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Apollo Tyres (APTY)
Automobiles
Takeaways from industry meetings.(1) All companies have cut production in August
and September to clear inventories (truck/bus tires); production has increased in
October, (2) companies with stretched balance sheets have started a bit of discounting
to drive volumes, (3) imports have increased market share (truck/bus segment: April-
August 2011) yoy; there has been a surge in imports after a lull (November 2010 to
March 2011) as companies took time to fulfill requirements for mandatory BIS
certification (for imports), (4) export volumes have surged in April-August 2011 in
contrast to trend in the past five years, and (5) case against rollback of anti-dumping
duties on Chinese companies is due for hearing in the Supreme Court on November 3,
2011.
Takeaways from industry meetings
The following are the takeaways from our recent meetings with the industry:
All Indian tire companies had taken production cuts (in truck/bus tires) in August and
September in order to reduce excess inventories. Production rates have increased as inventories
normalized in October 2011. As per data from ATMA (Automotive Tyre Manufacturers
Association), production of truck/bus tires was down ~8% yoy in August while other product
segments were at low single-digit growth rate yoy.
Companies with stretched balance sheets have started discounting in the market. In case it
continues, it could become a cause of worry for the industry.
As per ATMA data, imports have increased market share to 11% of the total domestic
availability (truck/bus tires) in April-August 2011 versus 9% last year in the same duration. As
per our channel checks, imports had slowed down in November-March 2011 as government
mandated BIS certification for all importers. The companies (importers) took time to get them
certified and hence import volumes reduced. After having met regulatory requirements, import
volumes increased April 2011 onwards. In the passenger car tire segment, market share of
imports has reduced by 100 bps yoy from 14% in April-August 2010.
Export volumes in April-August 2011 are up 28% and 50% for truck/bus and passenger car
tires, respectively. In the past five years, export volumes have been flat as there were no surplus
capacities after taking care of domestic demand. As capacity additions have stared coming
online, companies have increased export volumes even as realizations are lower than the
domestic replacement market.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Apollo Tyres (APTY)
Automobiles
Takeaways from industry meetings.(1) All companies have cut production in August
and September to clear inventories (truck/bus tires); production has increased in
October, (2) companies with stretched balance sheets have started a bit of discounting
to drive volumes, (3) imports have increased market share (truck/bus segment: April-
August 2011) yoy; there has been a surge in imports after a lull (November 2010 to
March 2011) as companies took time to fulfill requirements for mandatory BIS
certification (for imports), (4) export volumes have surged in April-August 2011 in
contrast to trend in the past five years, and (5) case against rollback of anti-dumping
duties on Chinese companies is due for hearing in the Supreme Court on November 3,
2011.
Takeaways from industry meetings
The following are the takeaways from our recent meetings with the industry:
All Indian tire companies had taken production cuts (in truck/bus tires) in August and
September in order to reduce excess inventories. Production rates have increased as inventories
normalized in October 2011. As per data from ATMA (Automotive Tyre Manufacturers
Association), production of truck/bus tires was down ~8% yoy in August while other product
segments were at low single-digit growth rate yoy.
Companies with stretched balance sheets have started discounting in the market. In case it
continues, it could become a cause of worry for the industry.
As per ATMA data, imports have increased market share to 11% of the total domestic
availability (truck/bus tires) in April-August 2011 versus 9% last year in the same duration. As
per our channel checks, imports had slowed down in November-March 2011 as government
mandated BIS certification for all importers. The companies (importers) took time to get them
certified and hence import volumes reduced. After having met regulatory requirements, import
volumes increased April 2011 onwards. In the passenger car tire segment, market share of
imports has reduced by 100 bps yoy from 14% in April-August 2010.
Export volumes in April-August 2011 are up 28% and 50% for truck/bus and passenger car
tires, respectively. In the past five years, export volumes have been flat as there were no surplus
capacities after taking care of domestic demand. As capacity additions have stared coming
online, companies have increased export volumes even as realizations are lower than the
domestic replacement market.
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