OTR Tires Never Tire

Technological innovation, focused R&D, and strategic marketing is standing this industry in good stead, reports, S.D.Khan

Off-Highway-Tires
Steve Jobs, the doyen of entrepreneurship once remarked, "Innovation distinguishes between a leader and a follower." This timeless quote is universally applicable to all industry segments, and for the past few years or so, it's been conspicuously reflected in the Indian Off-The-Road (OTR) Tire Industry. Going back in time, a gamut of Indian tire manufacturers were focused on highway tires for mass consumption. But the late 80s brought a change in this mindset, and with the passage of time, the shift towards OTR tires became the need of the hour.

Today, we have ushered into an era where India has emerged as one of the leading manufacturing and consumption hubs of OTR tires primarily in the Agriculture and Mining Segments. In order to meet the growing demand, manufacturers are complimenting their production capacities with rigorous Research & Development (R&D) and innovation, a telling example of which is the gradual shift to radialization.

Perhaps the driving force behind constant innovation is the rate at which OEMs are technologically upgrading their offerings for Mining and Infrastructure Sectors. Be they backhoe loaders, forklifts, tipper trucks, dumpers, cranes, or excavators, all equipments go through frequent technological upgradations these days, with respect to diversity of applications and hauling loads. And since OEMs are the major consumers of OTR tires, it's imperative that tire manufacturers periodically tailor their products in accordance with the clients' requirements. Apart from this, OTR tires of the modern age comply with the international standards and score high on abrasion resistance, fuel economy, and energy efficiency. Undoubtedly, innovation has emerged as the key to success.

Kunal Mundra
OTR Tires
According to Mr. Kunal Mundra, VP-Speciality Sector, CEAT Limited, "OTR tires are highly customized and engineered products. This in turn means that they require extensive R&D investments. CEAT has not only attracted a very strong R&D team but also invested in state-of-the-art labs, equipment and testing facilities at our Halol plant. There is one other critical element that drives our success - our R&D team is not simply a team of internal focused scientists; instead it actively interacts with customers as well as OE manufacturers to ensure that the right tire is designed for the right customer. Mining and heavy equipment manufacturers like JCB, Caterpillar, and Komatsu are continuously innovating and CEAT is continuously working in parallel to ensure that the ideal tire is in place for any new machinery they have to offer."

He continues, "CEAT is consistently investing in R&D to ensure our tires offer the optimum performance and a complaint free service for our customers. The priority for customers can vary significantly and CEAT's USP is a broad portfolio that has the right tire for the customer. We do not believe that one-size-fits-all, and hence are constantly working with customers and OE manufacturers to better understand their needs and fold that into our product development."

Satish Sharma
Apollo Tyres
Mr. Satish Sharma, Chief, India Operations, Apollo Tyres Ltd, affirms, "Our R&D is fully equipped to develop new tires for different applications, which is evident from the fact that Apollo has one of the widest ranges of off-highway tires with products in both small and large OTR segment. In the large OTR segment, we have the best in class bias range with sizes starting from 35 to 51 inches. We will be soon introducing the ultra large sizes 33.00-51 & 40.00-57 in Indian & International market. In this segment as well, Apollo will offer a wide range of choice with the core philosophy of 'application to fit'. And, I am happy to say that, we are the only ones to offer customized solution to the customers for diverse mining conditions and application challenges in bias segment."

He adds, "Our OTR tires have one of the lowest CPH (Cost per hour) in the industry. Our customized compound solutions help the customer to overcome his specific challenges like high abrasion, cuts and damages, and heat related failures."

Rajiv Poddar
BKT, on the other hand, is still moving on the path of innovation, on which, it embarked almost a quarter century back. Mr. Rajiv Poddar, Executive Director, BKT, informs, "How committed and focused we are towards R&D is reflected in the fact that we spend around 3–4% of our topline on this requisite. BKT develops about 150-160 new SKUs (Stock Keeping Units) every year in response to these ever changing requirements of our consumers. We have exclusive facilities to develop new compounds and technology which keeps adding new products to its already gigantic range of solutions every year. We proudly say that BKT is the first tire company in India to produce all-steel radial OTR tires. Again, it's our ability to constantly adapt to the needs and requirements of the clients that has stood us in good stead over these years and this philosophy will strongly be adhered to in the future too."

