Apollo buys S African firm for Rs 290 cr

Apollo Tyres will gain access to two plants in South Africa and one unit in Zimbabwe.

Apollo Tyres announced the acquisition of the $200-million Dunlop Tyres International (Pty) Ltd for Rs 290 crore in an all-cash deal. Durban-based Dunlop Tyres, popularly known as Dunlop South Africa, also owns subsidiaries in Zimbabwe and the UK.

The deal would help Apollo emerge as the country's largest tyre company with a capacity of 900 tonnes ""nearly 100 tonnes more than current industry leader MRF, said the company's Chairman and Managing Director Onkar S Kanwar. Apollo has a capacity of 750 tonnes now.

In a parallel development, the Rs 2,225-crore Apollo Tyres elevated Neeraj RS Kanwar to the post of joint managing director from the position of chief operating officer.

Dunlop South Africa reported net sales of $200 million and net profit of $4 million for the year ended December 2005. As part of the acquisition, Apollo Tyres will gain access to two plants in South Africa of 75 tonnes each and one unit in Zimbabwe of 30 tonnes. The acquisition will be funded by a mixture of debt and internal accruals.

"This acquisition will strengthen the presence of Apollo Tyres in Europe and Africa. It will give us access to better technology. We will do our best to rationalise and synergise operations in India and Africa. Care will be taken to achieve better cost-efficiency," said Kanwar.

"Dunlop South Africa exports 23 per cent of its total production. Of the total exports, 60 per cent go to Europe. Apollo is planning to increase capacity utilisation in the African units by 30 per cent," said Sunam Sarkar, Apollo Tyre's chief of strategy and business operations.