Eastern Europe an Apollo investment priority
Following on from its acquisition of Cooper Tire & Rubber, Apollo Tyres intends to focus investment where it anticipates growth – and vice-chairman and managing director Neeraj Kanwar has identified one such area as Eastern Europe.
In an article published 5 August, Kanwar explained to India’s Business Standard that Apollo’s capex programme is closely linked to growth. “Plants with the opportunity to grow will be the first ones (to benefit from investment),” he said. “So, you would have Serbia, China and, later, Mexico.” According to the article, Apollo has prepared an investment plan for the former Trayal factory in Kruševac, Serbia, which Cooper acquired at the start of 2012. “When Cooper took over, Serbia was one million units,” Neeraj Kanwar noted. “Already, there is capex that has gone in. That is taking the plant to 2.5 million. The plan is to take that plant to five-six million units. So, we will expand Serbia for Russia and for Europe to get a fully global manufacturing footprint.” At present, neither Apollo nor Cooper has a presence in the CIS region.
Although strike action prompted by opposition to Apollo’s takeover continues at the Cooper Chengshan factory in China, this factory and the Cooper Kunshan plant are expected to play an important role in the company’s regional plans. Apollo wants to produce near where it sells, and Kanwar said that although Apollo presently exports Indian-made tyres to Europe, West Asia and the ASEAN area, rebalancing the company’s global footprint is important. “China will look after China and Southeast Asia; India for India and West Asia, Europe for Europe, and America for America,” he said. Cooper’s El Sato, Mexico plant will be a later recipient of investment funds; the Business Standard article did not mention the four US-based Cooper Tire plants.
One region where no major investment will be made in the short term is Apollo’s home market of India. Neeraj Kanwar told the Business Standard that “India right now does not need any growth capex…we will just be doing maintenance capex here.” The financial daily wrote that once Apollo’s 2010-opened truck and bus radial factory in Chennai reaches full capacity, the company will “consider shifting the technology to its other units in the Americas, Europe and Africa.”