Apollo Tyres to invest euro 500 mn in Eastern Europe

India's Apollo Tyres Ltd will invest euro 500 million (about 4,100 crore) on its proposed greenfield facility in Eastern Europe.

The facility, first for Apollo outside the country, will be commissioned in 2017-18, the company's Vice Chairman and Managing Director Neeraj Kanwar told reporters Tuesday night.

"Where exactly the plant was to come up had not yet been decided. We are still negotiating with Eastern European countries. This is the first time Apollo is looking at greenfield facility outside India," Kanwar said.

"The investment will be around 500 million euro," he added.

The plant will have per annum manufacturing capacity of 5.5 million units passenger car tyres and 6.75 lakh units heavy commercial vehicle tyres.

In India, Apollo has its largest facility in Limda in Gujarat, two plants in the rubber producing Kerala and the latest next generation plant is near Chennai in Tamil Nadu.

These 4 have a combined production capacity of 1,400 tonnes a day. In South Africa, the Durban plant accounts for 90 tonnes and the Enschede plant in the Netherlands adds another 195 tonnes a day, taking the current production capacity to around 1,685 tonnes a day.

The company will also be investing Rs 1,500 crore in its plant at Chennai, where the capacity would be enhanced from 6,000 units per day to 9,000 units.

In Kerala, where Apollo has two plants at nearby Kalamassery and Perambra, the company would be investing Rs 500 crore in the next 2-3 years, he said. Already a new product category Off Highway Tyres (OHT) has been introduced and are producing 30 tonnes in Kalamassery unit.

The Kalamassery unit, set up in the fifties, needs to be converted to produce new product category, he said, adding that discussions on wage and productivity issues were on with the labour unions.

Pointing out that Apollo was keen to invest in Kerala, Kanwar said the trade unions have to be with us. There are mindset issues. "We have to show them a larger picture. In principle they are willing." .

Kanwar said Apollo has set up operations in Thailand and has 22 employees catering South East Asia. Operations have also been started at Dubai, Australia and Brazil.

The company would focus on R&D, Brands, Marketing and Technology, he said.

Asked about inorganic growth plans for the company, he said there was nothing on the table right now.

On the Indian Tyre market, he said with the new government coming in there is lot of sentiment that is positive. "Right waves and right noises are being made" and the recovery is expected in the second half of this fiscal in the tyre industry.

On the Rubber crisis, Kanwar said the rubber prices having softened and are at level tyre companies can afford.

Company was reinvesting back as margins are 'healthier'.

About Chinese imports, Kanwar said there was an upsurge in that and almost 20 per cent of replacement tyre market is accounted by them.