chaiman-message

“The best way to predict the future is to create it. Our way forward is to create a substantial basket of products for the rubber & tyre industry”

Chairman’s Message

The Promoter – Managing Director of the Company, Mr. Narain Holani has a wide experience in the Rubber Chemical Industry. He is an alumni of Birla Institute of Technology and Science (BITS), Pilani, a premiere institute of science and technology. The Managing Director and Senior Technologists have long working experience with ICI India Limited. He is supported by a team of qualified professionals in the fields of project management, production, research and development, quality, marketing, finance and human resources.

There is a large market for rubber processing chemicals in the domestic and international markets. The growth of the rubber processing chemicals industry is closely linked with the growth of the “automotive” (for tyres) and “general rubber goods” (non-tyre segment) industries. Demand for rubber processing chemicals in India is estimated to grow at 8 percent in the tyre segment (65 percent of total domestic consumption) and at about 2.5 to 3 percent per annum in the non-tyre segment (35 percent of total domestic consumption).

The higher growth rate in the tyre segment is due to the strong growth in the Indian automotive sector, which is estimated to register a CAGR of 9.5 percent

Out of the 4 major domestic suppliers, there are only 2 manufacturers (including Merchem) who are approved by the tyre industry clients and having requisite technology for manufacturing quality products meeting the tyre industry requirements.

Future

There is a consistent Demand Supply Gap in rubber chemicals. The Government of India and Indian Automotive Industry’s vision plan referred to as “Automotive Mission Plan 2016-26 – AMP 2026” highlights that the automotive industry with a growth at CAGR of 13% (base case) and 15% (optimistic case) will have an output of Rs. 16,160 billion and Rs. 18,895 billion in 2026. The tyre industry being an integral part of the automotive industry is likely to follow the same growth trajectory and expected to reach levels of Rs. 2,074 – 2,423 billion in the next 10 years. Accordingly, the chemicals used for manufacture of tyres can also be expected to grow at the same CAGR.

Currently, India’s contribution to the global tyre trade is $1.5 billion (1.72%) out of the $80 billion market. There is huge headroom for growth of exports from India, where it can increase its share to 4-5%. India is one of the most attractive markets with rising incomes of the middle class. India has only 10 cars per 1,000 populations as compared to the world average of 125—and rapid urbanization. Average household incomes are expected to triple over the next 20 years and India will become the fifth largest consumer economy in the world by 2025. The emergence of the middle class will drive the auto mobile industry, which will subsequently drive the tyre industry.

Tyre Industry Overview

India is the world’s largest producer and the third largest consumer of natural rubber and is also one of the fastest growing economies globally. With a stable growth, rising foreign exchange reserves, rapid expansion in capital markets and FDI inflow, India proudly stakes its claim as the second fastest growing major economy in the world. The Indian Rubber consumption are as follows:

 

 

Thus, it is evident from the above that majority of the rubber is consumed in automotive tyre industry. Thus, the growth of chemical industry is directly linked to growth of tyre industry.

Expanding auto market

India’s large percentage of young population is expected to add to the demand for vehicles and hence, tyres. India’s low vehicle penetration rate (18/1000 people) is a potential opportunity for the auto sector.

The fast development of road infrastructure in India is another factor that would boost the prospects of the domestic automobile and tyre industry.

India is already an export hub for major global auto makers. By 2020, India is expected to be the third largest auto market in the world. A growing working population and an expanding middle-class are expected to remain key demand drivers in the auto sector.
After a period of prolonged slowdown, M&HCV Production growth is reviving/stabilizing. The PV segment continues to grow on account of new models being introduced by OEMs/demand for SUVs. The Indian Government aims for ‘all electric car fleet’ by 2030.

Investment in capacity build-up

The industry has invested more than Rs 420 billion (US$ 6.3 billion) in recently completed and ongoing Greenfield/Brownfield projects which is historic and an ‘all-time high’.
The total turnover of the Indian tyre industry increased from Rs 340 billion in 2010-11 to Rs 530 billion in 2015-16 . Total tyre production increased by 10% YoY in 2016.

Mission, Vision & Values

“To be one of the recognized global players in Rubber Chemical Business through excellent customer care by providing extra value addition in terms of right quality, right precuts, just-in-time delivery and apt services”

Merchem enjoys a sizable domestic market share and a fair share in the European and fast developing Asia Pacific region. Merchem perceives its future business in extremely complex, challenging and competitive environment. However, the future looks promising for Merchem since it always stays a step ahead in acquiring cutting edge technologies and business strategies. Our aim is to deliver superior values to our customers, employees, suppliers, channel partners & shareholders, through our state of the art plants, operations, business excellence keeping in mind preservation of biodiversity, conservation of natural resources in an environmentally friendly manner, to benefit the society at large. Merchem is looking forward to meet future challenges with the continuing support of its customers. For, they are the driving force of our company.