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Tyre makers look overseas

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Swaraj Baggonkar Mumbai
Last Updated : Feb 05 2013 | 1:51 AM IST
To avoid the the slowdown of the auto industry, all the leading Indian tyre makers including Apollo, JK Tyre, MRF and Ceat are looking beyond the country's boundaries to stay in the black.
 
Not only are the companies looking to set up overseas manufacturing plants but also are aggressively eyeing opportunities of a possible buy-out of well-established tyre producing firms.
 
Delhi-based Apollo tyres, the country's second largest tyre maker after MRF, is said to be pursuing an overseas acquisition, in a bid to enter the $2 billion (in revenues) club by the year 2010.
 
The acquisition will most probably take place in Europe, though the company has kept choices wide open for opportunities in the Americas.
 
"Margins are better in Europe with good product acceptability and confidence in technology," said Neeraj Kanwar, joint MD and COO, Apollo Tyres.
 
The company aims to become a significant player in the European region in the next 5-6 years as they have seen a considerable rise in demand for radials from the region. Currently, exports to Europe and south east Asia come from its facilities based in India and South Africa.
 
RPG group-controlled Ceat Tyres is in the process of setting up a new plant in India with an investment of Rs 500 crore, dedicated to serve the export market. "About 60-70 per cent of the produce from the plant will be shipped abroad," said Arnab Banerjee, VP (sales and marketing), Ceat Tyres.
 
The company expects to more than double its revenue from exports to Rs 1,000 crore in the next three years from about Rs 400 crore at present. "The focus will be to attain significant market share in South America, Europe and North America," adds Banerjee.
 
JK Tyre, the third largest tyre company in India, but the largest exporter has stepped up its expansion drive in India and plans to spend Rs 1,100 crore in the next three years. This will help the company pump up its total capacity to 12 million units a year from 9 million units currently.
 
"About 60 per cent of the total revenue is generated through exports, to further enhance it, the company will spend Rs 450 crore in the next 12 months for a new facility. We want to strengthen our position in Latin America, Southeast Asia and Africa," said A S Mehta, director-marketing, JK Tyre.
 
Chennai-based MRF Tyres will set up a greenfield facility in Tamil Nadu at a cost of Rs 900 crore, which would boost the export share substantially. This will be in addition to the six plants already operating in the country. The company has a presence in 75 countries world-wide.
 
The apex body of the tyre industry, the Automotive Tyre Manufacturer Association (Atma), expects the total tyre exports from India to cross Rs 3,500 crore by March 2008, a jump of 140 per cent from Rs 1,460 crore posted in March 2004. The industry has seen a growth of 25 per cent annually, during the last three years.
 
The total passenger vehicle sales for the first quarter grew by just 13 per cent, compared with an overall growth of 20 per cent in the last financial year.
 
Commercial vehicles grew by 3.80 per cent during the same period as against 33 per cent during the last fiscal.
 
The companies export truck and bus radials, passenger radials and two-wheeler tyres to regions like Europe, the Americas, south east Asia and Asia Pacific. Currently about 44 per cent of all exports constitute the truck and bus radials, followed by 20 per cent from passenger cars.

 
 

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First Published: Aug 12 2007 | 12:00 AM IST

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