Pricing Power of Tyre Industry In India

Raw Material –

Prices of crude derivatives and carbon black declined by 20% in FY20 whereas natural rubber (which forms ~35% of total raw material cost for a tyre) price increased by over 7%. Overall decline in raw material prices (partially offset by negative operating leverage on lower volume) aided operating margins by 30bps in FY20. In 1QFY20, natural rubber prices stood at avg Rs120 per kg vs. avg Rs138 per kg in FY20.

Source – Nirmal Bang, Page no – 17

Healthy replacement demand to help negate rise in input cost – 

Source – Edelweiss On Tyre Industry, Page no – 10

Source – BP Wealth, Page no. – 8

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Regulations of Tiles Industry in India

Major regulations in the Indian Tiles Industry are as followings
1. Implementation of RERA to protect the interests of industry players
2. Reduced GST rates to augur demand for new houses
3. Unorganised industry shifting to natural gas due to regulatory requirements
4. Ban on use of coal gasifiers by NGT (National Green Tribunal)
5. Various government initiatives that boost the demand
6. Various licenses and clearances required for business commencement