Project On JK Tyres
Project On JK Tyres
Project On JK Tyres
ON
REASEARCH ON L.C.V. REPLACEMENT TYRE MARKET
IN
J.K. TYRE & IND. LTD.
Submitted in partial fulfillment of requirement of Bachelor of
Business Administration (B.B.A) General
Submitted to:
Submitted by:
Himanshu
Assistant Professor
00514101712
ACKNOWLEDGMENT
CERTIFICATE OF COMPLETION
TABLE OF CONTENTS
TOPICS
PAGE NO.
1. Introduction
2. Company Profile
13
3. Research Methodology
24
29
5. S.W.O.T
43
46
7. Bibliography
57
8. QUESTIONNAIRE
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INTRODUCTION
This project has been made to study the market share of JK Tyre in the
Lower Commercial Vehicle (LCV) segment. It also involved the study of LCV
Tyre market to analyze JKs performance vis--vis the competition.
My attempt is aimed to analyze the LCV replacement tyre market of JK
Tyres and to study & analyze the LCV sector.
In this report, I have carried out a brief analysis of tyre industry in L.C.V.
segment, discussing the current market trends and business profile. I
have also highlighted the opportunities and potential of this particular
sector along with the future growth perspectives.
The industry is definitely set to grow, but the huge competition, huge buyer
power, pricing inflexibility and cost pressures prove as detriments. Tyre
companies are operating at very thin margins and their return ratios are also
not attractive. One can look at tyre stocks but only from a trading perspective.
Both, OEM and Replacement demand would drive growth, with exports also
adding-in. The growing economy and the infrastructure sectors provide the
much-needed impetus. However, tyre companies face immense competition,
together with price and cost pressure
By adopting various calculation and analysis and then making interpretation
with the solution of specific problem I put my efforts on giving appropriate
suggestions to the company.
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Background
The origin of the Indian Tyre Industry dates back to 1926 when Dunlop
Rubber Limited set up the first tyre company in West Bengal. MRF followed
suit in 1946. Since then, the Indian tyre industry has grown rapidly.
Transportation industry and tyre industry go hand in hand as the two are
interdependent. Transportation industry has experienced 10% growth rate
year after year with an absolute level of 870 billion ton freight. With an
extensive road network of 3.2 million km, road accounts for over 85% of all
freight movement in India.
Market Characteristics:
Demand
The demand for tyres can be classified in terms of:
Type: Bus and Truck; Scooter; Motorcycle; Passenger Car; Tractor
Market: OEM; Replacement; Export
Threat of
Substitutes: Low
but Increasing
During the FY2002,
over 1,10,000
passenger car tyres
were imported. This
constitutes over 2%
of total radial
passenger car tyre
production in the
country.
Bargaining Power of
the Suppliers: High
The tyre industry
consumes nearly 50%
of the natural rubber
produced in the
country. The price of
natural rubber is
controlled by Rubber
Control Board and the
domestic prices of
natural rubber have
registered a significant
increase in recent
times.
Tyres by Type
The Indian tyre industry produces the complete range of tyres required by the
Indian automotive industry, except for aero tyres and some specialised tyres.
Domestic manufacturers produce tyres for trucks, buses, passenger cars,
jeeps, light trucks, tractors (front, rear and trailer), animal drawn vehicles,
scooters, motorcycles, mopeds, bicycles and off-the-road vehicles and
special defence vehicles.
The scenario in India stands in sharp contrast to that in the world tyre market,
where car tyres (including light trucks) have the major share (88%) by volume
followed by truck tyres (12%). In India, however, passenger car tyres have a
mere 17% share of the overall tyre market (as of FY2003).
Compiled by INGRES
Given the regular use and heavy wear and tear of truck and bus tyres, the
demand from the replacement market in this segment worked out to 68% of
the total demand for truck and bus tyres in FY2003; the OEM demand
accounted for around 9% the same year. With the Indian manufacturers of
cross-ply tyres focusing on the export market, this segment accounts for
around 22% of the demand for truck and bus tyres.
Motorcycle Tyres
Motorcycles accounted for 76% of two-wheelers sold in the domestic market
in FY2003. Motorcycle tyres constitute the largest segment of the domestic
tyre industry (29% of total tyre demand in FY2003). The replacement market
accounted for around 49.8% of the total motorcycle tyres sold in FY 2003,
while OEM demand accounted for around 50%.
Scooter Tyres
Scooters were the dominant segment in the Indian two-wheeler industry till
FY1998, accounting for around 42% of domestic two-wheeler sales.
