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Apollo Tyres will be investing $one billion (about Rs 5,545 crore) in the next five years to expand its global footprint, which will include setting up of two new plants in South East Asia and Eastern Europe.
The company will also be converting its Kalamassery plant in Kerala into a dedicated unit for the production of off-highway tyres (OHTs) with about 85 per cent of the output aimed at catering to export markets, including the US, Europe, Australia and Latin America.
Moreover, the company will also be hiking the production capacity of its factory in the Netherlands to 7.5 million units a year from the current 6 million units per annum.
“Over the next five years, we will be setting up two new greenfield plants, one either in Thailand or Indonesia and another in Eastern Europe in a phased manner,” Apollo Tyres’ Vice-Chairman and Managing Director Neeraj Kanwar told PTI.
On the overall investment for the next five years, he said: “All these projects put together, including our Kerala and the Netherlands units, we are looking at an investment of $one billion.”
Funding plans
Asked about the funding of the investments, he said it would be partly through the $150 million that the company plans to raise via placement to QIBs and internal accruals.
The tyre major will be focusing on setting up the plant in South East Asia and only after completion of the first phase of the project, the Eastern European plant will follow.
“The first phase of the South East Asia project will entail an investment of about $250-300 million. The initial capacity of the plant will be 16,000 units of passenger car radials (PCRs) per day and 1,500 units of truck and bus radials a day (TBRs),” Kanwar said.
The second phase will entail an investment of around $200 million and the proposed plant would have a full capacity of 24,000 units of PCRs per day and 3,000 units of TBRs a day.
“But, before we take up the second phase of the South East Asia project, we will start the greenfield plant in Eastern Europe. As of now, we have put our earlier plans to set up a plant in either Poland or Hungary on the backburner,” he said.
Kanwar said the company is yet to finalise whether the South East Asia plant will come up in Thailand or Indonesia as it is still under negotiations with both the governments.
“The plant in SE Asia will mainly cater to the entire ASEAN countries and China, while 20 per cent of the production will be exported to Europe and Latin America,” he added.
The proposed new plant in Eastern Europe will be for the production of PCRs with an envisaged capacity of 7 million units per annum entailing a total investment of around $350 million.
For the Kalamassery plant, which currently produces agricultural and industrial tyres, truck and bus tyres, Kanwar said Apollo Tyres will be investing about Rs 200 crore.
“We have taken a decision to convert this plant into a hub for the production of OHTs. Only 10-15 per cent of the production from here will cater to the Indian market and about 85 per cent will be exported.”
The company is looking at markets like the US, Europe, Australia and Latin America for the OHTs.
On the expansion of the factory of its Netherlands arm Vredestein Banden, Kanwar said: “This is currently at a project discussion stage, but it will take about 15 months once we start it. What we are looking at is to increase the production capacity to 7.5 million per annum from the current 6 million.”
The project will entail an investment of €50 million, he added.
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