No Cooper production in India, says Apollo
It appears Apollo Tyres is not planning to shift any Cooper Tire production to its factories in India. The Times of India reported on 22 June that the existence of Cooper production sites in low production cost countries makes such a move unnecessary. On the other hand, the Indian tyre maker makes no secret that it will use the acquisition deal to bring its Apollo brand into new markets. And the possibility of Apollo production in Cooper factories also remains.
“Cooper has good low cost sourcing base in Mexico, Serbia and China and sourcing from India is unlikely,” said Neeraj Kanwar, vice-president and managing director of Apollo Tyres. “In India we are already operating at full capacity. The American company has plans for capacity expansion and we will increase production at Cooper.”
Kanwar was quoted by the publication as saying Apollo’s radial technology was “better and more suited to the Indian market” but he noted that the acquisition of Cooper Tire & Rubber will give Apollo new commercial vehicle segment markets – “in China, for instance.”
Touching on the subject of how the acquisition will progress, Neeraj Kanwar said Apollo management will “streamline our operation and integrate the two companies,” a measure he considers “very important.” The vice-president and managing director did not give any information as to what shape and form any streamlining measures will take. And responding to questions about the level of debt Apollo is taking on to acquire Cooper, Kanwar reassured that “there’s healthy cash flow to pay down the interest. Add to that the synergy bucket, which we have identified worth US$80-120 million – and this is a conservative estimate – coming in the next three years and it looks quite alright. Also after two years, we will have the opportunity to pay down part of the $400 million through dividend from international operations as well.”