Apollo Tyres, India’s second-largest tyre manufacturer (by tonnage), will invest Rs 900 crore as capital expenditure this year, the bulk of it towards more than doubling the capacity at its new factory in Chennai, which is expected to come on stream later in the year.
Apollo’s capacity expansion comes on the heels of the French tyre giant, Michelin, finalising plans to pump Rs 11,000 crore, also in Tamil Nadu, to set up a radial tyres, tubes and ancillary products plant.
Of the Rs 900 crore earmarked for this financial year, the Chennai plant will see an investment of Rs 700 crore, while the balance will be used for off-the-road tyres (OTRs) and also for expanding production at the Baroda (Gujarat) plant.
The company had earlier set aside Rs 700 crore as capital expenditure, 90 per cent of which was planned for the new plant. However, the New Delhi-based company decided to increase the output of commercial vehicle tyres by more than two-fold to meet demand, which is expected to rise in the second half of the year.
The revised output will now be 3,000 truck and bus tyres per day as against 1,100 units decided earlier, with plans to increase it further in later stages. The plant will also produce passenger car tyres. Apollo’s commercial vehicle emphasis comes at a time when the truck and bus market in the medium and heavy segment has slumped by 30 per cent in the first four months of this financial year.