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MUMBAI: Apollo Tyres, India’s largest maker of tyres for commercial vehicles, has lined up $1 billion in investments with an eye on grabbing the No.
1 position from MRF Ltd across other segments — excluding two-wheelers — and crossing Rupee20,000 crore in revenue by 2020.
This would be the company’s biggest investment yet and has in mind global expansion as well as a stronger presence in North America.
The planned investment will go into setting up a new plant in Andhra Pradesh and expansion of capacity at its Hungary facility as it forges new ties with automobile companies Ford, Volkswagen and BMW to serve them in Europe.
The Andhra Pradesh plant will call for an investment of Rupee3,800 crore, which will create a capacity of 15,000 car radials a day and 3,000 truck tyres once it is commissioned by the first quarter of 2020.
The Chennai plant’s truck and bus radial capacity is being expanded to 12,000 tyres a day by end of the current quarter from 10,000 tyres a day.
A majority of the company’s plants are operating at full capacity and as Apollo Tyres enters its strongest growth phase, it will be gunning for the No.
1 position by 2020, managing director Neeraj Kanwar told ET.
“Our vision for 2020: we want to be a clear leader in all the product categories in India — in the farm, passenger, truck, SUV – and we are looking at price as well as volume leadership – that is our target.
As far as Europe is concerned, we want to be a premium tyre maker and we are slowly but surely moving into that position,” Kanwar said.
Apollo has a market share of 30% in the truck and bus radial segment and 19-20% in passenger vehicles, which it is expanding with increased replacement demand and more original equipment manufacturer contracts.
Demand for tyres in India is such that the company is diverting its export capacity to the domestic market.
Apollo Tyres expects India’s commercial vehicle growth cycle to be sustained for the next two years — even with the recent revision in axle norms — and anticipates expansion in the passenger vehicle market to become more broad-based, offering a higher potential of growth.
“For me, the issue is how fast I can put up the factory so that I don’t lose a sale.
The structural demand is very strong and some of our key customers are forecasting strong doubledigit growth,” Kanwar said.
Apollo Tyres’ consolidated gross sales increased 6% to Rupee14,929 crore in the year ended March 2018 from a year earlier.
With its capacity utilisation of new plants in Chennai and Hungary ramping up, people familiar with the company’s plans say sales are likely to cross Rupee20,000 crore by FY20.
