Market: Domestic rubber prices become a concern for tyre makers: Rishi Vora

“So the cost of imports in India to that extent has not come down significantly. Now, for businesses to get back to their, say, fourth quarter level, margins“They will have to at least accept another two to three price increases totalling 4% to 5% to get to Q4 levels. Now, the challenge here is that each segment has a different kind of competitive intensity,” he says. Rishi VoraKotak Institutional Shares.

Let us know your thoughts on the overall assessment of how you interpret this. raw material increase in the price of the basket and, individually, if you could break it down in terms of what your observation has been on the margins of these companies.
Rishi Vora: As Mr. Rajiv pointed out, at least domestic natural rubber prices has skyrocketed, last month we have seen an increase of between 20% and 30% and also in the price of imported natural rubber that we import from the Southeast Asian regions, while prices have cooled down from their peak, but the problem there is a freight problem where the freight rates Prices of imported products have increased. So, the cost of imports in India to that extent has not come down significantly. Now, for companies to get back to their margins, say, of the fourth quarter, they will have to accept at least another two to three price increases aggregating to 4-5% to get to the fourth quarter levels. Now, the challenge here is that each segment has a different kind of competitive intensity.

While OEM is generally a carryover product, so with a quarter delay, I think they’ll get those price adjustments. But on the replacement marketIt will depend on how each player behaves. And while in certain segments we are seeing that a certain absorption of prices is better, in certain segments from now on there are also problems where certain players are being more aggressive than others. So, in net terms, they will have to assume a 4% price increase and in the general replacement segment, from now on, we will have to see how each player does.

Would you agree with that assessment in terms of what… Long-term perspective could be?
Rishi Vora: Yes, absolutely. In the short term, obviously, in certain OEM segments there are challenges. Replacement is doing more or less well and hopefully in the second half we should see a recovery; the first half was mainly due to the elections, heat waves and now the strong monsoons in certain areas which have affected the demand in the replacement segment. Yes, our feeling is also that the second half should be better than the first half. Festivities would be the key, so we are monitoring that closely as well. But yes, our expectation is that the second half overall in terms of demand trend should be better than the first half.