However, the introduction of new motorcycle models has seen the share of
scooters declining to 19% of domestic two-wheeler sales in FY2003. The
OEM segment accounted for around 34% of the total sales in the scooter tyre
segment in FY2003, with the rest being accounted for by the replacement
market.
Replacement Market
The replacement market, including State transport undertakings and
Government buying, accounted for around 59% of the total tyre demand in
FY2003. The demand in the replacement market depends on the vehicle
population, the level of economic activity, life of the products transported,
kilometreage per vehicle, the price of the tyres and the quality of the existing
road infrastructure. Additionally, the replacement market, which offers better
margins, is extremely competitive. The replacement market is dominated by
the truck and buses segment, which accounted for 22% of all tyre sales in the
replacement market in FY2003.The large size of the replacement in turn is
determined by the interplay of various factors as discussed below:
The replacement demand may be lower because of longer replacement
intervals and lower business mileage if the economic activity slows down.
Replacement demand in India is higher because of a low vehicle
scrappage rate.
Poor road conditions by lowering the life of tyres, have a positive impact
on replacement demand.
Stricter enforcement of the MV Act, which seeks to prevent overloading of
vehicles, will result in an increase in the life of tyres and thus impact
replacement demand negatively.
Applying a new tread or "re-treading" can extend the life of the tyre at a
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Exports
In the light of the prevailing domestic market situation, most of the tyre
manufacturers have taken to exports to reduce inventory build-ups. In
FY2003, Indian tyre exports stood at Rs. 10.8 billion (10% of the total
industry) in value terms and 3.1 million in unit terms (6.5% of total
production). Indian companies have currently entered into sourcing
agreements (for tyres) with neighbouring countries. For instance, Ceat and J
K Tyres have sourcing agreements with tyre producers in Sri Lanka and
China. This is likely to have a positive impact on tyre exports from India.
Market Players
Some of the major players in the Indian tyre industry are MRF, Ceat, JK
Industries, Apollo Tyres, Bridgestone India, Goodyear India, Falcon Tyres
and TVS Srichakra. The tyre industry in India is fairly concentrated, with the
sample of eight companies (as in the text) accounting for 82% of production
in FY2002. Besides, not all companies have a diversified product portfolio.
13
INTRODUCTION
TO THE COMPANY
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(near Gwalior) and two at Mysore. To create its mark on the global highways,
the company forged a technical partnership with Continental AG of Germany,
the fourth largest tyre maker in the world. To keep pace with the market
demand as well as technological leadership in Indian market JK Tyre took
over ailing Vikrant Tyres in 1997 and turned it around in ten months. The
takeover brought the company to the forefront of the bus and truck segment,
giving it the largest presence with a 25.3% share.
J.K. Industries and Vikrant Tyres Limited are the only tyre companies in India
to have received all three ISO 9001, QS 9000 and ISO 14001 certificates.
This indeed is a true reflection of their commitment to stringent quality.
Also, JK Tyre is the largest exported tyre brand from India. It was awarded
the CAPEXIL's Highest Export Award for 1997-97 by FIEO. It enjoys
preferred premium brand status in Truck Bias market in USA and across
many markets in Africa, Middle East and South East Asia.
Aquasonic.
First manufacturer to introduce India's first range of eco-friendly
coloured tyres.
JK Tyre is the preferred OEM supplier to Indias leading automobile
manufacturers like Maruti Udyog Ltd., Telco, Mahindra & Mahindra,
Hindustan Motors, Ashok Leyland, Swaraj Mazda, Eicher, Escorts, Bajaj
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Tempo, L & T, John Deere and New Holland, thus showcasing the high levels
of quality associated with its products and services.
JK Tyre has taken the lead in redefining tyre retailing in India. It has set up
more than 100 exclusive One Stop Tyre Sales and Service Center - J K
Steel Wheels.
It is also credited with the launch of Indias first and unique Dial-a-Tyre
service wherein the customers can get tyres delivered and fitted at their
doorsteps.
J JKs offering under passenger car segment (radial tyre) consists of ULTIMA,
ULTIMA XPS, ULTIMA-XS, ULTIMA-XP, ULTIMA ROYALE, ULTIMA 210S,
TORNADO, BRUTE, BRUTE 4X4, RALLY.
Car Bias consists of CAPTAIN, JET DRIVE, JET DRIVE XS, and JET DRIVE
DX.
JK Tyres are also available for the entire range (various models and variants)
of automobile manufactured by the followning manufacturers namely: Maruti,
Daewoo, Fiat, Premier Padmini, Ford, Hindustan Motors, Mitsubishi, Honda
Motors, Opel, Hyundai Motors, Skoda Auto, Toyota Motors, Mahindra &
Mahindra and Tata Motors in India under passenger car segment.
