Apollo Tyres has announced investments to the tune of INR 3,000 crores and will be doubling manufacturing capacities in the truck and bus radial tyre segment.
This added investment will see the company’s Chennai plant augment facilities in the truck and bus radial segment from a current 6,000 units to 12,000 units per day. This expansion will be in a phased manner with the first phase likely to get underway by October 2016.
Following cheap imports from China that has now captured 35% of the market the tyre industry in India, existing brands are facing some severe constraints. Competition from Chinese companies is impairing the growth of the tyre segment in India.
While tyre manufacturers in India have appealed to the Government to tackle this issue, for eg, the US government has imposed 35% import duty on Chinese tyres. Growing competition from international tyre makers such as GoodYear, Bridgestone and Continental has also caused some concerns with domestic tyre manufacturers.
Despite competition and growing Chinese influence in the tyre segment, last year Apollo Tyres announced turnover of INR 11,700 crores and net profit of INR 317 crores. The company’s entry into the two-wheeler tyre segment also brought in rich rewards.
Apollo Tyres is enhancing company outlets for two-wheeler tyres from 2,000 to 3,000 outlets while first tyres from the company’s greenfield facility in Hungary is also expected to roll out early 2017. The Hungary facility will produce Apollo and Vredestein brand of tyres while the company’s latest acquisition of Reifencom GmbH, Germany will also allow Apollo Tyres to enhance their reach in the tyre segment.