Rubber farmers float company to make tyres to counter price slump
KOCHI: In a move to counter the prolonged price slump, rubber farmers in Kerala have floated a farmer-producer company which will start manufacturing two-wheeler and three-wheeler tyres. The Integrated Rubber Farmer Producer Company Ltd (IRFPC), based in Pala, is being assisted by German NGO Andreas Hermes Academe (AHA), which is involved in the capability building of growers in parts of Africa and India.
Officials said the company has identified a tyre plant in Erode, which has been put up for sale by the bankers. “We are bidding for the tyre plant for which we are now raising funds,” said Ajit C John, a working group member of IRFPC. The working group comprising leaders of prominent rubber producers’ societies (RPS) and few renowned technical experts in rubber is leading and guiding the activities of the company.
The company decided to start off with two and three-wheeler tyre production with an initial outlay of Rs 100 crore. Why tyres?
The automobile density in India, which stands at 28 vehicles per thousand, is very low and expected to rise significantly. “Tyre sector consumes more than 70 per cent of the rubber produced in the country and this demand is growing strongly. Most of the imports of NR are meant for use in this sector, which is dominated by a handful of companies.
There are a total of 50 big and small tyre companies, of which more than 80 per cent of the production and sales is contributed by a maximum of 10 major companies. “It was felt that unless the FPC is able to produce tyres of its own, it will not be able to deliver the right value to the growers for the products bought from them or efforts put in by them,” it said.
Why 2 & 3 wheeler tyres?
Two and three-wheeler constitute 51 per cent of all tyres produced. This segment is growing at the rate of 12-13 per cent while the industry is witnessing 5-6 per cent growth. The market is more regional and demand in the replacement market is not brand sensitive unlike passenger tyre segment, it said.
Finance for the project
The company has started mobilising capital for its tyre project from rubber growers across the country as shares. Face value of the share is Rs 10. Any rubber farmer who owns shares worth Rs 10,000 can be a member, but for becoming an active member with voting right he needs to possess shares for a value of Rs 1 lakh. However, there is provision to form Farmer Interest Groups (FIG) by forming a group of farmers having 1000 shares and nominating one of them to cast vote.