GURGAON, India — Apollo Tyres Ltd., in the course of a few days in mid-January, disclosed plans to build its first tire plant in Europe, two more in India and unveiled its first winter tires.
If that wasn´t enough, India´s largest tire maker also reported a 165-percent rise in net profits and 14-percent improvement in sales for its third quarter.
The Hungarian factory will cost about $296 million to build and have an initial annual production capacity of 7 million radial passenger tires, destined for the European and North American markets, according to Onkar Kanwar, Apollo chairman and managing director. It is expected to be built on 125 acres the company is purchasing in Gyongyos, near Budapest.
Apollo said there could be a ground-breaking ceremony at the site early in the next financial year, and the factory could start operating in 18 months.
Apollo has been evaluating options for a European manufacturing hub for the past nine months and said Hungary was one of the frontrunners from the start. Kanwar said the facility will be the largest investment ever made by an Indian company in Hungary. The project is subject to approval by the Apollo board and regulatory clearance.
The factory will employ 900, according to an Apollo spokeswoman. She said local managers will run the operation, although to begin with there might be a few from India, but on a limited basis, depending on need.
While the first phase will result in the production capability to make 7 million tires annually, Apollo has a second phase on the books that would double the capacity and investment. The spokeswoman said the timetable of that expansion hasn´t been determined and will depend on the completion of the first phase of the project.
Apollo´s new facility will be the fifth tire factory in Hungary. Michelin operates two plants, Hankook Tire Co. Ltd. one and Bridgestone Corp. is building a facility scheduled to go on stream this year.
Investment on home turf
In India, Apollo plans to spend nearly $100 million during the next two years to build factories to make radial consumer and commercial tires and off-the-road tires.
Apollo has purchased a 135-acre site near Chennai, in Tamil Nadu state, for a radial tire plant. The first phase, for which the company has allocated $68 million, could be complete within 18 months, Apollo said.
The plant´s product mix is being evaluated, Apollo said. The project is being devised to allow the firm to double the facility´s size as demand warrants it.
The $31 million OTR tire plant will be built on the grounds of its Limda, Gujarat state factory complex. Plans call for a capacity of 10 metric tons a day, starting with bias-ply tires and then gradually adding radial capacity. The product lines will be from 35- to 57-inch rim diameters.
Apollo´s board also approved a previously announced $12 million project to utilize wind energy in Gujarat. It would double the company´s power generation capacity from wind energy to 16 megawatts.
Strong financial results
Apollo´s expansion announcements came against the backdrop of another quarter of solid financial results. The firm said its consolidated net profits rose to $20.9 million in the third quarter, while sales jumped to $316 million.
Apollo´s net sales for its India operations rose to $247 million from $216.5 million year-on-year, and its net profits increased by 77 percent to $15.8 million.
The company also recorded a 41-percent improvement in operating profits. Overall exports rose by 24 percent, and exports of passenger radials increased by 70 percent.
Kanwar said this steady growth is exactly what Apollo had hoped for to maintain markets in India, South America and future ventures.
A new market Apollo hopes to penetrate is winter tires. On Jan. 15 the company unveiled its first such products, the Acelere Ice and Hawkz Ice for passenger vehicles and 4x4s.
Apollo said the Ice tires are the winter counterparts of its existing summer Acelere and Hawkz tires, and use a 100-percent environment-compatible silica compound, leading to lower rolling resistance and higher fuel efficiency.
The winter tires will cater to markets in Europe and North America, where consumers by law or motoring recommendation are required to switch to tires designed to tackle sub-zero temperatures and road conditions during the winter months.
The new plant in Hungary will produce the winter tires, once it is up and running, the Apollo spokeswoman said.