Continental eyes stake in Metro Tyres

Control of the company to remain with Indian promoters, says Rummy Chhabra, MD, Metro Tyres.

Continental AG of Germany plans to acquire a strategic stake in homespun two-wheeler tyre maker Metro Tyres in an attempt to cement its presence in the world's second largest two-wheeler market.

"We want to acquire a strategic stake in Metro. The proposal has been discussed by the Continental board of directors but a final decision has not been taken," Jorg Essiger, managing director (motorcycle tyres), Continental, told newspersons here yesterday.

On his part, Rummy Chhabra, managing director, Metro Tyres, said the company was willing to offer a strategic stake to Continental, though the control of the company would remain with the Indian promoters.

Both Essiger and Chhabra refused to disclose the stake that would be offered to Continental, though Essiger said it would be "of strategic value". Metro Tyres is a privately held company with an annual turnover of around Rs 300 crore.

Continental will also soon start sourcing motorcycle tyres from Metro Tyres in its effort to cut costs by substituting high-cost production in Europe with imports from countries like India.

This comes on the heels of Continental's decision to outsource its entire requirement of four-wheeler tyre tubes from Metro.