Kanwar: Constructive

New Delhi, Aug. 7: Apollo Tyres Ltd has signed a memorandum of understanding with the Tamil Nadu government for a radial tyre facility at an investment of Rs 520 crore.

The company has acquired 135 acres in the Oragadam industrial park of Tamil Nadu.

“We intend to build one of the finest and most progressive radial tyre manufacturing unit in Oragadam. We will invest Rs 300 crore in the first stage. The final investment will be around Rs 450-520 crore by the end of five years,” said Onkar S. Kanwar, chairman and managing director of Apollo Tyres.

The company expects to complete the project in two to three years.

The unit will be used exclusively to manufacture high-quality truck, bus and light truck radial tyres.

In addition, high and ultra-high-performance passenger car radial tyres for both domestic and export market will also be manufactured in this plant.

The company is developing the radial technology that will be used in the plant. “The fresh capacity will allow us to produce technology products across categories, for both original equipment (OE) and replacement market,” Kanwar said.

Apollo Tyres, which has three tyre and one tube plant in India, had a turnover of Rs 3,000 crore in 2005-06.

A company release said that Tamil Nadu was chosen for its proximity to the rubber growing region.

The presence of a lot of automobile manufacturers in the state, connectivity with the domestic market and proximity to the port for easy import of raw materials as well as export of finished goods prompted the company to invest in the state.

The company had recently posted its first quarter results for this fiscal. Net profit was marginally down to Rs 16.2 crore from Rs 16.7 crore in the corresponding period of the previous year.

Total income, however, was up at Rs 757.3 crore against Rs 568.3 crore.

Apollo Tyres has also deferred its rights issue of equity shares and its Rs 200-crore public issue because of the prevailing market conditions.