General Tyres to start manufacturing bike tyres

Company investing Rs500m to expand production facility.

KARACHI:

General Tyres, the leading tyre manufacturer of Pakistan, is investing Rs500 million in expanding its production facility and has started manufacturing tyres for CNG rickshaws. It also plans to bring motorcycle tyres into the market by the end of the fiscal year in June.

“Despite unfavourable business conditions, General Tyres has been gradually investing in its manufacturing facilities,” Chief Executive Mohammad Shahid Hussain said while talking to The Express Tribune on the sidelines of a press conference on Thursday. “Today, business conditions are better and are improving with every passing month.”

Speaking to the media, Hussain said the company wanted to capitalise on the fast growing market of compressed natural gas (CNG) rickshaws and motorcycles in the country.

This year, Pakistan is expected to produce 1.8 million units of motorcycles while 140,000 CNG rickshaws are already on roads. “Fortunately, there is no smuggling problem in the motorcycle tyre category,” he pointed out.

Replying to a question on opening of trade with India, Hussain said Pakistan should raise the issue of non-tariff barriers with the Indian government, which create hurdles in the way of exports. On the other hand, “our market is open for Indian exporters owing to relatively less intrusive laws and restrictions.”

Hussain pointed to the problem of under-invoicing and smuggling of tyres, which have severely hit the domestic manufacturers.

“Though the government has tightened up on smuggling and under-invoicing, still there is much room for improvement,” he said, adding billions of rupees could be saved by improving the customs clearance system.

If the cost of a Chinese tyre was around $240-$245, some traders were importing the same by declaring a value of $130-$140, causing severe losses to the national exchequer. And, then they gave all taxes on this lower import price, he said. Pakistan imports some 60% of tyres from China.

“Tax evasion actually helps tyre importers to sell these at low prices, making it almost impossible for us to compete with them,” Hussain added.

He, however, believed that Pakistan had the potential to be a big tyre exporter, provided the government created a level playing field for the manufacturers and controlled under-invoicing and smuggling.

General Tyres manufactures tyres for cars, light trucks and tractors. Some 60% of its tyres are sold to the original equipment manufacturers (OEMs) – carmakers – in the country. The company also exports its products to Afghanistan, Yemen and Syria and is exploring new export markets.

Published in The Express Tribune, March 16^th, 2012.