New factories, upgrades – Apollo discusses $1b investment
Apollo Tyres has disclosed further details about its global expansion plans. Speaking with news agency Press Trust of India, vice-chairman and managing director Neeraj Kanwar referred to projects amounting to $US1 million. This investment will take place over the next half decade.
“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,” Kanwar told PTI in late November. “All these projects put together, including our Kerala and the Netherlands units, we are looking at an investment of US$1 billion.”
The first international project to get underway will be the construction of an ASEAN region greenfield factory. During a separate interview with India’s Financial Chronicle, Apollo Tyres’ chief of India operations Satish Sharma described ASEAN as “a growing market for our products” and said it was “important to have our own manufacturing presence in the region.” He added that the company will proceed with this project at the earliest opportunity.
Mr. Kanwar shared with PTI that Apollo is yet to finalise the Southeast Asia plant’s location as the tyre maker is still negotiating with both the Thai and Indonesian governments. He added that the plant will “will mainly cater to the entire ASEAN countries and China,” although 20 per cent of production will be exported to Europe and Latin America.
“The first phase of the Southeast Asia (facility) will entail an investment of about $250 to 300 million,” Neeraj Kanwar shared with PTI. “The initial capacity of the plant will be 16,000 units of passenger car radials per day and 1,500 units of truck and bus radials a day. 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 Southeast Asia project, we will start the greenfield plant in Eastern Europe,” the vice-president and managing director added. “As of now, we have put our earlier plans to set up a plant in either Poland or Hungary on the backburner.” The European factory project, when taken off the backburner is expected to produce some 7 million passenger car tyres a year and will require a $350 million investment.
As mentioned, the billion dollar investment also covers projects at the firm’s existing Kerala, India and Enschede, The Netherlands plants. About $36 million (Rs 2 billion) is earmarked for the Kalamassery factory in Kerala, which currently manufactures truck, bus, agricultural and industrial tyres. “We have taken a decision to convert this plant into a hub for production of OHTs (off highway tyres),” shared Kanwar. “Only 10 to 15 per cent of the production from here will cater to the Indian market and about 85 per cent will be exported.” He added that Europe, the US, Latin America and Australia are considered potential markets for these products.
As for the Apollo Vredestein factory in The Netherlands, Kanwar said plans were “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.” Some 50 million euros ($65 million) will be invested in the Enschede project, he added.