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COMPETITORS
Apollo
Apollo is the 18th largest manufacturer of tyres in the world. The company,
was incorporated in 1972, manufacturer automotive tyres, tubes and flaps.
The unconditional warranty policy, which covers everything from small cuts to
blowouts, is the best among all tyre manufacturers and makes Apollos a
good-value-for-money buy. It has plants in Limda (Gujarat), Ranjangaon
(Maharashtra), Perambra (Kerala) and Kalamassery (Kerala). Apollo Tyres
has a history of lockouts, due to labour unrest. Since 1996, the company has
had 5 lockouts at various plants in the country.
Bridgestone
Bridgestone Tyre (India) is the subsidiary of Bridgestone Corporation, Japan.
Its offerings include brands like S248 (for 80 aspect ratio) and S322 (for 70
and 65 aspect ratios). The Bridgestone B350s using DONUT technology are
higher performance tyres, though not high speed ones, and are best for
extensive driving over variable road conditions without compromising on
speed. The warranty covers five years against only manufacturing defects and Bridgestone is quite strict about enforcing it. It has a plant in Dhar
(Madhya Pradesh).
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Ceat
Ceat Limited is the flagship company of the R.P Goenka (RPG) group. The
company manufactures automotive tyres, tubes and flaps. The company is
the 20th largest manufacturer of tyres in the world. The company has a
technical tie-up with Yokohama Rubber Company, Japan for manufacturing
car radial.
It has plants in Mumbai and Nasik (Maharashtra).
Goodyear
Goodyear India Limited (GIL) is a 74 per cent subsidiary of $ 13.5 billion
Goodyear Rubber and Tire Company, US. The company manufactures
automotive tyres, tubes, flaps, transmission belts and industrial V belts. The
GPS2 is known to be one of the better tyres in its class as it is particularly
quiet and offers a soft ride. However, it is sensitive to mechanical
irregularities, which can cause them to wear out fast. These tyres are again
only available in the 'S' speed rating.
The GT770+ is a 'T' speed-rated tyre and is longer lasting than the GPS2.
Goodyear also boasts of a large range of tubeless tyres and in fact has been
at the forefront of promoting the tubeless concept in India. It has a plant in
Ballabgarh (Haryana).
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MRF
The Company is one of the leading players in various tyre categories
including truck and bus, light truck, passenger car, jeep, tractor front, ADV
and scooter tyres. The company has a highest share in the replacement
segment, due to the perceived brand image and quality of tyres
manufactured by the company. The range essentially consists of the Zigma
CC, ZVT and ZVTS in nylon casing with an 'S' speed rating. The problem
though is the nylon casing which over time tends to lose its shape leading to
a wobble that in turn sometimes result in belt distortion. It has plants in Ponda
(Goa), Kottayam (Kerala), Arkonam (Tamil Nadu), Chennai (Tamil Nadu),
Medak (Andhra Pradesh) & Pondicherry.
Michelin
Michelin has surveyed the Indian markets and road conditions well to come
up with tyres meant for India. The Certis, which is the premier range, covers
vehicles from the Hyundai Santro to Toyota Qualis. The pattern is a unique
asymmetric design, which is basically meant to counter the forced camber
angle between the road and the vehicle. And it comes with a very safe 'H'
rating. Michelin plans to launch truck and bus radial tyres in India.
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vehicles are not allowed to move within city so demand for light commercial
vehicle is increasing at phenomenal rate. There are several companies
manufacturing LC, they are:
1.
2.
3.
4.
5.
6.
TATA MOTORS
EICHER MOTORS
SWARAJ MAZDA
HINDUSTAN MOTORS
MAHINDRA AND MAHINDRA
ASHOK LEYLAND
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Research Methodology
Research Objective
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RESEARCH METHODOLOGY
26
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Outlook
On the positive side, it is estimated that there would be a volume
growth of 12-14% in 2008-09. The performance of the tyre industry is
linked to the automobile and infrastructure sectors, the growth of which
is dependent on the performance of the economy. The current
estimated economic growth is over 8%. The continuous thrust being
placed by the Government on the development of infrastructure,
particularly roads, agriculture and manufacturing sectors, would lead to
an impressive acceleration in the automobile/ tyre sector, generating
more demand for tyres. However, tyre companies face immense
competition together with price and cost pressures
29
30
SAMPLE SIZE: 35
31
SAMPLE SIZE: 40
SAMPLE SIZE: 45
32
SAMPLE SIZE: 35
The responses to the above questions showed that:
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34
35
In the Delhi region it was found that the Tata model 407 has a major
presence in the L.C.V segments in all stands. Tata 709 is at second
position in Delhi region. In case of Eicher it was observed that all the
Eicher models are equally popular.
