Apollo Tyres to invest Rs 2,800 crore in FY20
Capex will be used to commission greenfield facility in Andhra Pradesh.
Apollo Tyres managing director Neeraj Kanwar told ET that despite the recent slowdown, he is bullish about the growth prospects in the local market, and while admitting that liquidity tightening after the IL&FS crises had affected demand for passenger cars, he’s quite sure that momentum will pick up in the coming months.
“India has a lot of opportunity. We have seen growth in every area. We do expect a good monsoon, and that will drive growth. BS VI will come here in April 2020. That will drive (sales in) the CV segment... We will not get back 20% growth, but it will be in high single-digit. That in itself, will give us good growth,” said Kanwar.
Currently, Apollo Tyres has four manufacturing facilities in India — two (including a leased facility) in Kerala, and one each in Gujarat and Tamil Nadu. Kanwar said with all plants running at nearly full capacity, the company is investing in Andhra Pradesh to gain market share, going forward.
“Today all our plants are running at 85-90%, which is really full capacity. Therefore, we took a decision a year and a half ago to start a greenfield unit in AP…Apollo is expanding in the landscape of India…And these investments have been made timely so that we gain our market share and serve our customers,” said Kanwar.
The company said it has already gained leadership position in the truck bus radial segment in the domestic market, and is now targeting improving its margins by supplying tyres for high-end cars and premium two-wheelers.
The fresh capacity in Andhra Pradesh will come on-stream towards the end of 2019. Thereafter, Apollo Tyres will focus on organic growth for the next 2-3 years. “Currently, we are concentrating on organic growth. We are not looking at any inorganic growth.... We need to get (our facilities in) Hungary and Andhra Pradesh to the same level as Chennai, which is today producing over 900 tonnes per day. So, the next 2-3 years, our hands are full. We need to see that these organic investments that we have made start giving us faster returns,” said Kanwar.
Globally, it has put in place a team to grow its presence in the US over the next few years. This, coupled with operations in Europe, Middle East and ASEAN, are expected to contribute up to 40-45% to the company’s revenues mid-term.