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					Pirelli in India

September 2005

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Pirelli in India

A Federal Republic larger than Europe with... • Long distances to cover • Inadequate road system many unpaved roads • Non electrified railways (three gauges) • Geographical obstacles • Periodical difficult climate conditions

Difficult and costly transportation across the territory
September 2005

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Pirelli in India

AUTOMOTIVE MARKET EVOLUTION

1990’s AND EARLY 2000’s

FUTURE TREND

Poor road conditions Vehicle overloading Low speeds

New infrastructures (golden quadrilateral) Higher speeds

The market is increasingly demanding for higher quality and more performing products

Protected market (high import duties and excise)

Open market (WTO)

September 2005

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Pirelli in India

THE “GOLDEN QUADRILATERAL”

5,846 km of four/six lane expressways connecting Delhi, Mumbai, Kolkata and Chennai

A 6 billion USD project boosting the Indian automotive and construction industries, and sustaining the Country’s economic growth

September 2005

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Pirelli in India

INDIAN AUTOMOTIVE SECTOR

A STEADY DOUBLE DIGIT GROWTH:

PASSENGER CAR/VAN PRODUCTION (2004)

1,080,000 units

+20%

(2004 vs. 2003)

TRUCK/BUS VEHICLES PRODUCTION (2004)

188,000 units

+25%

(2004 vs. 2003)

September 2005

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Pirelli in India

TYRE MARKET EVOLUTION

Indian tyre Producers are facing new challenges: • Growing quality standards and performance required by the market

• Growing risk of foreign competition as market barriers are being lowered in accordance with WTO directives

Most Producers are looking for technology updates to face these challenges, i.e. technology agreements or JV’s with Western and Japanese Companies

Consolidation process among producers is likely

September 2005

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Pirelli in India

PIRELLI TYRES IN INDIA
Distribution of radial car tyres and truck/bus tyres through local Dealers 1986: Technology supply (machinery, plants, know-how) for truck and bus tyres 1997: Technology supply (machinery, plants, know-how) for radial car tyres Possible next step: Industrial initiative in radial tyre segment, in partnership with a mayor local manufacturer. • “Local knowledge” • Relationship with local Authorities Why a Partner? • Distribution network • Investment capabilities
September 2005

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Pirelli in India

ATTRACTIVE POINTS • Highly skilled technicians and open minded managers with international background
• English widely spoken at all levels • Weak cultural barriers (as compared to China) • English common law • Biggest Democracy in the world, stable Government • GDP now growing 7% per year • Interest rates are lowering (7.5% against 16%in the ’90s)

• High internal transportation costs • Difficult to import used machinery • Living conditions not easy in developing areas for Europeans

September 2005

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Pirelli in India

THANK YOU...

September 2005

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Pirelli in India

PIRELLI’s TECHNOLOGY IN EMERGING COUNTRIES

Car + Light t. Truck. Motorcycles Steelcord

September 2005

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Pirelli in India

INDIAN TYRE GROUPS MRF (430m€ turnover)
• • Family owned Company, high turnover with low capital (3-4m€) “Do it yourself” philosophy

Apollo (390m€ turnover)
• • Fastest growing tire maker in India. JV with Michelin for radial all-steel truck tires, co-branded.

JK tires (370m€ turnover)
• Market leader in radial truck tyres (90% market share, sole local producer), with Conti all-steel technology

CEAT India (330m€ turnover)
• RPG Group, one of the largest Companies in India (Telecom, Cables, Carbon Black and Natural Rubber).

Birla Tyres (130m€ turnover)
• • Owned by Kesoram Industries (300m€ turnover) active also in: cement, rayon, spun pipes, chemicals. Long relationship with Pirelli.
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September 2005


				
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