In Naraina, it was seen that Tata model 407 and 709 are more
popular. Eicher models 10.75 and 10.90/ 10.95 are also popular.
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In Okhla, Tata model 407 has major market share in LCV followed by
Tata 709 and Tata 410. Eicher models 10.50, 10.75 and 10.90/10.95
are popular too.
In Paharganj, it was seen that Tata model 407 is the most popular
model followed by Tata 709 and Tata 410. Eicher models 10.50 &
10.75 are popular too.
In Kamla Market, Tata 407 is more popular followed by Tata 709 and
Eicher models 10.59 and 10.75.
The type of goods carried by these LCVs can be anything from household
furniture, to office furniture, to factory raw material, to food grains,
construction material, garments, electronic appliances, perishable goods,
cement, general merchandise items.
In Kamla Market, payload for Tata 407 is around 3 tonnes and for
Eicher is 5 to 6 tonnes. They mostly deal in carrying inter city
loadings.
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Naraina
Okhla
Kamla Market
Paharganj
Udyog Vihar
Mini Truck Union
39
MRF is the runner up with 28%. Features that the respondents rated in
the favour of Apollo are :
1. Better loading capacity
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2. Better Mileage
3. Warranty
4. No beading problem
5. Better cut growth resistance
6. High road contact area, enhancing road grip
7. Better casing and easy retredability
JK Tyres is third with 16%. Features that the respondents rated in the
favour of JK Tyres are:
1. Better Mileage
2. Less bead failure
3. Better cut growth resistance
4. Reduced Thermal Failure ( heat developed during over load
application)
CEAT is fourth with 16%, features that the respondents rated in the
favor of CEAT are:
1. Warranty
2. Easy Claim
3. Uniform wearing
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After how many months/ years you replace your tyres (Average).
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S.W.O.T.
STRENGTHS:
Established brand names (key in replacement market).
Extensive distribution networks- For example, Apollo Tyres has 118
district offices, 12 distribution centers and 4,250 dealers.
WEAKNESS:
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OPPORTUNITIES:
THREATS:
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CONCLSUION &
RECOMMENDATIONS
PROBLEM ANALYSIS
The structured questionnaires for the LCV users include problems that the
end users are facing with the quality, service or any other problem with the
J.K. Brand. It is from this form of primary data that a few common problems
were projected which are acting as hindrances in JKs path of being the
number one tyre manufacture in the LCV segment.
A general analysis of these problems from the mouth of the end users
pointed mainly towards improvement in the quality of the tyre.
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Some of the common problems from the light commercial vehicle owners
end were:
QUALITY RELATED
Tyre spreading
Tyre wearing away/ low tyre durability
Tyre taking air/ tyre swelling
The rubber of the crown being weaker as compared to the other brands
Tyre getting heated
The rubber of the tyre GOTI (as commonly known by the LCV drivers)
becoming uneven
More mileage and trouble free service required.
CLAIM SERVICE
A lot of customers have reported that the claim availing process of JK Tyre is
not only complicated but also a very lengthy process. First, the consumer has
to go to the dealer to report their complaint which involves a lot of dealers
hesitation to pass the claim then even if the dealer forwards it to the
company, again the company experts check the tyre. If the tyre expert of the
company once gets satisfied he passes the claim for a replacement of tyre.
The whole process involves a lot of time and running around. The consumers
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would prefer the company being a bit more consumer friendly thus following a
shorter channel for this process.
PROMOTIONS
While I was in the market carrying out my survey at various LCV stands I was
informed by many vehicle owners that there was the lack of promotion of JK
Tyre in the LCV segment, While MRF and Ceat is actively involved in
promotion at various stand, they visits stands and give gifts to LCV using
their brand tyres. With strong competition emerging from not only the bigger
players, like MRF, Apollo and Ceat but also from the local brands; the need of
the hour demands for an aggressive promotion for the brand at the level of
the end users and the dealers.
The main purchasing force of the tyres in this segment in the dealers
persuasion to purchase a particular brand of tyre and the second force may
be the brand name, the goodwill that exists for a brand in a particular area or
stand. Hence, word of mouth promotion of a brand among the light
commercial vehicle owners and drivers plays an important role in building an
image in the mind of potential customer. There is lack of consumer contact
Loyalty Point scheme. An initiative started by JK tyres to increase its market
share.
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AVAILABILITY
In cement siding, Gurgaon, Paharganj, Okhla, area there is availability
problem so consumers are buying other brands. Dealer in these stands are
more aggressively promoting other brands compared with JK tyres.
