Apollo Tyres to expand Chennai facility

Company hopes demand for radial tyres will increase

Apollo Tyres is planning to expand its capacity at its Chennai facility and in the process of setting up a R&D centre in the same complex. The new Centre will take up R&D works related to commercial vehicles for all the Apollo plants, across the World.

Speaking to Analysts recently, Gaurav Kumar, Group Head, Corporate Strategy and Finance said that the company is firming up project for the Indian operations.

"On an immediate basis in terms of expected growth in the Indian market for the current fiscal year, we have sufficient capacities; however, on a medium term basis we would be looking to expand the Chennai Plant," said Kumar.

The Chennai plant, currently manufacture radial tyres for truck and capacity of the plant is 6,000 trucks tyres and 16,000 passenger car tyres a day. Current capacity utilisation of the plant is around 70-75%. The facility caters to both domestic and export markets.

While Kumar declined to give any specific details on the expansion and an email sent to the spokesperson was not responded, sources said that depends on the demand the capacity can be expanded 50% further, based on the demand.

The development comes on the backdrop of company's expectation that in a few years' time it need higher capacity on truck radial for India and the other export market and secondly the continued conversion of the Kalamassery Plant into specialty tyres from the current product mix of truck and agricultural.

To a question on capex outlook for 2014-15, Kumar said, expected outflow would not be very high in 2014-2015 but there would be a certain amount of capex addition in 2015-2016 and that would be funded out of the Indian operations because it is being incurred there.

He added, company overall maintenance capex for all the three operations combined is about Rs 200 crore and can expect that to continue. From a Greenfield perspective very small capex in FY 2015 because bulk of the year would go in getting the environmental approvals, the various permits and licenses may be a few Million Euro.

"But in 2015-2016 if things go as per plan, we could be looking at a capital spend in the Greenfield of close to Euro 200 Million Euro. On the India side, I still need to get numbers once the project plans are finalised," said Kumar.

Apollo Tyres new R&D Centre in Chennai

The tyre major is in the process of setting up a new R&D Centre at its Chennai plant. The new centre will be dedicated for commercial vehicle, while R&D for passenger car done out of the Netherland facility.

"Currently the company got R&D centres in different parts, now it was decided to centralised at one place," said a source.

As per the plan, while the Netherland centre will cater to Apollo Tyres global passenger R&D, the Chennai facility will take up R&D activities relates to commercial vehicles, globally.

Speaking to Analysts recently, Gaurav Kumar, Group Head, Corporate Strategy and Finance said that the company continues to focus strongly on R&D particularly as it want to make a bigger impact and entry into the European market so both from the R&D centers in India on the commercial vehicle side and passenger vehicle in Netherlands it would continue to focus as the company go into new markets.