BUDAPESTIndia's Apollo Tyres Ltd. has confirmed a site in north-central Hungary as the location of the $615 million tire plant it plans to build over the coming five years.
This investment would be our first one into a Greenfield facility outside of India and would be a significant milestone in the company's international growth journey, Apollo Vice Chairman and Managing Director Neeraj Kanwar said at a press conference in Budapest.
The site is at an industrial park near Gyöngyöshalász, roughly 65 miles east of Budpest.
The site was disclosed earlier this month when the European Commission said it was granting approval for Hungary to provide investment aid of nearly $124 million for the project.
Hungary was chosen after a consideration of various factors over some of the neighboring Central Eastern European and Asian countries, Apollo said.
Once completed, the plant will have a capacity to produce 5.5 million passenger and light truck tires and 675,000 heavy commercial vehicle tires per year, in both Apollo and Vredestein brands. At full capacity, the plant will employ 975 workers.
The plant will cater to the European market and complement Apollo Tyres' existing facility in the Netherlands. The site is in close proximity to various OEM manufacturers as potential customers, Apollo said, and as such the company will start applying for necessary permissions and licenses to set up the facility and initiate an environmental impact assessment.
Apollo hopes to start construction by spring 2015 in anticipation of starting commercial-scale production by early 2017.
Apollo operates four plants in India, one in South Africa and one in the Netherlands with a combined production capacity of 1,700 metric tons daily.
Meanwhile, Apollo is conducting a review of its activities in southern Africa to secure the best value for all stakeholders, the company said.
Durban-based Apollo Tyres Africa (Pty.) Ltd. has initiated business rescue proceedings, which includes appointing an independent business rescue practitioner to evaluate the business's operations and recommend a course of action for the company.
Apollo derived 4.5 percent of its global sales and 0.5 percent of operating income in the quarter ended June 30 from its activities in Africa, down measurably from a year ago before it sold the Dunlop brand-related assets in Africa to Sumitomo Rubber Industries Ltd. The unit is on track for sales of about $100 million this year.