Due to sharp fall in the raw material prices, particularly the natural rubber, tyre majors such as MRF Ltd, Apollo Tyres and JK Tyres have decided to cut prices between 3% and 5%. Earlier, in December, all these tyre companies had to bring down their prices by 4% due to the lowering of excise duties by the government.
India’s leading tyre manufacturer MRF has announced reduced prices with immediate effect. The company said that the drop has been to the extent of Rs 400 per tyre in the truck-tyre segment, which constitutes a major chunk of its production. The company sees that its quarterly results continue to be poor due to some raw materials which continue to come in at high-contracted prices.
The current price reduction was possible due to a downward trend in the price of natural rubber. MRF has been the first to announce cut in prices in earlier occation too, a statement said.
Similarly, effective Thursday Apollo Tyres Ltd too has announced a reduction in prices across product categories. The price cut varies from 3% to 5% across various categories. This move has been made in keeping with a softening of key raw material prices since September 2008.
However, since December last the cost of both crude oil and natural rubber have been witnessing an upward trend once again. The benefit of lower raw material prices is yet to be felt in the company’s bottomline, since supplies have been taking place on earlier contracted rates. Despite that Apollo has taken a proactive step in lowering prices for consumers.
Speaking on the price initiative, Satish Sharma, Chief, India Operations, Apollo Tyres, said: “The demand situation continues to remain extremely challenging. Offtake from OEM remains weak. However we hope that a lower price point will see some resurgence in the aftermarket.”
In December 2008, on the heels of the government bringing down CENVAT on tyres by 4%, Apollo Tyres had reduced its product prices by the same amount, he added.
Meanwhile, followng MRF and Apollo Tyres, JK Tyre & Industries too has decided to cut prices by 3% to 3.5% on falling raw material prices, said industry sources here.
