Apollo Tyres to invest euro 500 mn in Eastern Europe

The facility, first for Apollo outside the country, will be commissioned in 2017-18

Apollo Tyres plans to invest Euros 500 million to construct a green field facility in Eastern Europe as part of its overseas expansion plans. The board of directors of the leading automotive tyre manufacturer had already cleared this investment  and the facility will be functional by 2017-18, according to Neeraj Kanwar, vice chairman and managing director, Apollo Tyres. Addressing a press conference here today he said that the new factory would mainly cater to the original equipment [OE] segment in Europe, which is becoming a critical market to the company. The company is yet to indentify the location of the project. Apollo already has an R&D facility for car and SUV segment in Europe.

Apart from this, on the Indian operations the company would invest roughly Rs 2,000 crore in next three years to further consolidate its market share. The local plan includes expansion of the green field facility in Chennai and Kalamassery plant in Kerala. Apollo plans to increase the production capacity of Chennai plant to 9,000 truck radials from the current 6,000. "Rs 1,500 crore investment is needed for this," Kanwar said. The company has transformed  Kalamassery plant for exclusively producing Off the Road [OTR] tyres and production is on. It now produces 30 tonnes of tyre on a daily basis from here. Kalamassery plant, which is one of the oldest tyre plants in India, will be fully revamped to cater to the overseas demand in OTR segment. Kanwar said that Rs 500 crore will be invested for the renovation and expansion.

Apollo has recently started operations in Thailand targeting the ASEAN market. It also started operations in UAE and Australia apart from Brazil. The company now exports to 100 plus companies from its plants in India, Europe and South Africa. He said that Europe, sub-Saharan Africa and America are the major markets as these areas contributes 38% of the consolidated revenue. The company had acquired Vredestein in the Netherlands in 2009 and in 2006 it acquired Dunlop Tyres International in South Africa. In 2013, the company had sold off the South African facility and the brand rights. Kanwar said that the advent of Chinese tyres was the major reason behind this sell off. In 2006 import of Chinese tyres to South Africa was just 5% of the total market size, but now this is 55%. In India 20%t of the replacement segment of cars is dominated by the Chinese companies.

Kanwar added that the company has a two-prong strategy for further advancement: a) investing in marketing and creating brand image and b) investing in R&D.