He elaborates, "The prime feature of our tires is the value-for-money which translates into an economical cost of life. Secondly, we sell you a service rather than a product. We use high quality raw materials to manufacture OTR Tires which are produced with most advanced technologies and state-of-the-art machineries. Importantly, we strongly adhere to rigorous quality control mechanisms and each product passes through 450 stages of tests, and the end result is for everyone to see in the form of tires that are tough, durable, long lasting, and fuel efficient."

BKT Tyres

Foreign Technology, Radialization

Today, the domestic OTR Tire market is quite competitive and highly concentrated, and is catered by top notch players. There has been a noticeable change in the technological upgradations that the Indian industry has adopted. It appears as if these trends are to some extent attributable to technological tie-ups with foreign players! OTR Tire manufacturers have divided opinions on this notion.

Mr. Mundra believes that the Indian OTR Tire Industry, till now has been a success story on the back of a significant cost advantage vs. international players combined with strong quality and performance. "This industry however requires strong R&D capabilities and this requirement will only increase as average tire sizes increase, number of SKUs increase and radialization gains momentum. While till recently, the development by Indian companies has largely been in house, the above trends could force existing players to experiment with different models for accessing technology held by international players. Currently very few players have taken steps in this direction however till then companies like CEAT, are in parallel investing to enhance their in-house R&D facilities."

Talking about radialization, he avers, "Across segments, from passenger cars to commercial vehicles to OTR, customers have embraced radialization only once they see a clear value proposition. Customer education by tire companies and OE manufacturers plays a big role in this. In India, radialization is slowly but steadily increasing in pockets; for example in mining, it's being driven by two key reasons. Firstly, there's increased education by companies like CEAT which has led customers to take trials of radial tires. Secondly, increasing sizes of machinery, especially in mining, is automatically triggering increased radial demand. India, however, still has a long way to go and the adoption will depend on how successful these trials are, since customers expect that for twice the price, radials should give well more than twice the service."

OTR Tire Industry
Meanwhile, Mr. Poddar brushes aside the belief that foreign technological collaborations are a must-have in order to flourish in India. "Over the years, Indian tire manufacturers have quite strongly directed their focus towards OTR tires. However, BKT being a pioneer in this segment doesn't need any technological tie-ups with foreign players. We are completely self-reliant." He perceives radialization as an integral part of the Indian OTR Tire Industry. "Radialization is not an alien concept in India by any means. In fact, contrary to popular belief, India is doing quite well at this front and there are some developed countries which are behind India in terms of the growing rate of adoption of this trend. Today, many Indian manufacturers are focusing on radials, but BKT was the first company to initiate this trend."

And according to Mr. Sharma, Indian mining industry has already attracted all the top players, which has helped the customers get access to the latest technology. "The increasing presence of global OEs in this sector has resulted in creating more demand for radial tires. Also, the Mining Sector is now looking for complete service solution on cost per hour basis. The dumpers and loaders used in the mining and construction sector travel long distances beyond the normal roads suitable for radial application. Hence, in India, the bias tires are still in demand, which are meant for tough applications."

Market Scenario

Although the economic slowdown hasn't spared any sector, it's perhaps Infrastructure & Mining, the second largest employer of workforce after Agriculture, that has been worst hit. What makes it a sorry state of affairs is the delay in awarding contracts, and lacklustre implementation of policy and framework. Infrastructure too has been through turbulent times. Has this had an impact on the OTR Tire market? Adjusting their proverbial sails according to the winds, manufacturers are devising customer-oriented marketing strategies in order to retain market share.

