The Hindu Business Line : Continental mulls stake in Metro Tyres

GERMAN tyre maker Continental AG may soon begin talks with the Metro Group for taking an equity exposure in Metro Tyres Ltd, the flagship company of the Rs 300-crore Metro Group.

``We are not averse to picking an equity stake in Metro Tyres. If at all such a decision is made, it will be for a minority stake that would affirm our commitment to the partnership with Metro,'' Mr Jorg Essiger, Managing Director (motorcycle tyres), Continental AG, told Business Line here.

He also said that no proposal to this effect has yet been made to the board of Continental AG. ``I will discuss this issue with Mr Chhabra (Mr Rummy Chhabra, Group Managing Director of Metro Group) and see if a proposal can be made to the board,'' Mr Essiger said.

When asked about the possibility of Continental AG taking an equity exposure in Metro Tyres, Mr Chhabra said, "I am ready to offer equity to them. They will have to take a decision.''

Mr Essiger is visiting India to see whether tubeless two-wheeler tyres can be sourced from Metro Tyres and exported to European Union markets where such tyres are predominantly used.

Continental AG had in October 2002 announced its foray into the Indian two-wheeler tyre market through a tie-up with Metro Tyres. The agreement provided that Metro Tyres would manufacture and market the `Continental-Metro' brand of two-wheeler tyres in the country.

This agreement was in addition to another long-term offtake agreement inked by both the partners under which the German tyre major agreed to source the `Continental' brand of motorcycle and scooter tyres for its international markets.

``The first order of about 50,000 two-wheeler tyres (including some scooter tyres) are to be exported to Europe from India by the next month. We have been able to conform to the European homologation norms for motorcycle tyres,'' Mr Essiger said.

He also said that at least two more tyre-building machines are likely to be relocated from Germany to Metro's unit in Ludhiana in the coming months. Continental has already relocated three-such machines to the Indian facility of Metro Tyres.

Mr Essiger claimed that the two-wheeler tyres that are sourced by it from India are cheaper by 20 to 40 per cent to the ones that are made in Germany. ``The main factor is the low labour cost in India,'' he said.

More Stories on : Tyres | Mergers & Acquisitions

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Murugappa joins billionaire club — Turnover put at Rs 5,200 cr

Continental mulls stake in Metro Tyres

One producer, one movie, two versions — K Sera Sera to share profits with actors

Stocks rebound on opinion polls

Failure to provide adequate level of intellectual property protection — US puts India on priority watch list

IFCI offers VRS benefits to officers on contract, but workers protest