish segment was tractors due to erratic monsoon rains.

Commenting on exports, the top executive emphasized that though it remains subdued due to the geopolitical situation, the situation is now getting better. He added that some markets had accumulated stocks previously due to the situation, but retail sales are now picking up. So primary sales for the company's exports are also expected to follow suit very soon.

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