The Hindu Business Line : Apollo Tyres plans to hike prices

Bangalore, Aug. 19 Kochi-based Apollo Tyres Ltd plans to sell its passenger car tyres in Europe and may eventually use its Dutch plant to manufacture its Apollo brand.

The tyre company is also planning to increase its capex by about Rs 500 crore in its Indian operations every year for the next two years. It may also hike tyre prices between 4 per cent and 5 per cent because of the expected increase in raw material costs during the third quarter by 12-13 per cent.

Sourcing

“Volkswagen has initiated talks with us for sourcing Apollo Tyres for their cars in Europe,” Apollo Tyres chief for Indian operations, Mr Satish Sharma told Business Line. He said there is a possibility of Apollo Tyres being manufactured in the recently acquired Dutch plant though he did not give a time frame.

Over a period of time, the company intends to engage with the European car makers in their home markets through the association with their Indian subsidiaries, Mr Sharma said.

Mr Sharma said with the raw material prices expected to rise by around 13 per cent, there was a possibility of effecting an increase in tyre prices between 4 per cent and 5 per cent to maintain similar margins.

Market tough

He said the capex for Indian operations for the current year was about Rs 900 crore, which includes about Rs 700 crore for the greenfield Chennai plant.

He pointed out that while the European market is stagnant and the African market will take long time to scale, the Indian market provides the tyre maker with high growth potential. He said the radial tyre share of the Indian market was a mere 9 per cent at present but is expected to grow to 25 per cent in three years.