‘Margins are significantly higher in the replacement market’

Trident International (P) Ltd specializes in the design, development and distribution of specialty tyres and wheels for industrial, construction and off highway applications.

Manoj Gyanani, Director, Trident International (P) Ltd to Sandeep Menezes says that there is no constructive policy set by the government to be implemented.

Excerpts from the interview:

Since the equipment market is not growing, tell us about the increasing pricing pressures felt by vendors from OEMs?

There is always going to be pressure from OEMs and end users to cut costs. But I believe that in the last two to three years we have already reduced prices to the extent possible in spite of the increased cost of production and rising raw material prices.

Post elections, tell us about the expected recovery in the market?

All depends on which government comes into power and what coalition politics plays out. Currently, the government is headless, aimless—it is a lame-duck government since there is no policy implementation. Everything is at a standstill. We hope that in the next election whoever comes to power, there is a scenario of pro development, pro business and pro nation.

Even if the projects take-off in the current quarter as stated by the government, according to you how long will it reaches the equipment segment to see the benefit?

Absolutely, you can announce a project in next quarter but by the time the actual framework comes into place, I don’t think it will happen before the end of next year.

How has the recent Rupee depreciation impacted your segment?

It has impacted hugely. The Rupee lost around 20 per cent at one moment of time while now it is about 12 to 13 per cent. We supply to OEMs and after-markets. Components are imported like certain rubber or adhesives, but we don’t have a choice.

But Rupee depreciation has also made locally manufactured products cheaper thereby opening up a huge export opportunity. Comment.

I believe that the Indian domestic market is bigger than the export market because of the deficit we carry.

What is the quantum of Trident’s revenues from exports?

Currently it is around 85 per cent exports and only 15 per cent from domestic market. We are looking towards the non-traditional markets of South America. We are also looking at our own backyard of South Asia and South East Asia. Also markets such as Africa and West Africa have huge export potential.

Which means Trident is benefiting?

We import lot of raw materials which goes into manufacturing of our tyres to that extent the benefit has been offset. Also costs in India have significantly increased like increase in fuel prices. We have been untouched by Rupee depreciation—we have not benefited hugely nor have we lost hugely like others.

How have been sales from OEM’s vis-à-vis replacement market?

There are no OEM sales currently because of market conditions and also pricing pressures are huge. The replacement market still has some future going forward. Also margins are significantly higher in the replacement market.
Currently nobody has the sales in the OEM market. In times of bad sales everyone is under costs pressure. It’s ironical because OEMs do not have the sales or volumes and also want to cut prices; therefore it’s a double whammy.

Currently, the equipment market is witnessing negative growth of around 15 to 20 per cent compared to last year. How has Trident fared vis-à-vis the industry?

Let me tell you that Trident has witnessed 15 to 20 per cent growth over last year. I know mining segment on the whole is struggling, but it has been good for us. Agriculture segment was satisfactory earlier, now it is good. Construction segment has been bad for everyone but been stable for us. Therefore for Trident, the mining segment has grown; agriculture segment has grown while construction segment has remained stable.
We are aiming to grow our business at least 20 per cent year-on-year. This is something we will strive for and believe it can be achieved.

Going forward, does Trident intend to launch any new products?

We also plan to launch tyres for the mining sector, which are actually importing substitutes being launched in India. It will save the nation’s valuable foreign exchange and be beneficial to our customers.

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