NEW DELHI, India—Apollo Tyres Ltd. is expanding in India with two moves totaling a combined $89.4 million.
The firm has signed a memorandum of understanding with the Government of Andhra Pradesh on Nov. 10 to set up a manufacturing plant in the state. The facility will be dedicated toward producing tires for two-wheelers and pickup trucks, Apollo confirmed via email.
The plant will be Apollo's fifth in India. Apollo said it has not finalized when construction will begin as it is still in the process of acquiring the land and finalizing its plans. However, it intends to employ 500 in the first phase of the new facility's operation.
The new facility represents a $76.3 million investment.
“Our last greenfield in Chennai, India, has already undergone two rapid capacity expansions,” Satish Sharma, president of Apollo's Asia-Pacific, Middle East and Africa region, said in an email. “With other plants also at their terminal capacities, we needed a new facility to manufacture tires for the two fastest growing segments in India—tires for two wheelers and pickup trucks.”
In a separate move, the firm also inaugurated its Global R&D Center for the Asia-Pacific region, located in Chennai. Apollo said it is its second global research and development center, also operating one in the Netherlands that employs more than 150.
Apollo invested about $13.1 million in the new R&D site and will employ about 140 there.
“The two global centers help us focus on the development of all product categories for their respective geographies, in addition to the core research,” Sharma said. “The Global R&D Center in the Netherlands services the product development requirement of the entire Europe and Americas region, and focuses on the passenger vehicle tire segment. The Global R&D Center for Asia focuses on the commercial vehicle segment and services the product development requirement of the entire Asia-Pacific, Middle East and Africa region.”
Sharma said the firm ultimately chose to establish its plant in Andhra Pradesh because of the availability of the necessary infrastructure and proximity to the ports and original equipment manufacturers. Industry friendly policies of the current State Government, combined with the fact that Andhra Pradesh is viewed as one of the best states to do business with, also played an important factor.
Apollo Chairman Onkar S. Kanwar thanked local authorities for the support offered to the firm during the ceremony on Nov. 10. The firm's current India manufacturing footprint consists of two tire facilities in Kerala in addition to sites in Tamil Nadu and Gujarat. It also operates facilities in the Netherlands and is currently constructing a second European site in Hungary.
“I am extremely pleased to announce this significant investment by Apollo Tyres to build a world class facility in Andhra Pradesh,” Shri N. Chandrababu Naidu, chief minister of Andhra Pra-desh, said during the ceremony. “Our endeavor to provide superior infrastructure and ensure full government support to companies has seen the state emerge at the top of the Ease of Doing Business index in the country.”
The new R&D center will help service product development for the firm's Asia-Pacific, Middle East and Africa region. It also will complement Apollo's global network of centers, which includes satellite centers in Bengaluru, India, and Germany.
Its Advanced Engineering Center in Bengaluru works toward integrating electronics into tire technology while the one in Frankfurt focuses on establishing ties with leading German original equipment customers.
“The new center is a testimony to our increased focus on research and development,” Sharma said. “Technology being one of the key pillars for our growth going forward, our investments into R&D has also been increasing gradually in the last three to four years and is now close to 2 percent of net sales.
“The two centers, along with a highly experienced team of more than 300 scientists, will help us in furthering the dimension of research and development.”
With sales of $1.93 billion in 2015, Apollo is the 17th largest tire maker in the world, according to Rubber & Plastics News' 2016 Global Tire Report. It sells its brands into more than 100 countries through a variety of outlets.