Ruia Group to invest Rs 850 cr to boost 2-3 wheeler tyres

Pawan Ruia-controlled Ruia Group has firmed up plans to invest Rs 850 crore to build its Falcon brand of two and three wheeler tyres, while looking to stabilise production at 30 tonnes per day in its units under Dunlop India.

Ruia after the 83 rd annual general meeting of Dunlop India on Tuesday said the funds will be used to make 1 million additional two and three wheeler tyres per month from two facilities ? one at Uttranchal and another at Mysore.

While the Uttranchal facility would be a greenfield project to be implemented by Falcon Tyres and Rubbers Pvt Ltd to make 500,000 tyres per month, the Mysore project would be an expansion of its existing unit of Falcon Tyres Ltd to make another 500,000 tyres per month.

As a greenfield unit, the Uttranchal plant would require an investment of Rs 550 crore but the Mysore expansion would require an investment of Rs 300 crore. ? We have already tied up with banks for a Rs 200 crore loan to implement our Mysore project,? Ruia said. For

implementing the Uttranchal project, Falcon Tyres and Rubber Pvt Ltd have already proposed a rights issue to ?take care of the promoters equity portion,? he added.

The Uttranchal project, according to Ruia, would come up to mainly cater to the needs of Hero Honda motor cycles and the makers of Hero Honda have been the main facilitators of the project. Falcon Rubbers & Tyres have 60 acres in their possession and expects to complete the project by 2010-2011 end. The expansion in Mysore would also be completed within the same period, Ruia said. He said once the new capacities come up Falcon’s total capacity would go up to 2.3 million pieces per month.

For Dunlop the company has adopted a go-slow strategy and would only like to stabilise production at 30 tonne per day at both its units at Sahaganj and Ambattur though the target is to take the production up to 70 tonnes per day during the fiscal end, Ruia said. While Falcon makes only two and three wheeler tyres, Dunlop makes four wheelers and off-the-road Tyres (OTRs). ? The market is responding to the situation of Dunlop and all our production are getting sold,? Ruia said.

Dunlop is on the track of cost optimisation by arranging for captive power and has planned Rs 250 crore investment for setting up a 50 mw co-generation unit at Sahaganj. ?The company’s application for clearances is pending with the state government,? Ruia said. Setting up another 50 mw co-generation unit at Ambattur was also on the cards though a final decision is pending, he added.