Apollo Tyres to invest Rs 400 cr in Kerala

Chennai facility achieves break-even ahead of schedule

Apollo Tyres Limited is planning to invest about Rs 400 crore at its Kerala facility to expand its off-highway tyres manufacturing capacity.

According to Satish Sharma, president - APMENA Region, Apollo Tyres, growing demand, especially in the global market, has pushed the company to go for expansion.

At present, the company’s Kalamassery plant in Kerala manufactures 30 tonnes of off-highway tyres and its capacity would be raised to 110 tonnes in the next 18-24 months, he said.

These tyres are used in specialised vehicles like loaders, golf vehicles, agriculture equipments and others. The company exported 60 SKUs to the European operations, he said.

On the company’s Chennai plant in which the company invested around Rs 2,300 crore, Sharma said, “We thought the break-even will be reached in seven years, but in three years the plant reached break-even level.” The plant, located at Oragadam, on the outskirts of Chennai, was inaugurated three years ago.

“The real challenge now is manufacturing, not sales. To address this issue, we are now planning to expand the capacity of the plant by around 30-35 per cent,” said Sharma. The overseas market contributed to around nine per cent last year for Apollo Tyres and the company expects to increase this to 14 per cent in 2014-15, said Sharma.

The official said in the last few months, the company witnessed around 40 per cent growth in overseas business. The company said it was open to inorganic growth, which would give both market access and manufacturing capacities.

“One of our major focuses is the Asean region and this is the market where the company needs a manufacturing base,” said Sharma.

“It is not only to avail duty benefits, but it is important for the company to be close to the market and to avoid high freight rates,” he said.

The company is looking at manufacturing facility in Thailand, Indonesia and Philippians. “It will take another two years to decide on the destination. The focus now is to make the eastern Europe facility up and running by 2016.” The facility is a greenfield project and the company is investing around ^500 million in this facility, over four years.