Apollo signs lease on Laos rubber plantation
To secure its own supply of natural rubber, Apollo Tyres has leased approximately 10,000 hectares of land in the Southeast Asian country of Laos. Company chairman and managing director Onkar S Kanwar announced at Apollo Tyres’ Annual General Meeting on August 11 that the tyre maker has “actively entered the area of rubber plantations to try and secure future supplies.” Kanwar later noted that the yield from this rubber plantation would be ready for tapping in within two to seven years and that within five years Apollo plans to meet 25 per cent of its total natural rubber requirements from leased plantations. Reaching this level of self-sufficiency is viewed as a form of insurance – Kanwar opined that a crisis situation currently exists in India in regards to increasing raw material prices and natural rubber shortages.
“I do not wish to be an alarmist, but as I look ahead, as a tyre manufacturer, I am worried by the natural rubber situation that faces us today,” Kanwar stated. “The past year has been ruled by rising prices and a shortage in supply. Prices hit as high as $6,768 a tonne in February this year. Experts predict that this tightness is likely to last till the year 2018. As you are aware, a large number of today’s productive plantations had come up in the 1980s. Most of these will require massive uprooting and replanting between 2012 and 2018.
“Combined with this is the spectre of dramatic climate change, where the past few years have seen unprecedented rains and even flooding in the two largest natural rubber producing countries of Thailand and Indonesia,” Kanwar continued. “As a result, experts believe that the gap between the growing demand for natural rubber and dwindling supplies is going to increase to alarming proportions of one million tonnes by the year 2020.”
The chairman and managing director also outlined plans to invest Rs 5 billion (£67.7 million) in its domestic and international operations during the current financial year. Of this, six million euros will be invested in the Apollo Vredestein operation in the Netherlands, US$30 million in Apollo Tyres South Africa and the remainder in India; Rs 400 million (£5.4 million) of its funds for India will be invested in its facilities in the company’s Perambra Chalakudy and Kalamassery plants and the balance in increasing capacity at its Chennai factory. Truck tyre capacity there is expected to double to 6,000 units per day and passenger car tyre capacity will also double, to 16,000 units per day.
“My team has been hard at work to put together our next five-year strategic plan and the key building blocks have been identified to take your company to the next level of growth and performance,” Kanwar told shareholders. “The opportunities before us are indeed exciting. The June quarter, for the first time, saw India’s growth rate in passenger sales outstrip that of China. More and more global automotive manufacturers are either setting up shop in India, or are expanding capacities. As China starts to slow down, India will take its pre-eminent position; not just in the automobile industry but across various sectors. This is a time of great promise for our country and all of us must work together, diligently and sincerely, to encash on that promise.”