Apollo Tyres to invest Rs 1,700 cr in Chennai plant

Euro 200 million to be spent on Hungary unit in 2016-17

Apollo Tyres will invest Rs 1,600-1,700 crore, a bulk of it in its Chennai facility, and 200 million euros in a greenfield facility in Hungary in 2016-17.

Gaurav Kumar, chief financial officer, Apollo Tyres, said the company had spent a quarter of the planned capital expenditure in the Hungarian plant, which would have a capacity of 5.5 million car and light truck tyres and 675,000 heavy truck tyres.

The Chennai plant’s capacity will be increased to 12,000 truck-bus radials and 16,000 car tyres a day in a couple of years. Apollo Tyres expects the Chennai capacity to start coming on stream from the last quarter of 2016.

The investment will be funded by internal accruals and borrowing. Apollo Tyres’ gross debt went up from Rs 690 crore to Rs 970 crore due to loans taken for the expansion of the Chennai plant.

“We expect to start commercial production at the Hungarian plant in the first quarter of 2017,” Kumar told analysts during an investors’ call. Till about June the company had spent euro 150 million  on the Hungarian project. The debt drawdown was euro 110 million. The company expects it will have spent close to euro 300 million on the project by March.

Apollo Tyres had in 2015-16 spent 90 million euros on the Hungarian plant and Rs 400 crore to enhance capacity at its Chennai unit. The company’s capacity utilisation in India has risen to 85 per cent and in Europe to 90 per cent.