Local firms seek to shore up foothold in tyre business

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Local firms seek to shore up foothold in tyre business

A salesman arranges locally made tyres at a shop in Dhaka. Bangladesh is missing out on opportunities to tap the rising local demand for tyres in absence of large manufacturers here.Photo: STAR

Sajjadur Rahman

Local manufacturers are coming up to tap growing opportunities in tyre business that now depends heavily on imports.

Husain Tyre, which started production in 1996 with three-wheeler scooter tyres, makes more than 10 types, including light ones for small trucks and microbuses.

Gazi Group, a plastic product manufacturer, started producing automotive tyres three years ago. Now Meghna Group plans to enter the market soon.

“Initially, we will make motorcycle tyres by June next year. We have already started producing tubes for motorcycle tyres,” said Mizanur Rahman, chairman of Meghna Group.

Despite a growing use of automobiles here over the years, Bangladesh is missing out on opportunities to tap rising demand for tyres in the absence of large manufacturers.

On the other hand, Nepal and Sri Lanka, relatively small markets, produce tyres to meet their domestic demand.

According to Bangladesh Road Transport Authority, around 150 new motorised vehicles are added to city streets every weekday. A total of 2,18,000 new vehicles were registered in the last two and a half years.

Bangladesh spends Tk 1,000 crore to import up to 15 lakh tyres a year, according to importers, distributors and sellers.

Manufacturers, such as Husain and Gazi, are yet to pick pace and compete with giant Indian and Japanese tyre makers.

“The market is dependent on imports,” said Mohammad Muzahid, an executive committee member of the Tyre Merchants’ Association and an importer of Indian Good Year tyre.

Although there is no exact data on the market share of imported and locally produced tyres, Humayun Kabir Liton, office secretary of Tyre Merchants’ Association, said the use of local tyres is rising fast.

“Local tyres will be able to grab a 10 percent market share in the next couple of years,” said Liton, who has been in the business for nearly 15 years.

The tyre market has been growing fast, but local big companies did not make an entry to this sector as it requires large capital investments and consistent power supplies.

Years ago, two big names — Rahimafrooz and Nitol — moved to produce automotive tyres, but their plans did not carry through for high capital investment requirements and dependence on the import of raw materials.

“When we took an initiative to produce tyres locally, more than seven years ago, the market was not as big as it is now,” said Niaz Rahim, a director of Rahimafrooz Group.

“At the time, the investment cost was estimated at Tk 250 crore — now it will be no less than Tk 400 crore for the same project,” he added.

India’s JK Tyre also tried to set up a joint venture to make tyres in Bangladesh several years ago.

Importers and sellers found the scarcity of raw materials in the country as an obstacle to producing tyres in Bangladesh.

“Rubber, chemicals, carbon and yarn — all have to be imported,” said Humayun Kabir, another importer. “The poor supply of power also discourages investors.”

Bangladesh imports at least 60 percent of its tyre requirements from India, followed by China, Indonesia, Japan and Thailand, industry people said. Prices of tyres have also quadrupled in the past decade, riding on growing demand.

Niaz Rahim of Rahimafrooz did not rule out the possibility of a joint venture to manufacture tyres.

Zakir Husain, managing director of Husain Tyre, declined to comment on the country’s tyre market.

sajjad@thedailystar.net