IFC to Invest in Apollo Greenfield Plant
The International Finance Corporation has agreed to partially finance Apollo Tyres’ new greenfield facility in Tamil Nadu, India. On April 22 the World Bank organisation stated that, pending the consent of its Board on May 26, it will furnish Apollo with a financial package of US$60 million. Phase 1 of the plant, located in Oragadam near Chennai, is nearing completion, and the commercial production of tyres there began in the first week of March 2010.
Total costs for the project are estimated to be US$515 million. This investment will not only enable Apollo to establish a greenfield passenger car and truck and bus radial plant; the funds will also be directed towards the expansion of the company’s facility in Vadodara, Gujarat. At this site Apollo has expanded passenger car radial production and established a production line for mining and other OTR tyres. In all, the project will increase Apollo Tyres’ manufacturing capacity from 27,500 tyres per day to 50,000 tyres per day, with the main increases being a threefold increase in passenger car radial capacity and a twelve-fold increase in truck and bus radial capacity.
The greenfield site in Oragadam covers 128.5 acres, of which 30.5 are built upon. Apollo expects passenger car production there to reach its full capacity of 8,000 tyres a day by July 2010 and truck and bus radial to arrive at its full capacity of 6,000 units a day by April 2011. The company’s OTR and passenger car tyre production lines at the Limda plant in Vadodara have been completed and commercial operation commenced.
According to the IFC, the greenfield project will result in the creation of about 1,500 skilled and semi-skilled direct, permanent jobs and an additional 2,000 jobs during the construction phase. The project will also result in establishment and development of new small and medium enterprises in the supply chain.
Apollo is investing in the implementation of a waste heat recovery project at its Vadodara plant on a joint venture/public partnership basis with the Gas Authority of India (GAIL). The IFC reports it is also considering investing in this project.