India’s tyre industry is bracing for a tough fiscal year, weighed down by sluggish demand, volatile raw material prices and muted export growth. Revenue is forecast to expand just 7-8 percent – supported by modest price hikes and a marginal rise in volumes – marking a second straight year of single-digit growth. However, operating margins are set to contract sharply as natural rubber prices remain elevated despite recent moderation. In a wide-ranging discussion, Anuj Sethi, Senior Director at CRISIL Ratings, unpacks the factors shaping the sector, from price pressures and replacement demand to global headwinds and evolving trade dynamics.

How would you characterise the current fiscal year for the Indian tyre industry, considering its challenges and opportunities?

With volume expected to grow just by about 3-4 percent due to sluggish demand, overall revenue growth will remain in single digit for the second straight year, this fiscal. On the other hand, high raw material prices, especially of natural rubber, rose sharply over the past 12 months and have only recently begun to moderate. To a moderate extent, tyre manufacturers are increasing tyre prices in the replacement market to offset the impact of higher input prices, albeit operating profitability will still be impacted this fiscal.

The report mentions 7-8 percent revenue growth this fiscal year, supported by a 3-4 percent increase in realisations and volume. What specific factors could push growth beyond this forecast, and what risks might undercut it?

While realisation growth due to price hikes being undertaken by tyre manufacturers is a certain given sharp increase in natural rubber prices, higher than projected volume growth could take the growth higher than expected. With about 2/3rd of the domestic demand

coming from replacement segment, and it being the primary volume driver, any significant decline in that demand can impact the growth forecast other way.

Given that replacement demand is the primary volume driver, how do you assess the longevity of this demand surge in the context of evolving consumer preferences and vehicle usage patterns?

The replacement demand is expected to sustain over the medium term driven by the strong automotive sales achieved in previous fiscals.

With operating profitability projected to drop 300 basis points, what contingency measures are tyre makers considering beyond gradual price increases to mitigate this impact?

The price of natural rubber, which constitutes about half of the raw materials, continued to surge sharply in the first half of fiscal 2025. However, ability to pass on this increase is limited due to modest volume growth. Small price hikes and continued focus at improving operating efficiencies on an ongoing basis is another way to offset the impact to some extent.

Natural rubber prices have been highly volatile, reaching record highs and then falling to around INR 170 per kg. What is your outlook for natural rubber prices in the near to medium term, and what factors will likely influence their movement?

The sharp rise in natural rubber prices is due to a global shortage caused by inclement weather in major producing countries such as Thailand and Vietnam, which account for about half of the global production. Going forward, increase in supply with improving hectarage and slowdown in global economies is likely to drive correction in international rubber prices. In the last couple of months, some moderation in natural rubber prices has happened.

China has a surplus in crude oil-derived raw materials, including carbon black and other chemicals. Do you anticipate this surplus impacting global prices for these commodities, and how might Indian tyre makers benefit or face challenges as a result?

Share of natural rubber in tyre manufacturing is 47 percent, while carbon black accounts for ~20-22 percent. Should carbon black prices remain under control, it will benefit domestic tyre manufacturers.

Export growth is expected to remain muted at 2-3 percent. How does the current geopolitical climate, including sanctions or trade restrictions, further complicate Indian tyre makers’ access to markets in North America and Europe?

Export growth is expected to remain sluggish due to challenging business conditions in US and Europe. However, certain segments like off-the-road tyres are beginning to see better prospects as stocks with dealers are moderating. This could help players with presence in the off-the road- tyre segment.

Exports to key markets such as North America and Europe are under pressure due to economic challenges and unviable operating costs, leading to plant shutdowns in regions like US, Europe and Israel. Is the Indian tyre industry at risk of facing similar challenges, or does it have structural advantages that mitigate these risks?

Indian players are better placed compared to some of the western peers due to comparatively lower cost of operations, though operating profitability has come under pressure this fiscal because of higher imported rubber prices. Also, Indian players have flexibility to supply in small batch sizes unlike Chinese peers, and hence this also works to their advantage, more prominently in higher margin segments such as off-the road tyres.

Have tyre makers explored new international markets or alternative trade routes to counter supply chain disruptions and higher freight costs?

Not really; to circumvent the difficult environment around the Suez Canal, vessels are going around the Cape of Good Hope, adding 2-3 weeks and additional freight cost on exports. Some of the costs are being shared with the customers.

The report references Extended Producer Responsibility (EPR) regulations. How significant is the financial and operational burden of compliance for tyre makers, and what progress has been made in addressing this?

Adoption of EPR regulations is not expected to have a very sizeable impact on profitability, though it will lead to investments in strengthening processes and in technology.

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Balkrishna Industries Ltd (BKT) reported record quarterly sales volumes in its core off-highway tyre (OHT) business in the first quarter of FY27, supported by robust demand across India, Europe and the Americas, even as rising raw material costs, freight inflation and geopolitical disruptions squeezed margins.

