Académique Documents
Professionnel Documents
Culture Documents
Project Concept 3
Market Potential 4
Gujarat – Competitive Advantage 6
Growth Drivers 7
Project Information 8
- Location
- Infrastructure Availability
- Raw Material/ Manpower
- Key Players
- Major plant and machinery/equipment
Project Financials 11
Approvals & Incentives 13
Page 2
Project Concept
Commercial vehicles
Passenger cars Two-wheeler Three-wheeler
(CV)
Mining
Multi Purpose equipment and
Mopeds
vehicles earth movers
Auto components
Source:
http://www.ibef.org/industry/autocomponents-india.aspx http://www.cii.in/sectors.aspx?enc=prvePUj2bdMtgTmvPwvisYH+5EnGjyGX
http://www.icra.in/Files/ticker/SH-2016-Auto%20(R).pdf O9hLECvTuNueppNFKWCExayUoGQImfWe
http://www.ibef.org/download/Auto-Components-January-2016.pdf
Page 3
Market Potential
units billion
technological advancement and innovation are 1.0 0%
expected to drive the industry. The tyre demand in 0.5
2015 is estimated at 1.66 billion units and is
0.0 -10%
expected to rise a CAGR of 2.8% to reach 1.80 2011 2012 2013 2014 2015 2016E 2017E 2018E
billion units in 2018, majorly driven by demand in
emerging markets, especially in China and India. Global tire demand (volume) Growth
Page 4
Market Potential
Segmental share of total production (FY15) Based on type of vehicles, the Indian tyre
industry can be broadly segmented into
Others
4% commercial vehicle tyres and passenger
Truck and bus vehicle tyres. The commercial vehicle tyre
Two and 12%
thee wheeler
segment includes truck tyres for M & H
52% CVs and LCV tyres; the passenger vehicle
Passenger cars tyre segment includes cars, utility vehicles
and Jeep
25% and two-wheeler tyres. While the two-
wheelers have the largest share by
volumes, in terms of value truck and bus
Light Trucks
7% tyres constitute majority of the market.
► Gujarat government plans to increase the share of automotive industries in its overall
engineering output to 10% by 2020, from the current 3.7%.
► Gujarat expects to surpass the production capacity of top car manufacturing states like
Haryana, Maharashtra and Tamil Nadu, with an installed capacity to roll out 10 lakh units
annually within the next 3–4 years.
► Gujarat is set to become a hub for both Indian and global tyre manufacturers in the country,
augmented by the revival in automobile demands and formation of new auto-clusters in the
state. Recently, MRF has announced its plan to set-up a tyre manufacturing plant in the state,
likely in Bharuch. Taiwanese tyre company Maxxis Group is in the process of setting up its
manufacturing plant in Motown Sanand with an investment of INR25 billion, while top tyre-
producing companies like CEAT and Apollo Tyres are already running their plants in Halol and
Vadodara, respectively.
► Incremental manpower requirement in Gujarat for the manufacturing of engineering goods is
expected to be 53,580 during 2017–22.
Source:
http://www.vibrantgujarat.com/newsdetail.htm?104 “Sectorial risk outlook: Tyre, July 2015,” Dun and Bradstreet
http://timesofindia.indiatimes.com/business/india-business/MRF-plans- “Indian tyre industry,” September 2014, ICRA
manufacturing-plant-in-Bharuch/articleshow/50213600.cms
Page 5
Gujarat - Competitive
Advantage
Skill development and training in auto sector is a focus area for
Gujarat government
Gujarat is a hub of Well-developed Gujarat has a strong
Manufacturing
engineering industry, with and engineering skill educational infrastructure in
the manufacturing and sector growth development automobile sector with 27
engineering sector in industry colleges providing technical
Gujarat contributing over education in the sector with
27% to the state’s GSDP annual intake capacity of
and contributing 9% 1,980, and additionally 111
overall to the national colleges provide technical
engineering output. education in mechanical field.
