Tyre manufacturers are looking at hiking prices between 3% and 5% in the current quarter on account of continuous pressure of rising raw material costs.
JK Tyre & Industries has announced its intentions to increase the prices. “We have not decided the time and the percentage, but the next round of price hike is definitely in pipeline during this quarter,” said A S Mehta, marketing director, JK Tyre.
The company will hike prices between 3% and 5%, its fourth round of price increases this year. The company had raised prices in May, June and July.
During the announcement of company’s second-quarter results, Raghupati Singhania, vice-chairman and managing director, JK Tyre, told analysts, “It was a very challenging quarter, as the prices of raw material are increasing. The natural rubber prices have doubled from the last year with the overall increase in all raw material costs being 40%.”
Currently, rubber is selling at $4,200 per metric tonne. Tyre prices have been revised, but could not keep pace with the rapidly rising costs. However, we will undertake a price increase shortly.” Singhania said.
“Prices of essential components like natural and synthetic rubber, steel, carbon black are witnessing substantial surge,” said Mehta.
Balkrishna Industries, the specialty tyre manufacturer and exporter, said the company is looking at increase prices this quarter.
According to a company official, Balkrishna is the process of finalising the percentage of hike. While Japanese tyre major Bridgestone Tyres had already taken its third price jump in October. The other two were in April and July.
On the other hand, Ceat Ltd is planning to hold product prices through the next two months despite rubber rally. The company is trying to compensate the input cost surge through capacity additions at its Nashik plant and volume increase.
According to S P Singh, convenor of All India Tyre Dealers’ Federation, “The companies have been indicating on another round of price hikes. The continuous increase in tyre prices has been a pressing issue for the industry. Customers are unhappy and manufacturers are sending circulars to convince the customers.”
“The raw material prices for the tyre industry have gone up by 47% this year. However the companies were able to pass on only 37% of the overall increase. Strong competition with strong demand is limiting companies to take price hike decisions,” said Mahantesh Sabarad, Mumbai-based analyst at Fortune Equity Brokers.
Meanwhile, tyre makers are riding high on auto demand. According to Automotive Tyre Manufacturers’ Association, during April-August 2010, tyre companies produced a total of 47.1 million tyres as against 36.7 million in the same period last year, a rise of 28%. Companies are investing heavily on capacity expansion.
(dnaindia.com)
No comments:
Post a Comment