The Onkar Singh Kanwar-controlled Apollo Tyres Group is close to acquiring a tyre company in China. It will be the first acquisition of a Chinese manufacturing company by an Indian concern.
"We have signed a memorandum of understanding with the Chinese company. We have been offered a 76 per cent stake," Kanwar, vice-chairman and managing director, Apollo Tyres Ltd, told Business Standard.
Arthur Andersen is doing a valuation of the company. Based on that, the Apollo Tyres Group will decide how much to pay the Chinese promoters of the company for the 76 per cent stake. The acquisition will be made by Apollo International Ltd, Kanwar says.
Kanwar is also planning to rope in Continental AG of Germany as the technology partner in the Chinese venture. Negotiations are likely to commence shortly. Continental has a technical collaboration with Apollo Tyres Ltd in India. Apart from Apollo, it has technical collaborations with two other tyre companies in India, JK Industries and Modi Rubber. Continental has a nominee on the Apollo Tyres' board of directors.
Apollo Tyres, with operations in Kerala and Gujarat, is one of the leading players in the commercial tyres segment in India. The company is planning a brownfield expansion of Rs 100 crore at its Gujarat unit.
According to Kanwar, the company is expected to achieve a turnover of over Rs 1,700 crore in 2001-02. Apollo Tyres has gained a significant marketshare in the commercial tyres segment during the past year. It was partly because of the fact that the Modi Rubber plant at Modipuram was shut for a large part of the year.
Some Indian companies like Ranbaxy have set up greenfield ventures in China.
JK Industries had tied up with a company in China to source tyres for exports to other countries under its JK Tyre brand.