Says Mr. Sharma, "Yes, there has been a slowdown in the Mining and Infrastructure Sectors. However, our superior products, backed by the service support for our customers, have helped us to grow our market share even during this slowdown. OTR segment is a very niche one, where the marketing strategy is also customized for individual customers."

Meanwhile, Mr. Mundra has meticulously chalked out a strategic growth plan for CEAT. "While market growth is currently under pressure, CEAT's OTR business has been growing steadily in both domestic as well as international markets. CEAT has undertaken a number of strategic initiatives to achieve this. There has been increased focus on segments like cement, ports and construction that are showing good growth. In parallel, CEAT has also focused on becoming a partner to our customers as against a supplier - this has been achieved by investing in our key relationships through workshops and on-the-ground support to minimize their operating costs. CEAT has also been continuously investing in and improving key back-end processes such as logistics and R&D resulting in an increasing portfolio, lower costs and faster delivery times. Globally, an expanded product suite and an enhanced specialist distribution network helps in driving our growth."

According to Mr. Poddar, "To be very honest, the market for OTR Tires is not eroding at all. There is a transient blip or to be more precise, a momentary downward trend which has impacted almost every industry, leave alone OTR Tires. Despite the slowdown, the sales of machines have been constant as India has been steadily moving on the path of an infrastructural boom. Talking of Mining, well, the lack of appropriate policy and framework is to be blamed for the lull that this sector has been going through for a long time now. Although we are not into Mining in a big way, we are gradually directing our focus towards this sector. Moving on to marketing strategies, we always strive to provide value-for-money to our clients. Not only do we have the widest range of OTR Tires in our bouquet of offerings, we also possess the highest levels of adaptability. We try to understand the clients' requirements first and then tailor the end-product in accordance with that. One of the major reasons for BKT's enormous success has been its ability to establish the last mile connectivity with its clients."

Government Support Will Pave the Way

Indian OTR Tire Industry
While lamenting the lack of appropriate policy & framework in Mining and Infrastructure, tire manufacturers suggest that the Government should aim to achieve targets listed in the Five Year Plans. According to them, a concerted revival of these sectors is critical to the growth of the OTR Tire Industry in the long run. Observes Mr. Mundra, "The growth for the Indian OTR tire industry is directly proportionate to the growth in key user segments especially infrastructure and mining. The Government's actions in driving growth in these user segments will therefore have indirect but far reaching consequences for the OTR tire industry. Increasing infrastructural investments as highlighted in the latest 5 year plan will go a long way towards nullifying the growth pressure currently being felt due to the challenges being faced by the Indian mining industry. In terms of direct support, India's price competitiveness in the local and international markets will continue to depend on the government regulation / levies and their continued support would be critical."

Mr. Sharma echoes this sentiment, "The ambiguity in the Mining due to lack of clear policy environment is affecting the sector in a big way. In spite of the huge potential, the demand currently is weak for the large size tires due to the regulatory issues in the sector. We look forward to a clear policy framework to enable the mining operations in the country and create demand for the OTR Tire industry."

BKT sees the situation rather differently. In the words of Mr. Poddar, "The first and foremost challenge is the lack of mechanisation in the Agricultural Sector in India. Despite the fact that ours' is an agrarian economy, we are yet to shift to machine-oriented farming practices in a major way. This stems from the fact that ancestral land is passed on from one generation to the other coupled with that the traditional farming practices and the mindset. The policy should aim at widespread awareness campaigns, educate farmers, and encourage them to shift to mechanisation. Agricultural equipment and machinery can be made available through incentives and finance schemes. Secondly, there should be fast track clearances of a swathe of mining projects which are stuck in doldrums due to scams and inappropriate implementation of policy and framework. This has left CE manufacturers and contractors in a worrisome state as they are uncertain about the future. The Government should highly prioritise on bailing this sector out of trouble."

Well, here's an industry that's upbeat on setting new benchmarks and adding to the country's growth. All it's asking for is a helping hand from the Centre!

NBM&CW November 2013

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