Apollo Tyres in rubber chase

Calcutta, Sept. 29: Apollo Tyres plans to acquire rubber plantations abroad to keep a check on rising raw material costs.

Onkar S. Kanwar, chairman and managing director of the company, said Apollo was scouting for acquisitions as well as exploring opportunities for new plantations in the south Asian region.

“We want to have at least 20-25 per cent of our natural rubber requirement from captive sources. Our people are now examining opportunities in Southeast Asia,” Kanwar told The Telegraph.

Indonesia, Thailand and Malaysia are the top three natural rubber producers, but Apollo may go to a new location with a similar climate (plenty of sun and rain), with Vietnam an option.

India is almost out of bounds for the nation’s top tyre manufacturer as large areas of land necessary for plantations are not available. Kerala is the largest producer of rubber, while the Andamans has similar conditions, but the government is not willing to allow plantations there.

Apollo uses 12,700 tonnes of natural rubber every month in its facilities in India, Africa and Europe. Natural rubber prices have jumped to Rs 180 a kg from Rs 100 a kg in the last one year, dealing a blow to profitability.

Apollo owns the Dunlop brand in 32 African nations and has plants in South Africa, Zimbabwe and Vredestein in the Netherlands, besides India..

New facilities

Apollo is keen to set up a facility in east Europe two years after its plan to enter the region suffered a setback because of political opposition to land acquisition in Hungary.

“We are fortunate it did not work out then as the economic slowdown followed soon after. But now we are eager again and ready to spend $200 million for it (the unit),” Kanwar said.

It is also keen on a manufacturing presence in Southeast Asia. Tyre is mostly a localised business, and a large domestic market is a pre-requisite for a manufacturing presence.

The new plants, along with the upcoming Chennai unit, will help Apollo to realise its ambition to become one of the top 10 manufacturers in the world.

(telegraphindia.com)