The company posted 16 percent year-on-year growth in OHT sales volumes to 93,770 metric tonnes, while standalone revenue rose 24 percent to INR 34.09 billion. EBITDA increased to INR 7.03 billion, representing an EBITDA margin of 20.61 percent, while profit after tax reached INR 4.32 billion.

"Q1 started on a positive note for us. We delivered our highest quarterly sales volume in the OHT segment," Rajiv Poddar, Joint Managing Director, said. He noted that the performance came "despite the challenges across many international geographies and end markets, as well as within the supply chain of the world", highlighting the resilience of demand across key markets.

Management said profitability was affected by higher raw material prices stemming from global supply chain disruptions and geopolitical tensions, although the impact was partly offset through price increases introduced during the quarter.

BKT accelerates investment programme

BKT continues to advance one of the largest expansion programmes in its history.

The company has already invested approximately INR 38 billion under its broader INR 68 billion capital expenditure programme, with around INR 30 billion yet to be deployed. Of the remaining investment, INR 15-20 billion is expected to be spent during FY27 after capital expenditure of about INR 10 billion in the first quarter.

Completed projects include:

• Commissioning the second phase of its carbon black facility at Bhuj, increasing annual capacity to 360,000 tonnes, with an investment of INR 8 billion.
• Expanding captive power generation capacity from 40 MW to 64 MW, involving an investment of INR 1.25 billion.

"All the balanced CapEx projects, which are amounting to approximately INR 30 billion, are progressing as per schedule,” added Poddar.

On-highway business begins commercial rollout

Beyond its dominant OHT franchise, BKT has formally entered India's truck and bus radial (TBR) and two-wheeler tyre markets.

The company began commercial supplies after establishing its distribution network during the quarter and reported encouraging initial customer response. Although management declined to disclose revenue or volume figures given the early stage of the business, it expects sales to begin ramping up from the second quarter. "Having seeded the business in Q1, we expect a gradual ramp-up starting in Q2," Poddar said.

The long-term target remains INR 50 billion in on-highway tyre revenue by 2030. Satish Sharma, Senior President and Director of Strategy and Business Development, said FY27 would focus on expanding the portfolio before accelerating growth. "The vision statement states that INR 50 billion revenue from on-highway tyres by 2030. We're standing on that figure... FY 2028 onwards will be serious business."

India becomes larger contributor

India accounted for 40 percent of total volumes during the quarter, driven by demand from agriculture, construction, mining and industrial applications. Management said infrastructure investment and market share gains continue to support domestic growth, although margins in India remain marginally below export markets.

BKT estimates its market share at 18-19 percent in India, 7-8 percent in Europe and 3-4 percent in the United States, with inventory levels across key markets remaining normal.

Management also expects the US business to recover to its historical contribution of 15-16 percent of revenue, supported by improved tariff clarity and stronger brand positioning.

Inflation remains the principal challenge

BKT introduced approximately 5 percent price increases during the first quarter, with the full benefit expected to be realised in Q2. "We have taken on a price hike of about 5%, scattered across the various parts of the quarter. You will see the full passthrough coming in this quarter," Poddar said.

However, management said raw material costs have also increased by around 5 percent, potentially reducing margins by roughly 2 percentage points despite the pricing action.

Freight costs currently represent about 5 percent of revenue, with executives warning that continuing geopolitical tensions could lead to further increases.

The company also identified supply chain disruptions, vessel availability, container shortages, weather conditions in Europe and monsoon variability in India among the principal risks for the coming quarters.

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Cabot Corporation has announced a significant leadership transition, with President and Chief Executive Officer Sean Keohane set to retire from his roles and step down from the Board of Directors, effective 30 September 2026. The company has elected Executive Vice President, Chief Financial Officer and Head of Corporate Strategy Erica McLaughlin to succeed him. McLaughlin will assume the positions of President and CEO, in addition to joining the Board as a member of the class whose term concludes at the 2029 Annual Meeting of Stockholders, effective 1 October 2026.

To facilitate a seamless handover, Keohane will remain with Cabot in an advisory capacity through the end of the 2026 calendar year. Concurrent with McLaughlin’s elevation, the company has initiated a formal search process to identify her replacement as Chief Financial Officer.

McLaughlin brings over two decades of experience to her new role, having joined Cabot in 2002 and holding various senior leadership posts across finance, strategy and the Reinforcement Materials division. Since assuming her current position in 2018, she has been instrumental in shaping corporate strategy and driving operational discipline. Her prior roles included Vice President of Business Operations for Reinforcement Materials, General Manager of its tire business and Vice President of Investor Relations. Beyond Cabot, she contributes her expertise as a board member for Azenta Life Sciences and as an advisor to FM Global.

Keohane’s distinguished tenure spans nearly 25 years, with his service as President and CEO beginning in 2016. His leadership was marked by significant portfolio refinement, the strengthening of core businesses, and the successful expansion into battery materials. He also advanced the company’s sustainability agenda and commitment to operational excellence, delivering robust performance and sustained shareholder value throughout his career.

