Apollo Tyres to pump in Rs 3,000 cr for tyre capacity expansion
Apollo Tyres chairman Onkar Kanwar said domestic tyre manufacturers are facing 'big challenges' from cheap imports from China, which has now accounted for up to 35% of the market in India
Kochi: Apollo Tyres is investing about Rs 3,000 crore to double manufacturing capacity of its truck and bus radial tyres, according to its Chairman Onkar S Kanwar.
He further said that domestic tyre manufacturers are facing "big challenges" from cheap imports from China, which has now accounted for up to 35 percent of the market in India.
"The company is investing almost Rs 3,000 crore in doubling of capacity of truck and bus radial tyres," Kanwar told reporters late evening Monday, ahead of the Annual General Meeting of the company here.
He said the expansion of the company's Chennai facility to increase the truck-bus radial facility from 6,000 tyres per day to 12,000 tyres per day is underway.
Apollo Tyres is investing Rs 2,700 crore towards this expansion. The first phase of expansion is likely to be completed by October 2016, he added.
Commenting on the cheap imports from China, he said: "Today they have 30-35 percent of market share. They are taking that much share in the truck and bus radial tyres. This is really impacting the market. That is a big challenge. We have taken up with our government authorities. They are looking into it."
Kanwar noted that the countries like the US has imposed 35 percent import duty on Chinese tyres and all other avenues have been closed for them but "we have opened up our market" for them.
"Today we have competition from all the multi-nationals -- GoodYear, Bridgestone, Continental etc...So there is competition. You have to fight that competition but you cannot fight a competition which is not in market economy. Unfortunately, Chinese (are) not a market economy," Kanwar said.
He said Appollo Tyres have done "very well this year despite challenges".
"Last year our company had a turn over of Rs 11,700 crore...with a net profit of Rs 317 crore. This is despite challenges," he said.
Kanwar said the entry into the two-wheeler tyre space has made Appollo Tyres a full range player.
"The company's two-wheeler tyres have been well received by the customers and business partners. Seeing this demand, the company is increasing the number of outlets selling two-wheeler tyres from 2,000 currently, to 3,000 outlets very soon," he said.
He said the first tyres from Appollo Tyres' greenfield facility in Hungary is expected to roll out early next year.
"The capacity will then be gradually ramped up over the next few years. Once ready, this facility will have capacity to produce 5.5 million passenger car and light truck and 675,000 heavy commercial vehicle tyres," Kanwar said.
The facility will produce both Appollo and Vredestein brand of tyres and will complement Appollo Tyres' existing facility in the Netherlands, he added.
He said the acquisition of Reifencom GmbH, Germany based leading tyre distributor with both online and offline presence will help the company improve its mix of distribution channels in Germany and Europe.