KOCHI, India—Apollo Tyres Ltd. is planning to expand its truck and bus radial facility in Chennai, India, over the next two or three years, according to chairman Onkar Kanwar.
The Chennai plant is being expanded with an investment of $425 million, an Apollo spokesman confirmed.
The project, said the spokesman, will take the truck-bus radial capacity at Chennai from its current 6,000 tires per day to 12,000 tires per day. The plant 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 … To maintain this we are going ahead with further expansion in the capacity there,” Kanwar told shareholders at a general meeting on Aug. 11.
In India, Kanwar said Apollo is going to have “other expansions and de-bottlenecking projects on the anvil at our plants here in Kerala and in Baroda.”
Apollo's operations in Europe “continue to do well” and are being significantly ramped up with the start of construction at a $615 million greenfield facility in Hungary.
Kanwar said he expected production to start at the Hungary plant in 2017, stating that it would allow Apollo to gain a better market share in Europe.
Despite having exited its manufacturing business in South Africa, Kanwar said Apollo would 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. 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 Kanwar, sales offices in Dubai and Bangkok have established themselves and are opening new markets and new opportunities for the company.
Kanwar said that Apollo's office in Singapore, opened during 2015, is set to begin operations as a purchase hub, but eventually would aim to serve as the firm's key base for global procurement, integrated supply chain, commodity trading and hedging.
In the short-run, Kanwar said he saw the coming year as “another in a string of challenging years, with global uncertainties, talk of (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 he said “continue to be low is 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 tyre industry is the largest.
Kanwar warned that artificial means of propping up prices would work in the long run in a globally connected economy like ours, adding that the only sustained effect on prices can be with a strong and buoyant economy.