RECOMMENDATIONS:
PROMOTIONS:
There is an urgent of aggressive promotion for the range of JK Tyre in the
LCV segment at the consumers as well as at the dealers end.
Setting Promotional camp at various LCV stands in Delhi region making
them aware with product range and their quality. Public relations and
word of mouth marketing play a growing role within marketing mix to
build and maintain brand.
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Most of the problems that were projected, as per the primary data
collected from the end users, revealed issues relating to the quality of the
tyres. The end users when asked about the problems that they are facing
with JK Tyres, as their instant reply would be , tyre is not durable, tyre
takes air, tyre spreads after using for a short span of time, time rubber is
weak, rubber of the tyre becomes uneven, etc. Not only the tyre expert but
also the sales officer understands that most of the times it is not the fault
of the tyre but a genuine fault with the machine, the vehicle. This is what
the company people understand not the end user. They simply recognize
this as a flaw with the JK brand of tyres. Well this is not the right most of
the times, but this cannot be conveyed to the consumers by just saying it
to them. They wont buy your talk; you got to prove it to them.
These camps can be used to educate the end users regarding such issues
relating to the vehicle. They should be educated that if the tyre is wearing
away from one side it is owing to bad alignment of the vehicle and not a
flaw with the tyre. They should be informed about tyre rotation. Why is it
necessary for long lasting of the tyre and other such issues and ways in
which they can not only increase the life of the tyre but also the vehicles
life. These camps could provide free alignment free servicing and other
such customer care services. This will help JK Tyre in enhancing the brand
equity and sales of JK brands.
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LCV owners least follow motor sport and follow more cricket, so it will be
better way to further strengthen JK brand among them.
SPECIAL SCHEME
JK has started consumer Loyalty point Scheme and Warranty scheme,
it started way back on December, 2005. But all the LCV owners in Delhi
region are not aware with the scheme so via dealers and sales &
marketing department more stress is needed to be given to make
customer aware of schemes launched by JK tyres to further increase its
customer base.
Effective merchandising accelerates the buying process as it serves as
an on the spot reminder to the consumer to buy, so JK tyres should
concentrate more on Dealers for promotion of JK Tyres.
Taping Fleet owners like Coca-Cola Company, Pepsi, Bisleri, Mother
Dairy and Logistic companies like DHL, Blue Dart, FedEx, Gati,
Blazeflash etc. to buy JK Tyres.
all times happy if the company wants to survive in that area. The
dealers problem should be handled most instantly. They should be kept
attracted towards some incentives or the other in the form of monetary
or otherwise. The company should lend a listening ear towards their
accounting related problems and instant steps should be taken to
rectify such problems. Dealers profitability and margins, this is where
everything boils down to, should always be kept in mind at tall times
with respect to all brands of JK or else there are many other
competitors in the market in this industry. Losing one dealer means
losing manifold customers.
MEETINGS
The company should organize meetings and get together for the dealers and
the end consumers to understand the market scenario, problems and issues
relating to the brand and the market strategies (for the dealers).
PRICING
As per the primary data, questionnaires from the end consumers, I fell that
the pricing strategy of JK Tyres is perfectly fine, it need no major change.
MRF tyre in the LCV segment are the highest priced tyres as compared to its
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major competitors, still it sells. Here, we see that MRF is playing the game on
the pricing strategy keeping Indian consumers way of thinking in mind backed
with its brand equity.
This price war may be won by a promotional strategy wherein through
adequate promotional activities and camps the consumer is educated about
JK Tyres product superioty in terms of design and technological
advancement as compared to MRF along with the advantage that JK Tyre
offers to its customers as compared to MRF like for example JK Tyres having
a better cut resistance in its tyres. Furthermore, the consumers and the
dealers should be educated about the cost per kilometer benefit from JK Tyre
as compared to MRFs wrong perception of being the number one. The
consumer should be made to realize that Is the price he is paying for a tyre
is it feasible in ratio to the number of kilometers it runs. All this has to go in
the minds of the consumers or at least an attempt could be made in this
aspect and it can be done with the most adequate sensitive promotional
strategy.
MARKET AWARENESS
It is always advisable to be more alert once a company becomes a market
leader, because it is always the leader who is being attacked by the
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BIBLIOGRAPHY
REFERENCES
1. "BSE Plus". Bseindia.com. Retrieved 3 October 2013.
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QUESTIONNAIRE
Name:
Address:
Contact Information:
Email Address:
More Than 15
J.K. Tyre
Apollo
Goodyear
Ceat
Michelin
Bridgestone
MRF
Price/Schemes
After Sale Services/Claims
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