The iStock report is based on an analysis of the top six tire manufacturers in China. CRISIL He said that manufacturers account for 80% of the Rs 750 billion industry.

According to the CRISIL report, the capital expenditure of the tire manufacturers is expected to increase to around Rs 500 crore this fiscal due to improved demand. Compared to the previous two fiscal years, this fiscal year is about Rs. 3,700. crore with an improved annual growth rate.

Demand is likely to be driven by segments such as replacement vehicles, commercial vehicles and passenger vehicles (CVs and PVs), and the credit profile of tire makers, excluding exports, is expected to remain “stable”, the rating agency said.

CRISIL The report is based on an analysis of the country’s top six tire manufacturers, accounting for 80% of the Rs 7,500 crore industry.

However, the report said the capex for the current fiscal will be lower than the annual average of about Rs 62 billion from 2018 to 2020 as the utilization rate is still below 70-75%.

Meanwhile, the tire company’s production growth rate will be halved to around 2.5 million tons in the current financial year, growing at 6% to 8%, compared to 12% to 14% in the last financial year.

The credit rating agency said the growth rate in the last fiscal year could be due to the lower base effect in the company’s first two fiscal years, when volumes declined due to the recession and the coronavirus pandemic. After the epidemic, demand in the replacement market is expected to normalize to around 4% in the current fiscal year, up from around 12% in the previous fiscal year, the report said. OEMs expect demand to grow by around 12%, mainly for commercial vehicles, due to increased government infrastructure spending and vehicle utilization.

Anujj Sethi, Senior Director, CRISIL Anuj He said, “OEMs are expected to be Original Equipment Manufacturers (OEMs) Demand for passenger vehicles is expected to remain healthy due to increase in personal incomes and strong consumption. However, demand for two-wheeler and tractor OEMs will continue to be moderate. ‘

According to CRISIL, exports are said to be expected to increase. Due to cost competitiveness and benefiting from the global automakers of “China” The strategic and strong demand for off-road tires in the US has grown by 13-15% on top of last year’s high growth of over 45%.

The report said that due to the price of natural rubber soared more than 20%, carbon black, oil and other crude oil prices, operating margins are expected to decline to 10% in fiscal 2022 (the last level of fiscal 2012). Nylon tire curtains soaring. Raw material production increased by 40-50%. However, the report added that price increases have not yet been fully transferred to tire makers as demand is recovering after two years of weakness.

These costs account for 70% of raw material costs for tire makers.

CRISIL Rajeswari Karthigeyan said, “Better accruals coupled with higher revenues and operating margins should secure the credit profile of CRISIL rated tire manufacturers by supporting capex financing and maintaining balance sheet strength.”

He noted that in the current fiscal, CRISIL expects its debt and interest coverage ratios to be around 0.5x and 5-6x, respectively, marginally better than last fiscal’s 0.6x and 4-5x.

CRSIL warned that further spread of the epidemic, ongoing semiconductor shortage (which could impact passenger car demand) and commodity price trends are a cause for concern.