Source:
http://www.narendramodi.in/maruti-to-invest-rs-4000-crore-at-bechraji-agreement-signed-with-gujarat-govt-4536
http://www.thehindu.com/news/national/gujarats-controversial-labour-laws-bill-gets-presidential-assent/article7938265.ece
http://www.vibrantgujarat.com/writereaddata/images/pdf/Skill-Ecosystem-Updated.pdf
http://www.business-standard.com/article/economy-policy/gujarat-govt-plans-incentive-scheme-to-boost-manufacturing-sector-
113022500549_1.html
Page 6
Growth Drivers
The domestic automotive industry has witnessed a gradual recovery
1 in 2014-15 following two years of demand slowdown because of
Recovery in weak economic activity, rising inflation, poor consumption and
domestic vehicle
liquidity constraints. The recovery has been primarily supported by
sales
the two wheeler and Medium and Heavy Commercial vehicle
(M&HCV) segments..
The major demand for radial tyres has been witnessed in the truck
and bus segment due to improved road infrastructure and the
2 introduction of fuel-efficient products in the automobile industry.
Rising demand for
Furthermore, although tyre production in the passenger car segment
radial tyres
is already completely radialized, the number of radial tyres in various
segments of the market is expected to increase.
The industry is recording sharp expansion in profits, driven by low
input costs. Although the prices of natural rubber trended upward
3 during 4Q15 due to policy measures, they are still trading lower at
Favourable input
costs driving INR120-INR130 per kg in July 2015, compared with INR143 per kg in
margins July 2014. Crude-linked material such as synthetic rubber, carbon
black and rubber chemical remains favourable. The correction in the
low prices of natural rubber is expected in 12-18 months
Of the overall road network, national highways are the most
modernized and developed, but they account for 1.6% of the total
Poor infrastructure road network. Inadequate and poor road infrastructure causes early
4
augmenting the
damage to tyres, which has been fuelling replacement demand for
replacement tyre
demand tyres. About 48% of total tyre production is supplied to the
replacement market. The replacement market for tyres is the highest
for trucks/buses and tractor front tyres.
Demand in the automobile industry is closely linked to economic
growth. A slowdown in economic growth over the past two fiscal
5 Improving years has affected overall consumer and investor sentiment, and
economic growth
consequently overall auto industry sales. However, going forward,
to drive OEM
demand various pro-growth measures adopted by the new Government are
expected to impact the auto industry and allied sectors, including tyre
industry, favorably.
Source:
Automotive Tyre Manufacturers' Association -- Production and Export Trend
http://www.freedoniagroup.com/industry-study/3357/world-tires.htm
“EU tyres update,” HSBC Global Research, 1 February 2016, via ThomsonOne
http://icra.in/Files/ticker/SH-2015-Q3-1-ICRA-Tyres.pdf
http://www.business-standard.com/article/companies/indian-tyre-industry-revenues-to-grow-by-4-6-in-fy17-report-116020400429_1.html
Page 7
Project Information
Project at a Glance
Project Name Tyre manufacturing
Location Halol, Gujarat
Area of the Estate 600 ha
Automobiles and ancillary units, Auto-component, Tyre rubber, Engineering,
Focus Sector
Plastics, Electrical and Electronics
MRF, Apollo Tyres, JK Industries, CEAT, TVS Srichakra, Balkrishan
Target Audience
Industries
► Halol is an indicative location for establishment of the proposed unit. The city in Panchmahal
district of Gujarat, spread over 600 hectares of land. Alternatively, the plant can be set up in
other suitable locations in the State.
► There is a 220 KV power station and 220 KV power line passing through Halol and two 66 KV
substations in proposed Halol site. There is a continuous 3-phase, power supply in the region.
► Water supply is made available from Narmada main canal. There is a 20 millions of liters per
day water exclusively available to the existing industries.
► There is a gas distribution line passing through the proposed Halol-Savli sites. The gas
connectivity is laid and maintained by Gujarat State Petroleum Corporation.
► There are several automobile, engineering and tyres manufacturing companies in the region,
including General Motors, Hero Motor, Bombardier, Larsen & Tourbo, Apollo Tyres and CEAT.
► Halol has the advantage of a Broad Gauge railway network at a close distance of 1.5-2 kms
and is connected to Vadodara through SH87 and to Savli through SH158.
► Vadodara Domestic Airport is the nearest airport located at a distance of 35 kms from Halol.
► Port Connectivity is available with three ports – Dahej, Hazira, Kandla and Mundra.
