According to sources, Apollo Tyres' Greenfield plant for car radials is coming up at Oragadam near Chennai is expected to become operational by June 2009. Initial signs are that the project would involve an investment of Rs 500 crore and employ 1,000 people. Point to be noted here is that it would initially have a production capacity of 30,000 tyres a day which will be scaled to 45,000 tyres.
Furthermore, a capex of Rs 150 crore is also planned for expanding the company's Baroda plant from 10,000 car tyres a day to 20,000 by the end of the year. According to top company officials, another brown field project is proposed at Baroda for 'Off the track tyres' for dumpers and other vehicles for Coal India and Bharat Earth Movers Ltd. This would involve an investment of Rs 100 crore and be operational by mid-2009. The funding for all the expansion projects would be primarily through internal accruals.
At this moment of time, the commercial vehicle segment contributes about 70 per cent of the company's turnover ($ 1 billion in FY' 07) with car radials accounting for the balance. What’s more, Apollo plans to change the equation to 50:50 for each segment over the next 5 years. In pursuance of this strategy, Apollo is scaling up its multi-brand stores based on the soft franchisee model to 30 from the existing 2 during 2008-09.
I have no doubt in my mind that company focus will be on a diverse, modern and contemporary product range. Besides Apollo intend to expand their original equipment segment. Active talks are on with Ford, Volkswagen and BMW while preliminary talks are on with Toyota for a tieup for car tyres.
Apollo expects to notch a growth rate of 15 per cent in the current fiscal over the previous year. A marketing spend of 10 percent is being incurred on publicizing the company's brand. What’s more, Apollo is also planning a Greenfield project in Hungary for car radials. This will have a production capacity of 7 million tyres per annum. Two years ago, Apollo acquired Dunlop in South Africa.