Apollo Tyres Ltd Inflating its market share

Venkatachari Jagannathan
08 May 2000

The New Delhi-based Apollo Tyres Ltd is considering building a greenfield tyre plant in south India. It is looking at Tamil Nadu and Andhra Pradesh as options.

According to Onkar S Kanwar, Apollo's vice chairman and managing director, "The project outlay will be around Rs 300 crore and the plant capacity will be 100 tonnes per day." The project will be funded out of internal accruals and term loans. Kanwar rules out any equity infusion. It may be recalled that Apollo Tyres recently issued partly convertible debentures to the promoters.

According to Mr Kanwar, the proposed facility will roll out truck and bus (radial and bial) and earthmoving equipment tyres. Further, if negotiations with Hyundai Motors (India) Ltd for original equipment supplies succeed, the plant will also roll out car radials.

The new investment is part of the Rs 400 crore investment announced by the company recently. The company commissioned its Rs 80 crore, 1 lakh tyres per annum capacity car radial tyres plant at Baroda this January.

For Apollo Tyres, a plant in Chennai makes economic sense. The company would be able to cut freight costs while supplying to Ashok Leyland (truck tyres), Tafe (tractor rear tyres) and Hindustan Motors Ltd for its earthmoving equipment -- all of whom are located in and around Chennai -- and also for catering to the southern replacement market.

Currently, Apollo Tyres has two facilities in Kerala, from where the southern demand is met. "The south accounts for 15-18 per cent of the country's total truck tyre market," according to Mr Kanwar.