Conti to expand, add radials to Indian tire plant

August 28, 2011

NEW DELHI, India — Continental A.G. plans to invest $71 million through 2013 in its newly acquired tire plant in Modipuram, India, to expand bias-ply truck tire capacity and add capacity for radial car and truck tires.

The projects, announced in India earlier today by Continental India Ltd., will double bias truck tire capacity to more than 1 million units annually and create 600 to 800 jobs.

The investment primarily will cover adding capacity for radial tires — 900,000 passenger and 230,000 truck/bus tires annually by the second half of 2013 — to the 37-year-old plant, Conti said.

Conti acquired the Modipuram plant, along with an inner tube plant in Partapur and access to 110 regional distribution centers, in July from India’s Modi Rubber Ltd. for approximately $25 million.

Citing rising demand in India for vehicles with “high-quality tires,” Nikolai Setzer, head of the Conti’s tire division, said Conti is “convinced that radialization will be the driving force in the Indian truck tire market” and investing in radial capacity “will prepare a solid base in order to meet that demand.”

Mr. Setzer did not comment on Conti’s annual revenue expectations for the Indian operations. Modi Tyre Co. Ltd. reported an estimated $78 million in sales in its last fiscal year.

While Conti expects to continue Modi’s strong focus on the replacement market through a network of about 1,400 truck tire dealers, it said it also will work to build its OE business with vehicle makers.

Citing Conti’s “legacy” as a leading tire maker in Europe, Continental India CEO Andreas Penkert said, “…we start this first direct initiative of the tire division here in India with full strength and dedication to make it a success—for our customers, for Continental and our employees and for the region.”

Conti reported more than $500 million in tire division sales in Asia in fiscal 2010, or 5.4 percent of global tire-related revenue, according to Conti records. It also operates tire plants in China and Malaysia.(PRA)

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