Board Chair Michael Morrow said, “Erica brings deep industry expertise and a strong understanding of Cabot’s businesses, markets and global operations. This experience, coupled with her commitment to the company’s long-term strategic priorities, positions her exceptionally well to lead Cabot. Our decision to appoint Erica as the next President and CEO reflects a thoughtful and deliberate succession planning process. Her deep knowledge of the organisation and commitment to the values and culture that have been integral to Cabot’s success will provide continuity as we execute this leadership transition. We believe she brings the leadership, discipline and strategic clarity needed to lead Cabot forward and deliver on our long-term vision.

“The Board is deeply appreciative of Sean’s exceptional leadership and distinguished career at Cabot. We extend our congratulations on a well-deserved retirement. During his tenure as CEO, Sean provided strong, steady and thoughtful leadership, focusing the company’s portfolio around its core businesses and advancing new strategic long-term growth priorities. His collaborative leadership style has strengthened our organisation and leadership team, leaving a strong foundation for continued success in the years ahead.”

McLaughlin said, “I am deeply honoured to succeed Sean as President and CEO and lead Cabot into our next chapter. Having been at Cabot for close to 25 years, I know firsthand the strength of our people and our businesses. I look forward to working with the Board and our global team to build on our success, grow the company by supporting our customers with innovative chemistry solutions to advance their businesses and create value for our stockholders.”

Keohane said, “It has been a tremendous privilege to lead Cabot and to work alongside such a talented and dedicated global team. I am incredibly proud of what we have accomplished together and the foundation we have created. I am confident Cabot is in excellent hands under Erica’s leadership. We have worked side by side for almost my entire tenure as CEO and I have seen first-hand her strong leadership, operational discipline and sharp strategic mind. Erica is a trusted and highly capable leader with deep knowledge of our business and a commitment to our people, the culture and the unique heritage of this great company. I look forward to supporting a seamless transition in the months ahead.”

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Robin Wiener, President of the Recycled Materials Association (ReMA), has been appointed to the Board of Directors of the Tire Recycling Foundation (TRF). Her appointment recognises her leadership within both the recycled materials and tyre manufacturing sectors. In this new capacity, Wiener will support the Foundation's mission to enhance the tyre recycling supply chain and foster the growth of innovative markets for recycled tyre materials.

TRF, a joint initiative led by the U.S. Tire Manufacturers Association and the Tire Industry Association, aims to drive circularity and sustainability in the US tyre recycling industry. Wiener joins a board of global industry leaders dedicated to securing funding and allocating grants for critical research and demonstration projects.

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Apollo Tyres Chairman Onkar S. Kanwar has said the company remains focused on disciplined execution, sustainability and long-term value creation as it navigates geopolitical uncertainty, changing trade dynamics and a challenging global business environment.

Addressing shareholders at the company's 53rd Annual General Meeting (AGM), Kanwar said FY26 had been a year that tested businesses worldwide, but Apollo Tyres had continued to strengthen its financial performance while investing for future growth.

"The future is not something we inherit. It is something we create through the choices we make every day," Kanwar told shareholders, quoting Mahatma Gandhi's observation that "The future depends on what we do in the present."

Apollo Tyres reported consolidated revenue of INR 284.71 billion for FY26, crossing the INR 280 billion milestone, while operating profit rose to INR 41.43 billion. Kanwar said the company's focus extended beyond financial performance to improving capital efficiency, operational discipline and profitable growth.

"Every important decision we take is driven by one simple question: Are we building a stronger company for tomorrow?" he said.

Kanwar also highlighted the company's efforts to strengthen the Apollo Tyres brand through its association with the Indian national cricket team, describing the partnership as one that reflected Apollo Tyres' values of resilience, determination and excellence rather than merely serving as a branding exercise.

Sustainability remained central to the company's strategy, he said, noting that Apollo Tyres' greenhouse gas emission reduction targets had been validated by the Science Based Targets initiative (SBTi), reinforcing its commitment to achieving net-zero emissions by 2050.

The company continued to expand the use of renewable energy while improving responsible sourcing and resource efficiency across its operations, Kanwar said. "Sustainability is no longer a separate agenda for Apollo Tyres; it has become an integral part of how we innovate, manufacture and grow."

Kanwar credited employees for the company's performance, describing their commitment and adaptability as the foundation of Apollo Tyres' continued progress. He also acknowledged the support of governments and institutions across the markets where the company operates.

He singled out Hungary as a key manufacturing base in Europe, saying Apollo Tyres' plant at Gyöngyöshalász reflected the benefits of long-term collaboration with the Hungarian government.

Looking ahead, Kanwar expressed confidence in the company's growth prospects, citing India's expanding market opportunities and Apollo Tyres' international manufacturing and distribution footprint.

"Uncertainty will always be a part of business, but organisations that remain true to their values, continue to innovate and invest responsibly will be best placed to succeed," he said.

Thanking shareholders, customers, dealers, suppliers, financial institutions and government partners for their continued support, Kanwar said Apollo Tyres remained committed to building "a company that is stronger, more resilient and more responsible with every passing year."

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