Apollo Tyres initiates business rescue proceedings in S Africa

Apollo Tyres is undertaking an exercise to 'rescue' operations of its South African arm in the wake of uncompetitive cost structure, continuous labour unrest and related issues.

The company has roped in a specialist to re-structure its operations there.

"Apollo Tyres Africa (Pty) Ltd has voluntarily initiated the Business Rescue proceedings, and has appointed a specialist to re-structure its operations and to secure the best value for all stakeholders," a company spokesperson said in a statement.

The evaluation by the independent Business Rescue Practitioner will decide the future course of action for the company in South Africa, the statement added.

"This move by the company, has been prompted by the uncompetitive cost structure in the South African market, along with the continuous labour unrest and related issues," the statement said.

Apollo Tyres had entered South Africa in 2006 with the acquisition of Dunlop Tires International for Rs 290 crore in an all-cash deal. However, it hasn't been able to make the best out of the business there.

In December last year, the company closed transaction to sell its South African business along with a passenger car tyre plant to Sumitomo Rubber Industries in a deal valued at $60 million.

The sale included Apollo Tyres South Africa (ATSA), including the Ladysmith passenger car tyre plant, and the Dunlop brand rights that Apollo had in 32 countries of Africa.

Apollo retained the Durban plant which manufactures Truck & Bus Radial (TBR) tyres and Off Highway tyres (OHT) used in the mining and construction industries.

Post the transaction, Apollo Tyres continued to sell Apollo, Vredestein and Regal branded tyres in Africa, and focused on creating and strengthening its sales and distribution network across the continent.