Apollo Tyres is planning to invest around Rs 1,500 crore to expand its truck-bus radial (TBR) tyres capacity at its plant here to 9,000 units a day.
Satish Sharma, president – APMENA (Asia-Pacific, Middle East and North Africa) region at Apollo Tyres, said the company would increase its TBR capacity to 9,000 units a day from 6,000 units a day at present. Sharma was here to inaugurate play structures created by Apollo using end-of-life tyres in two schools in a village near Sriperumbudur.
“We have reached a stage where capacity is going to be a concern, since capacity utilisation would reach 100 % by June. To cater to future demand, it was decided to expand the capacity,” said Sharma.
The plant manufactures 16,000 passengers car tyres in a month and capacity utilisation is around 80 %. So far, the plant attracted investment to the tune of Rs 2,100 crore. The Chennai facility, along with the Baroda plant, exports around 100,000 tyres in a month. The company also exports BTR at about 15,000 units a month.
The company is also investing Rs 400-500 crore to expand its off-highway tyres manufacturing capacity in Kerala. At present, the Kalamassery plant in Kerala manufactures 30 tonnes of off-highway tyres; this will be raised to 110 tonnes over the next 18-24 months. The investment will be spread over for the next five years in three phases. During the first phase, which was completed recently, the company invested Rs 50 crore.
Commenting on the company’s performance, Sharma said there is pressure on revenues at the industry level, while margins are good. He said the import of Chinese tyres grew 60 % year-on-year, putting pressure on the sector. Chinese tyres are 30-35 % cheaper than Indian ones.
“The industry has taken up the issue with the government, since it is not only affecting the manufacturers, but also customers since quality is a concern. We are yet to see any concrete response from the government,” said Sharma. Chinese imports contribute 20-22 % of the replacement market now.
Overseas Strategy
Apollo Tyres’ vision is to be a significant player in the global tyre industry. Currently, 11 % of revenue in Indian operations comes from exports. In 2015-16, the company set a target to increase it to 15 %.
According to Sharma, while the overall export of tyres did not expand, Apollo Tyres grew 20 % thanks to focus strategy, expansion of markets and increase in product portfolio.
The company has set up legal entities, mainly for sales, in Bangkok for Association of Southeast Asian Nations, or Asean, markets; in Dubai for West Asia and north, east and west Africa; South African for south African markets. India caters to all South Asian Association for Regional Cooperation, or SAARC, countries.
Apollo Tyres is now gearing up to set up a legal entity in Malaysia. The company’s strategy is to first prepare a distribution footprint and seed the market ahead of manufacturing.
Like the European Union, within the Asean countries there is zero duty to utilise the opportunity, Sharma said. – Business Standard