Page 8
Infrastructure
Availability
Logistics & Connectivity
Rail Road
► The broad gauge double track rail line ► Halol is connected to NH8 and NE1 through 4
from Vadodara to Godhra passes along at lane State Highway No 87.
a distance of around 1.5-2 km from Halol ► SH87 connect Vadodara to Halol, SH150
industrial area with the railway station at
connects Halol to Savli.
Kahakariya village of Savli Taluka.
► The proposed Delhi Mumbai Industrial Corridor
► The Halol industrial area is connected to
this railway line through SH150. is located at 35 kms from Halol, which is
connected to the corridor through SH87.
Air Port
Utility
Water Power
Source:
http://www.gidc.gov.in/pdf/gidc_halol_expansion_industrial_estate.pdf
http://www.nsdcindia.org/sites/default/files/files/gujarat-sg-report.pdf/
Page 9
Key Players
Leading Players
Planned investments (as on June 2016)
Company Investment (INR billion) Location
MRF Ltd. 40 Bharuch
Maxxis Group 26 Sanand
Source:
https://infrastructureindia.gov.in/project-
list?p_p_id=projectlist_WAR_Projectportlet&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=column-
1&p_p_col_count=1&_projectlist_WAR_Projectportlet_jspPage=%2Fhtml%2Fprojectlist%2Fview.jsp&_projectlist_WAR_Projectportlet_searchType=S
ub+Sector&_projectlist_WAR_Projectportlet_id=45&_projectlist_WAR_Projectportlet_projectTypeeids=&_projectlist_WAR_Projectportlet_delta=20&_p
rojectlist_WAR_Projectportlet_keywords=&_projectlist_WAR_Projectportlet_advancedSearch=false&_projectlist_WAR_Projectportlet_andOperator=tr
ue&_projectlist_WAR_Projectportlet_orderByType=asc&_projectlist_WAR_Projectportlet_resetCur=false&_projectlist_WAR_Projectportlet_cur=2
Page 10
Project Financials
► Cost segmentation: The tyre-manufacturing industry is highly raw material-intensive, with raw
material accounting for around 65% of total production costs. Within the raw material
segmentation, natural rubber accounts for nearly 44% of costs in the tyre industry.
Page 11
Project Financials
Source:
http://www.gidc.gov.in/pdf/tenders/PDF/16-17/Allotment-Price-2016-17.pdf
“Tire Market in India 2012-2016,” June 2013, Technavio Insights via ISI Emerging Markets
http://ifcextapps.ifc.org/ifcext/spiwebsite1.nsf/0/3B74399828B3397C852577120055FD52/$File/EMP-Apollo%20Tyres.pdf
https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=11&cad=rja&uact=8&ved=0ahUKEwjV4YTpk7fNAhVGNJQKHZoXCLo4ChA
WCBowAA&url=http%3A%2F%2Fwww.invest.mp.gov.in%2Fruledownload.action%3FFILE_NAME%3DAUTO_COMPONENETS_TYRES&usg=AFQ
jCNEcxmiqqqkRrIbGtyQDb1pFYuugtw&sig2=sfkEI04hkUB0yjrUssUErA&bvm=bv.124817099,d.dGo
http://www.icra.in/Files/ticker/Tyre%20Industry%20Note%20Final%20April%205,2011.pdf
http://www.business-standard.com/article/companies/taiwanese-tyre-maker-maxxis-to-set-up-rs-400-crore-plant-in-sanand-114101500956_1.html
http://www.indiainfoline.com/company/jk-tyre-industries-ltd/summary/304
http://timesofindia.indiatimes.com/business/india-business/MRF-plans-manufacturing-plant-in-Bharuch/articleshow/50213600.cms
http://articles.economictimes.indiatimes.com/2012-10-02/news/34218043_1_govind-rubber-high-end-bicycle-ludhiana-plant
http://timesofindia.indiatimes.com/business/india-business/MRF-plans-manufacturing-plant-in-Bharuch/articleshow/50213600.cms
http://economictimes.indiatimes.com/industry/auto/tyres/ceat-to-make-2-wheeler-tyres-to-invest-rs-1200-crore-in-new-unit/articleshow/45479740.cms
http://www.gujaratstartups.com/news/apollo-tyres-opens-rs-200-crore-otr-facility-limda
http://www.dnaindia.com/money/report-balkrishna-industries-to-set-up-its-fourth-plant-in-bhuj-1447699
https://www.tyre-asia.com/atg-inaugurates-new-tyre-plant-in-gujarat/
http://www.business-standard.com/article/companies/apollo-tyres-to-invest-rs-400-crore-in-kerala-chenni-facility-capacity-by-around-30-35-
114061400489_1.html
http://www.tyrepress.com/2015/12/bkt-preparing-for-51-inch-giant-tyre-production-at-500-million-plant/
http://projectreports.eiriindia.org/product/auto-tyre-tube-flaps/
Page 12
Approvals / Incentives
% of eligible fixed
Category of % of Net VAT % of Net VAT to be
capital investment Incentive period
Project Location reimbursement to paid to
entitled for (no. of years)
(Taluka) the unit Government
Incentive
1 100 90 10 10
2 80 80 20 10
3 70 70 30 10
Net VAT incentives
Net VAT incentive will be reimbursed to the industrial undertaking in one financial year will not
exceed one-tenth of the total amount of eligible incentive.
