New Delhi, Sept. 16: Metro Tyres Ltd, the Rs 300-crore OEM manufacturing group, has tied up with Continental AG to foray into the tyre markets of Europe and the US.
Metro will produce up to 10 lakh two-wheeler tyres for exports through Continental AG, the German tyre major which will also be licensing its technology to Metro.
Metro officials said it is investing Rs 20 crore to set up a separate manufacturing line that will cater exclusively to the export venture of the company.
Rummy Chabbra, managing director of the company, said, “We expect Rs 25 crore additional income yearly from this venture. The third line will be producing 50,000 tyres and 50,000 tubes per month and the entire production will be exported to Continental. The tyres would be sold through the marketing channels of Continental.”
A few months ago, Metro was prepared to enter these foreign markets using its own brand name. But the offer from Continental, which had previously supplied technology to Metro for bicycle tyres, stopped the company from going ahead with earlier plans.
Chabbra said, “At the moment we have shelved the idea of launching the Metro brand name in the foreign market. All the orders that we have got from Continental has been deferred from its other plants like China, Bangkok, Thailand and Germany due to the production cost advantage that India enjoys. But apart from cheap production, they also demand world class quality and at the moment we are concentrating on that.”
Continental does not have any equity stake in Metro at the moment, but Metro is not averse to any such propositions. Chabbra said, “We want to work on the current setup for at least a year, before we talk about any equity control. But we are not against it.”
The Indian tyre industry at the moment is growing at a rate of 5-6 per cent and is worth Rs 10,000 crore. Metro holds a 20 per cent market share in the bicycle market in India, but at the moment does not want to foray into the domestic motorcycle and scooter market.
Chabbra said, “We want to exploit this opportunity before other expansion plans. If we can establish our product in international market where companies like Honda, Kawasaki, Harley Davidson and Yamaha are players, the domestic market will not be a problem.”