Energy crisis deflates tyre industry
The country's sole tyre manufacturing plant has failed to cash in on the booming automotive industry due to energy shortage and under-invoicing by a section of importers.
Now the importers meet more than 80 percent demand for light commercial vehicle (LCV) tyre in Bangladesh.
Husain Tyre, which started production in 1996 with three-wheeler scooter tyres, now makes 13 types, including those for LCVs and microbuses. LCVs are generally minibus and light truck (3 tonnes).
“We start production at our plant at midnight due to inadequate pressure of gas in the day,” said Moazzem Husain, managing director of Husain Tyre.
The market has a huge demand for LCV tyre. Moreover, Bangladesh now produces a lot of rubber, the main raw material for tyre, he said.
“The industry can consume more three to four factories if there is adequate gas and electricity supply. Also, the local tyre industry has a potential to become an import substitute,” said Husain.
The plant now makes only 10-12 LCV tyres a day against its capacity of 28. It cannot supply against the demand. Bangladesh spends nearly Tk 1,000 crore to import up to 15 lakh tyres (all sizes) a year, according to the importers, distributors and sellers. Of the amount, one-third is spent for importing LCV tyres.
Nepal and Sri Lanka produce tyres to meet their domestic demand. But the Bangladeshi players are yet to pick up pace and compete with the giant rivals from India, China and Japan.
Bangladesh imports at least 60 percent of its tyre requirements from India, followed by China, Indonesia, Japan and Thailand, industry people said. The prices of tyres also quadrupled in the last decade, as the demand rose.
The sellers said the locally produced tyres cost less than the imported ones because of relatively cheaper rubber.
A Husain-brand tyre of 57-16 size (LCV) costs Tk 8,400 on the retail market, while the same size of the imported one costs Tk 10,800 (Birla) and Tk 9,300 (Apollo), and a China one between Tk 6,400 and Tk 7,000.
“Customers are satisfied with the services of Husain Tyre. It is like Indian tyre in terms of quality,” said Fayez Ahmed, a dealer of Husain Tyre. The company gives guarantee, which Ahmed said is an extra advantage.
“The problem is with the price that fluctuates frequently, and low supply.”
Mamunur Rahman, commercial manager of Husain Tyre, blamed the shortage of electricity and gas for a poor production and supply. It also causes fluctuation in the prices, he added.
Rahman said some traders import tyres by stating price less than actually paid, and concealing information.
The duty on the tractor tyres is 5 percent. “Some importers bring LCV tyres, stating that those will be used for tractors, and sell those at lower prices,” he added.
Husain Tyre was earlier a plant of the then West Pakistani entrepreneurs. After the liberation of Bangladesh, the government took over it and sold to Husain Group in an auction in 1991.
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