Apollo Invests 200 Million Euros in Hungary Car Tyre Plant
Apollo Tyres Ltd and Hungarian authorities have entered an agreement to build a passenger car radial tyre production plant with a first phase annual capacity of 7 million units. Phase one of the project is expected to be completed in 18 months time at a cost of 200 million euros. Hungarian Prime Minister, Ferenc Gyurcsany, and chairman & MD of Apollo, Onkar S Kanwar, met this morning, resulting in an “invitation” for Apollo to build the factory. The most likely site of the project is in Gyongyos outside Budapest city, Hungary.
The fact that Apollo describes the deal as an “invitation” and refers to the Hungarian Investment Agency as being “very helpful” suggests that public subsidies are involved. No details of this are currently available. However, when Hankook built its 500 million euro (£340 million) plant in Dunaujvaros, Hungary recently, it received approximately 20 per cent of the total investment in assistance. Roughly half of this was direct subsidy with the rest coming in the form of tax relief. An Apollo statement on the subject reports that the company has been evaluating various options for a European manufacturing hub to service the European and North American markets in a process that began about nine months back ago.
Commenting on the plans at a media briefing, Hungarian Prime Minister Ferenc Gyursacy said: “I am well aware of Apollo Tyres as a leading tyre manufacturer with a global expansion plan. We are very keen to have Apollo set up its first green field manufacturing unit, outside India, in Hungary. Apollo will bring to Hungary its world class manufacturing expertise, technology and people management skills.”
Onkar S Kanwar added: “So far, this is the largest investment made by any Indian company in Hungary. This manufacturing facility in Gyongyos, Hungary, will become our hub to service our passenger car radial customers in Europe and North America. This is a key investment in our global strategy. The Hungarian Prime Minister, the Investment Agency and all officials associated with this decision have been immensely helpful throughout our negotiations…Apollo Tyres is currently in a growth mode.”
According to Apollo, the European investment is designed to compliment Apollo Tyres’ planned investment in India. Yesterday, the Indian manufacturer’s board of directors approved 2.2 billion rupees for the construction of a world class greenfield radial facility in the recently acquired 135 acres of land in the Oragadam Industrial Park, outside Chennai city in Tamil Nadu. This investment is in the first phase of the project, which is also to be completed in the next 18 months.