Apollo to double TBR capacity at Indian plant

By Shahrzad Pourriahi, Crain News Service

KOCHI, India (Aug. 11, 2015) — Apollo Tyres Ltd. is planning to double truck and bus tire capacity at its 5-year-old Chennai, India, plant over the coming two to three years, Chairman Onkar Kanwar told shareholders at its group's general meeting in Kochi on Aug. 11.

Apollo has budgeted $425 million for the project, which will boost annual truck/bus radial tire capacity to 12,000 units, an Apollo spokesman confirmed. The plant, he noted, also produces 16,000 passenger tires per day.

“Our decision in 2009-10 to invest in a truck and bus radial facility in Chennai has proven to be a wise one,…” Mr. Kanwar said. “To maintain this we are going ahead with further expansion in the capacity there.”

Mr. Kanwar added that Apollo is preparing other expansions and de-bottlenecking projects at its truck and farm tire plant in Kerala and mixed-capacity factory in Baroda, India, and that it expects its $615 million greenfield plant in Hungary to start production in 2017, at which time it  allow Apollo to gain a better market share in Europe.

Despite having exited manufacturing in South Africa, Apollo expects to retain its presence in the markets of South Africa and the African continent as a whole, supplying tires from its other plants with greater flexibility and efficiency, Mr. Kanwar said. Apollo sold the bulk of its South African business in 2013 to Sumitomo Rubber Industries Ltd. and last year closed its remaining tire plant in Durban.

According to Mr. Kanwar, sales offices in Dubai and Bangkok have established themselves and are opening up new markets and new opportunities for the company.

Further commenting on long-term planning, Mr. Kanwar said Apollo's office in Singapore, opened during 2015, is set to begin operations as a purchase hub, but would eventually aim to serve as the firm's key base for global procurement, integrated supply chain, commodity trading and hedging.

In the short run, Mr. Kanwar said he saw the coming year as “another in a string of challenging years, with global uncertainties, talk of QE [quantitative easing] roll-back by the U.S. Federal Reserve, currency instability across much of Europe and slowing growth in large economies like China.”

He did, however, foresee a slightly brighter year for India, saying “green shoots of a revival can now be seen.”

The Apollo boss also addressed the issue of rubber prices, which “continue to be low not because of imports or any other reason other than the fact that demand for all commodities has continued to stagnate.

“This is a reflection of the [global] demand situation in the consuming industries, of which the tire industry is the largest.

Mr. Kanwar warned that artificial means of propping up prices would work in the long run in a globally connected economy like India's, adding that the only sustained effect on prices can be with a strong and buoyant economy.

_________________________________________

Shahrzad Pourriahi is a reporter for European Rubber Journal, a United Kingdom-based sister publication of Tire Business.