Falcon Tyres, part of the Ruia Group, is drawing up plans to offload its promoter’s stake by a few percentage to a private equity firm for Rs. 100 crore according to latest media reports. The amount raised will then be deployed to scale up its output at Mysore to 14 lakh units per annum by 2010-11. The manufacturer of Dunlop Tyres is currently in the process of preparing our presentation and aims to raise the money in a couple of months. In addition to that, the company will also introduce tubeless tyres in its portfolio shortly, in a bid to increase profitability.
It is to be mentioned that Falcon currently manufactures two- and three-wheeler tyres under the Dunlop brand name. Falcon produces 7.5 lakh tyres a month, wherein approximately 4.5 lakh tyres are sold as OE primarily to Hero Honda and Bajaj, another 2.5 lakh tyres in the replacement market under Dunlop brand and the balance exported (without any brand name) to countries such as Brazil, the UAE and Bangladesh. During the past two years under the Ruia group, its replacement sales has moved up from a mere 15 per cent to approximately 40 per cent This coupled with 10-15 per cent exports has brought down original equipment (OE) sales from as high as 85 per cent to around 50 per cent currently. Furthermore, the company will begin exporting its products to emerging markets in East Europe, Africa and the Middle-East. In the domestic market, Falcon would be ramping up its dealership network in a phased manner.
According to a senior representative of Falcon Tyres, the company is planning several measures including further capacity augmentation and entry into new product ranges to increase its profitability. He added by saying that In the OE segment Falcon has increased its customer profile, thereby reducing dependence on any particular customer. He further added by stating that despite the slowdown in the auto sector, the scooter and three-wheeler segments are growing and the company is looking at catering to the replacement market where profit margins are also. He concluded by saying that the burgeoning demand for smaller tyres in the domestic market and new export orders have impelled the company to enhance its production capacity.
Incorporated in 1973, Falcon tyres has its plant located in Mysore, Karnataka State, India. It manufactures and markets a wide range of nylon bias ply tyres (which includes) low aspect ratio of varying load Index, uni-directional tyres, tyres (scooter) and butyl tubes for two and three wheelers, passenger cars, jeep, light commercial vehicles and farm vehicles, under 'Dunlop' brand for the domestic market and 'Falcon' brand for overseas market. Ruia group's Falcon Tyres has also taken over JJ Polymers, a nylon tubemaker, a few months back.
Source: Wheels Unplugged