Apollo Tyres, which has in the recent past increased its footprint in Europe, is planning to set up a plant in eastern Europe to manufacture passenger car tyres and heavy commercial vehicle tyres.
The exact location of the factory is yet to be decided, Vice-Chairman and Managing Director Neeraj Kanwar told reporters here.
The facility, expected to be completed by 2018 at an investment of around €500 million (around ₹4,100 crore), will roll out an estimated 55 lakh car tyres and 6.75 lakh truck tyres, he added.
“We have had good sales growth in Europe,” Kanwar said.
Apollo already has a R&D centre for passenger car and SUV tyres in Europe and there was a lot of attention to research.
In order to increase its market presence and visibility in European countries, Apollo had recently entered into a tie-up with Manchester United football club.
While 60 per cent of Apollo tyres are consumed within the country, the rest are marketed abroad, mainly in Europe.
It has a plant in South Africa and another in the Netherlands. The company is also focussing on South-East Asian countries.
Expansion Kanwar said the company is planning to invest ₹1,500 crore to expand its Chennai plant, which has 85 per cent capacity utilisation now.
The investment would increase the plant’s production capacity from 6,000 truck radial tyres a day to 9,000 a day.
Another investment the company has planned is at its Kalamassery plant near Kochi, where ₹500 crore would be spent for making off-highway tyres (OHT).
As of now, the plant manufactures conventional tyres for which the market is shrinking fast.
The plan for making OHT would be a paradigm shift for the plant and would require a lot of flexibility and change of mindset on the part of the employees and trade unions there, Kanwar added.
Profit up 37% in Q1 Apollo Tyres, whose annual general meeting was held in Kochi on Wednesday, has reported a net profit of ₹228 crore for the first quarter of the 2014-15 financial year.
This is a 37 per cent growth over the ₹166-crore profit in the first quarter of the last financial.
The company said the net sales in the Q1 this year was ₹3,235 crore up from ₹3,190 crore in the corresponding period last financial.
The Indian operations grew by 6 per cent in Q1, while the European operations expanded by 18 per cent.
The AGM has approved a dividend payout of 75 per cent per share (0.75 per equity share).
Chairman Onkar S Kanwar told the AGM that the company was pro-actively following a strategy of expansion by adding new products and broadening the revenue base by increasing the forays into several countries.
The plan to set up a plant in east Europe was one such.