Apollo Tyres adds truck radials in Andhra after strong revival in segment

Original plan was to make only cars tyres; firm also plans Rs 10 bn capex for maintenance of existing units and to complete Chennai expansion

Apollo Tyres is planning to produce commercial vehicle tyres at its upcoming facility at Andhra Pradesh, where it plans to invest around Rs 18-20 billion. Originally the company was planning to produce only car tyres, but it is now adding tyre bus radials (TBR).

The company said it has lined up around Rs 10 billion for the current fiscal as capex, towards regular maintenance of existing facilities and to complete the Chennai expansion. This doesn't include investments in Andhra Pradesh.

Gaurav Kumar, CFO, Apollo Tyres, said that Andhra Pradesh Greenfield would start production in the second half of fiscal 2020.

"We are on the drawing board right now. Given the strong revival in demand and the significant volume growth outlook in AP, we are considering both car and truck tyres," Kumar said, confirmin that the earlier plan was to consider only car tyres.

Apollo had set up a large facility at Oragadam near Chennai, where it produces nearly 8,000 tyres a day and plans increase that to 12,000 tyres. Apollo decided to go for a new greenfield in Andhra, following land constraints in Chennai.

Apollo earlier said it is looking at an initial car tyre capacity of about 16,000 units a day in Andhra Pradesh.

The truck radial capacity is being finalised, and would be based on demand ooutlook, Kumar said. Usually based on machinery configuration, manufacturing capacity is in multiples of 1,500 tyres per day.

At the Chennai facility there is no way that production can be expanded beyond the 12,000 units. Average run rate for fiscal 2018 would be somewhere in the region of 8,000 units, so there is enough scope for growth in terms of capacity utilisation in Chennai this year, Kumar said during an analyst call.

The Chennai plant has a capacity of 16,000 passenger car tyres and 10,000 TBR a day currently. The TBR capacity will go up to 12,000 a day in the next few months. Utilisation is upwards of 90 per cent.