Apollo Tyres planning unit in Eastern Europe

Apollo Tyres is planning a facility in Eastern Europe to manufacture passenger car radials.

The company launched its Apollo branded tyres in the European market a few months ago and has been selling an average of 50,000 units of truck radials every month “entirely for the replacement market,” said Mr Onkar S. Kanwar, Chairman and Managing Director, Apollo Tyres Ltd.

Apollo, which already owns a facility in the Netherlands – Apollo Vredestein BV, is now on the look out for another facility – either through acquisition or a green field unit in Europe to meet the increasing demand for passenger car radials there.

“We are looking at geographies such as Eastern Europe as the labour cost is reasonably low and the factory can run for longer hours and seven days a week as in India,” he said.

Announcing this at a press conference here today, which was organised to coincide with the official launch of the company's Chennai facility, he said the company may also consider increasing its tyre prices in India as margins have been under severe pressure thanks to spiralling input costs.

He said the last nine months has seen 37 per cent inflation in input costs driven mainly by rubber prices. However, tyre prices have gone up by just 19 per cent. “This has mounted enormous pressure on the bottom line of the company. If the situation persists, we may have to consider a price hike, in small doses though,” said Mr Neeraj Kanwar, Vice-Chairman and Managing Director of the company.

Talking about the Chennai plant, he said the company expects to achieve its terminal capacity of 16,000 passenger car tyres and 6,000 commercial vehicle tyres a day by early 2012. The company recently invested an additional Rs 500 crore in the Chennai facility, taking the total investment to Rs 2,100 crore.

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