Tyre industry anticipates muted growth, while rising rubber prices affect MSMEs

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The Tyre manufacturing industry, which also comprises of micro, small and medium enterprises (MSMEs) who supply raw materials to them, has anticipated subdued growth in the wake of falling demand, increased raw material cost, demonetization etc.

According to Automotive Tyre Manufacturers’ Association (ATMA) the results shall be seen in the third and fourth quarter of the year. The increasing prices for raw material would impact the results in quarter 3 and 4 and also demonetization has reduced sales in certain categories.

Small Scale Industries who supply raw materials will also have to bear the loss due to decline in sale amid rising rubber prices. But the impact is not expected to be that much because most of the orders were already in place.

Rubber production has been on the rise this year, with a 12 per cent increase in the eight months to November from a year earlier, to 428,000 tonnes. But the difference between the domestic and international prices has narrowed. Currently, there is a gap of Rs 30 per kilo between the international price and domestic price of NR. At Rs 160 per kilo, international price has been flying above the domestic price of the premium grade RSS-4 (Ribbed Smoked Sheet), which is Rs 130 per kilo this week.

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