Classification of the Project Amount (in INR crore)
Ultra Mega Industrial Unit 500
Mega lndustrial Unit 400
Large Industrial Unit 150
Micro, Small or Medium Industrial Unit 50
Industries in the Automobile Sector can opt for either the general incentives under the
Gujarat Industrial Policy- 2015 or the incentives under the scheme for Mega / Innovative
Project as provided below:
Mega projects have been defined under the policy as having an actual investment of atleast INR
1000 crores and projects which provide employment to atleast 2000 persons (both of these
conditions must be met in order to be deemed a mega project. The assistance to such projects
under the scheme are:
Financial assistance to the Mega/Innovative Projects will be decided on merit on a case to case
basis
The State Government may make special dispensation for the land use and tenure conversion
for Mega / Innovative Projects.
If the Mega/Innovative require support of ancillary units and if such support is to be extended by
MSME untis, GIDC would identify land for setting up of such MSME ancillary units
GIDC would assist, if required, in identifying land for setting up of Mega/Innovative Projects as
their anchor clients
Page 13
Approvals / Incentives
► India has signed Free Trade Agreements (FTAs) and regional trading agreements (RTAs) with its
neighbouring countries, including China, South Korea, Sri Lanka, Bangladesh, Bhutan and the
Maldives. These enable the signatory countries to benefit from the preferential rate of customs
duties in India.
► Union budget 2015 and 2016 provisions for the tyre industry:
► Reduction in basic custom duty on butadiene and EPDM, a key input material used in
synthetic rubber manufacturing
► Proposal to provide 15% deduction as investment allowance to a manufacturing company
that invests more than INR 250 million in any year in plant and machinery for a period of
three years announced
► Proposal to provide additional depreciation of 20% against 10% on new plant and machinery
installed by a manufacturing unit, if the asset is installed after 30 September 2015
► Major policy initiative for road infrastructure that will indirectly impact the tyre industry;
growing and improving road infrastructure in the country is likely to support growing
“radialization” in the Indian tyre industry (increasing “radialization” is considered as an index
of the status of road development in the country, technology development and overall
economic growth).
► According to ATMA, although the basic custom duty on tyres is 10%, under the various trade
agreements, the duty is actually lower which has resulted in a growing volume of tyre imports.
The association has urged the government to reduce the custom duty on natural rubber to
facilitate imports and increase the duty on tyre imports.
Page 14
Approvals / Incentives
GoG has introduced single window facilitation portal for investors with undermentioned benefits:
► Centralized system to monitor applications
► User friendly and simplified application process for investors
► System for authorities and investors to check the status of applications
► Increased departmental ownership
► The unit shall be facilitated through ‘Investor Facilitation Portal’ for obtaining all the
necessary state approvals/ clearances - https://www.ifpgujarat.gov.in
Page 15
Industries & Mines Department
www.imd-gujarat.gov.in
This project profile is based on preliminary study to facilitate prospective entrepreneurs to assess a prima facie scope.
It is, however, advisable to get a detailed feasibility study prepared before taking a final investment decision.