Not MRF, Not Apollo: This Tyre Company Is Winning the Profit Race

When you think of India’s tyre industry, names like MRF, Apollo, CEAT, and JK Tyres come to your mind. These are the giants that cater to millions of passenger vehicles, bikes, and trucks on Indian roads. But quietly outpacing them in profit margins is Balkrishna Industries (BKT), a company that doesn’t even cater to your everyday car or scooter. Instead, it focuses on off-highway tyres (OHTs), a niche that makes up just 8.7% of the tyre market but contributes disproportionately to profits.

So, how does BKT earn more from less? To understand that, let’s take a closer look at the Indian tyre industry.

An Overview of the Indian Tyre Industry

Industry Overview: The Indian tyre industry is valued at around ₹1,00,000 crore and plays a crucial role in supporting the country’s transport and automotive sectors.

Vehicle Segments: It caters to a wide range of vehicles, two-wheelers, passenger cars, trucks, buses, and off-highway equipment, with demand closely linked to vehicle sales and raw material costs.

Market Composition: Passenger vehicle tyres dominate the market with over 50% share, followed by two-wheelers (21%), trucks and buses (15–20%), and off-highway tyres (around 8.7%). The remainder includes tyres for tractors, trailers, and specialised vehicles.

Major Players: The Industry is dominated by five companies, MRF, Balkrishna Industries (BKT), Apollo Tyres, CEAT, and JK Tyre, which control more than 95% of the market. MRF leads with a 35% share, primarily in car, bike, and commercial vehicle tyres.

BKT’s Niche Advantage: BKT stands out for its exclusive focus on off-highway tyres used in agriculture, mining, and construction, which allows it to operate in a high-margin niche and earn superior profits.

The Making of a Tyre and Its Core Challenge

A modern tyre is an engineering marvel, composed of a precise blend of materials. The primary ingredients are natural rubber (41.6%) and crude oil-derived products (29.7%), which together form the bulk of the tyre. Steel cords provide structural strength (16%), with other chemicals and materials making up the rest.

This heavy reliance on commodities exposes the entire industry to a significant and persistent challenge: price volatility. The prices of natural rubber and crude oil can fluctuate dramatically, sometimes by as much as 30% within a few months. This isn't just a theoretical problem; it's a constant pressure on costs and profitability.

Rubber prices, both in India and globally, are highly volatile. For example, there were sharp price hikes in late 2020 and 2022, followed by steep declines. A major surge also occurred around September 2024, when domestic prices crossed ₹2,25,000 per tonne. Managing these unpredictable price movements is a constant challenge for tyre manufacturers.

The BKT Strategy: Why Their Margins are Higher

This is where Balkrishna Industries stands apart. While facing the same raw material volatility, BKT consistently reports higher profit margins than its larger competitors. The reason lies in its unique business model.

While MRF, CEAT, and Apollo focus on the high-volume, hyper-competitive passenger and commercial vehicle markets, BKT has carved out a leadership position in the off-highway tyre (OHT) segment. Instead of selling to individual consumers, BKT operates on a B2B (Business-to-Business) model, supplying specialised tyres for heavy machinery in agriculture, construction, and mining.

Furthermore, BKT is fundamentally an export-driven company. A remarkable 42.6% of its revenue comes from Europe and 18.2% from North America, with India only accounting for 11.2%. This global, niche focus allows for premium pricing, as the products are specialised and face less competition. It also benefits from currency fluctuations, as a weaker rupee boosts the value of its international earnings.

The financial data tells the story clearly. BKT’s net profit margin stands at an impressive 15.84%. This is more than double that of its closest competitors: MRF (6.64%), Apollo Tyres (4.76%), CEAT (3.73%), and JK Tyre & Industries (3.52%). BKT has turned a smaller market segment into a highly profitable enterprise.

The Next Turn: Electric Vehicle (EV) Tyres

The industry is now gearing up for its next major evolution: the rise of electric vehicles. The EV market in India is small but growing rapidly. In 2024, nearly 100,000 electric cars were sold out of approximately 4 million passenger vehicles, representing a market share of about 2.5%. This momentum is building, with the monthly EV share in new car sales rising to 4.1% by May 2025.

EV tyres may look the same, but they are engineered differently for several key reasons:

1. Heavier Weight: EVs are heavier due to their large battery packs, requiring tyres with a stronger, more robust construction to handle the load.
2. Instant Torque: Electric motors deliver power instantly, which increases stress and wear on the tyres. This necessitates the use of more durable rubber compounds.
3. Rolling Resistance: To maximise an EV's battery range, tyres must be designed for minimal rolling resistance.
4. Noise Reduction: Without a loud combustion engine, road and tyre noise becomes much more noticeable. EV tyres often incorporate noise-dampening technologies for a quieter ride.

Recognising this shift, major Indian players are actively investing in R&D. Companies like Apollo Tyres, MRF, CEAT, and JK Tyre have all launched or are developing specialised tyre ranges to cater to the unique demands of electric vehicles, ensuring they are not left behind in this crucial transition.

Conclusion: Picking the Right Lane

The Indian tyre industry is driven by volume, but profits come from strategy. Balkrishna Industries shows that being a specialist with a strong export focus can beat mass-market giants in returns. With rising EV penetration and volatile input costs, the next decade may favour companies that innovate early and carve out defensible niches, just like BKT has in the off-highway segment.