ICRA expects the domestic tyre industry to grow by ~8% to Rs 493 billion supported by ~6% domestic volume growth even as falling raw material prices would pressure tyre companies to pass these benefits in the replacement segment.

While the decline in natural rubber and crude oil prices could provide the requisite headroom for passing on some benefits to the consumers, inflationary pressure on advertising, employees and some other consumables has increased significantly for several players in the industry over the past two years.

Subrata Ray, Sr. VP, Co-head, Corporate Sector ratings, ICRA said, "Industry wide revenues for ICRA sample set comprising of nine major players grew by 5.6% during 2013-14 while operating and net margin expansion was higher by ~100 bps at 13.8% and 6.5% respectively."

Tyre demand in 2013-14 is estimated to have grown by a muted 1%,largely aided by the two wheeler and tractor segments, even as demand from the LCV and PV segments faltered. This comes close on the heels of a 2% de-growth witnessed by the industry during 2012-13 due to contraction in the high volume two wheeler and tractor segments. ICRA expects demand for tyres to grow by 6%-8% during 2014-15, driven largely by Truck and Bus (T&B), PV and scooter segments.