ranjit | Feb 19, 2018 | 0
Grooving for excellence
By Raghav Varma
An Indian consumer perceives very little differentiation among major branded treads available in the country. It is the service differentiation that gives Tyresoles the cutting edge over competition, says Karun Sanghi, Managing Director
How has Tyresoles evolved over the years in India’s retreading industry?
Tyresoles started in 1947 with our independence. It was part of the Anglo-Thai group which also owned Herbertsons. In 1973 my family acquired the retreading business and Tyresoles became part of the Sah & Sanghi group. In the early eighties we had 4 factories but by the nineties we had only one factory in Belgaum. In the last few years we have been expanding again and have factories in Belgaum, Jabalpur, Ahmedabad, Hyderabad and Erode. We have also started tread rubber manufacturing in Mangalore. We are now developing an all India footprint to serve our customers better.
Retreading industry in India has been lacking in technology development compared with non-Asian countries. How did Tyresoles cope up with this challenge?
I don’t think the retreading industry lacks technology. All the latest technology is available in India. We have a few organised retreaders with plants comparable with any plant you would in the world. We also have a large number of smaller players in the unorganised sector. These plants need better equipment to produce a good quality, safe retread. At Tyresoles we have inflated buffing and building machines. We have Rema Tip Top repair system for radial tyres. We have multi-segmented mould for radial OTR retreading. So our plants are very much in line with other facilities you would see internationally.
What is unique about the specialised rubber compounds that you have developed to suit vehicles operating in Indian conditions?
Since we have started our own tread rubber production, we can develop different compounds for different applications. We have different compounds for bias and radial tyres. We have different compounds for highway and off road applications. We are able to develop and test compound very quickly for various applications. We are starting to test the rolling resistance and wet grip of our compounds so we can improve the fuel efficiency of vehicles fitted with our tyres.
Even now Indian roads pose a major challenge to tyres. How do you develop retreads that are capable of taking on this challenge?
Indian road conditions are different from other countries. We have some very good highways and some very bad rural roads. As a retreader we don’t know what roads our customer’s vehicles will use. Usually it is a combination of very good and not so good roads. So we are constantly working on a combination of high mileage and good cut resistant compounds. We continue to develop new compounds and test them.
What gives your products the winning competitive edge in the market?
Our approach is quite different from other retreaders. We work with a network of service partners across India. These partners work very closely with fleets to understand their requirements and our factories produce tyres to match these requirements. We don’t just sell a retread. We do vehicle inspections. We check their scrap tyres. We understand their loading patterns, their vehicle routes. Based on this information we find the best solution to lower their overall tyre costs. We are in business because we help our customers lower their tyre costs.
How do you see the future of earthmover retreading?
The mining business has been going through a difficult transition. In the last few years, iron ore mining was banned in most of India. Coal mining has been going through a transition. Now mining is restarting in some areas but volumes are low. So earthmover retreading has also struggled. We first introduced a Rema Tip Top repair facility for Radial earth mover tyres. Next we introduced multi-segmented mould for retreading. We continue to expand the sizes that we can process.
Please elaborate on Tyresoles’ infrastructure development. How are your plants technologically equipped?
Belgaum is our largest plant built on 4 acres of land and buildings of 30,000 sq ft. We have used this plant to develop our processes and train our production teams. To serve our customers better, we have decided to build an all India network. So we have started factories in Jabalpur, Ahmedabad, Hyderabad and Erode. These new plants focus on truck and bus customers as well as tractor customers. We have centralized the production of the largest Earthmover tyres in Belgaum. We plan to open more factories in North India to serve customers better.
Retreading industry in India is still largely disorganised. Do you think it needs to be more professional and collectively focused on growth?
Yes, the retreading industry is largely unorganised. With increased radialisation the number of tyres retreaded each year will probably go down. So we expect the market to consolidate over the next few years.
How big is your dealership network? How do you track customer feedback?
We have 300 service partners located in Maharashtra, Goa, Karnataka, Tamil Nadu, Telengana, Andhra Pradesh, Gujarat, Madhya Pradesh and Chattisgarh. These partners work very closely with fleet customers. Our sales team works with them to develop their skills and market presence. In February, we have launched an APP to connect with our customers better. Any customer can request a tyre pick-up or other value added services at the press of a button. They can also send us feedback instantly.
As an industry dealing in recycling and environment protection, do you think retreading industry deserves support from the government?
Tyre retreading industry is essentially a tyre recycling process. In western countries tyres cannot be put in landfills and must be recycled in various ways. The government offers numerous incentives to recyclers are dispose of these worn out tyres. When a truck tyre is retreaded it results in a saving of 20 litres of crude oil. There is an estimated 80 lac tyres retreaded every year in India. So the retreading industry saves 16 crore litres of crude oil for the nation. Currently the Environment ministry is working on disposal systems for “End of Life” tyres. If more tyres are retreaded then the disposal problem will also minimised.
At present the retreading is considered a works contract activity with both a sales and service component. We are charged VAT of 5-15 % on the material sales and Service tax of 14.5% of the labour charges. Tread rubber manufacturing is subject to 12.5% excise and VAT of 2-15%. However, most manufacturers are below the 1.5cr turnover limit so do not pay excise. Most units are based in Kerala so again VAT rates are very low. So total tax collected from this industry would be very low.
The GST committee is in the process of fixing the rates for various industries. Considering the environmental benefits and the poor tax compliance, we have been asking the government to classify tyre retreading and tread rubber in the lowest slab of 5%. This moderate rate will substantially improve tax compliance and increase the total tax collection from this industry. Lower pricing would also encourage retreading resulting in substantial environmental benefits.
What are your future plans?
We are waiting for the GST role out. Based on the new tax structure we will expand our service network to serve the all India market. For now, we are rolling out our APP and understanding our customers better.