Global Commodities Alternative Data and Insights

Helixtap

Helixtap collects, processes and distributes proprietary data, analyses and forecasts for the rubber, latex and automotive markets

CEO, Helixtap

Farah Miller

Commodities

<ul><li>Major players in the Indian tire industry are in for tough times with a host of factors, including a hefty fine from the Competition Commission of India (CCI) for alleged cartelization and higher input cost along with weak demand, throwing a spanner in their works. If implemented, the CCI fine - US$56 million on Apollo Tyres, US$82 million on MRF Tyres, US$33 million on CEAT, US$40 million on JK Tyre, US$23 million on Birla Tyres, totaling INR 1,788 crore (US$236 million) – imposed in February will eat into the profits of the five majors. The affected tire majors are now mulling, turning to NCLAT, the National Company Law Appellate Tribunal, to get things in their favor.</li><li>The Automotive Tyre Manufacturers' Association (ATMA), the tire makers' industry body, fined Rs 8.40 lakh ($11057) by CCI, is also filing an appeal with NCLAT to get it reversed. While MRF noted that the company would "take appropriate legal recourse on the matter," CEAT said they are studying the verdict to decide on an appropriate legal recourse. "The company has been advised that the order of the Commission (CCI) is not based on a proper appreciation of facts and law and will accordingly take appropriate legal recourse in this matter," MRF said in a regulatory filing. Meanwhile, Rajiv Budhraja, Director-General of ATMA, told Helixtap on the CCI verdict follow-up, "ATMA will defend its position in its own ways.</li><li>As per CCI rule, we have two months to approach NCLAT". However, the poor track record of the CCI in collecting fines might lend some relief to the tire majors. Double whammy for Indian tire manufacturers The blow from CCI came at a time when the tire industry was fighting the increased input cost, adding pressure on the margins of the tire majors. Natural rubber's raw material price, which was at INR 120/kg ($1.58) in March 2021, rose to INR 190 ($2.50) in December 2021.</li></ul>

Major players in the Indian tire industry are in for tough times with a host of factors, including a hefty fine from the Competition Commission of India (CCI) for alleged cartelization and higher input cost along with weak demand, throwing a spanner in their works. If implemented, the CCI fine - US$56 million on Apollo Tyres, US$82 million on MRF Tyres, US$33 million on CEAT, US$40 million on JK Tyre, US$23 million on Birla Tyres, totaling INR 1,788 crore (US$236 million) – imposed in February will eat into the profits of the five majors. The affected tire majors are now mulling, turning to NCLAT, the National Company Law Appellate Tribunal, to get things in their favor.The Automotive Tyre Manufacturers' Association (ATMA), the tire makers' industry body, fined Rs 8.40 lakh ($11057) by CCI, is also filing an appeal with NCLAT to get it reversed. While MRF noted that the company would "take appropriate legal recourse on the matter," CEAT said they are studying the verdict to decide on an appropriate legal recourse. "The company has been advised that the order of the Commission (CCI) is not based on a proper appreciation of facts and law and will accordingly take appropriate legal recourse in this matter," MRF said in a regulatory filing. Meanwhile, Rajiv Budhraja, Director-General of ATMA, told Helixtap on the CCI verdict follow-up, "ATMA will defend its position in its own ways.As per CCI rule, we have two months to approach NCLAT". However, the poor track record of the CCI in collecting fines might lend some relief to the tire majors. Double whammy for Indian tire manufacturers The blow from CCI came at a time when the tire industry was fighting the increased input cost, adding pressure on the margins of the tire majors. Natural rubber's raw material price, which was at INR 120/kg ($1.58) in March 2021, rose to INR 190 ($2.50) in December 2021.

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