Apollo Tyres earmarks Rs 2,500 crore capex for FY18

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Published: May 17, 2017 3:24:00 PM

Apollo Tyres has lined up Rs 2,500 crore capex for the current fiscal as it eyes a double- digit volume growth. The company, which recently commissioned its new manufacturing plant in Hungary, expects construction activity to commence at its new plant in Andhra Pradesh in the second half of the current year.

“In rupee terms, overall for India and Europe would be about Rs 2,500 crore, almost split equally between India and Europe,” Apollo Tyres Chief Financial Officer Gaurav Kumar said in an analyst call.

Apollo Tyres has lined up Rs 2,500 crore capex for the current fiscal as it eyes a double- digit volume growth. The company, which recently commissioned its new manufacturing plant in Hungary, expects construction activity to commence at its new plant in Andhra Pradesh in the second half of the current year.

“In rupee terms, overall for India and Europe would be about Rs 2,500 crore, almost split equally between India and Europe,” Apollo Tyres Chief Financial Officer Gaurav Kumar said in an analyst call. For the European operations, the company has earmarked a capex of about 180 million euro for the current fiscal.

“In FY18, the European capex, which is Hungary and small maintenance etc, would be about 180 million euro,” Kumar said. Besides Hungary, the company’s other European manufacturing plant is in the Netherlands. On the outlook for the current financial year, Kumar said growth prospects look good with the government focusing on infrastructure development.

“We expect the demand outlook to be good. I would say we are internally looking at again a double-digit volume growth even in FY18,” he added. On the company’s upcoming plant in Andhra Pradesh, Kumar said: “We continue to work on acquiring the land for our next greenfield in India in Andhra Pradesh, the construction on that would probably start in the second half of this year.”

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The company plans to produce tyres catering to all product categories, including two-wheelers, from the Andhra plant. The firm, which entered the two-wheeler segment last year with Acti series, expects its volumes to go up in this space gradually. “We continue to grow in that (two-wheeler) segment, though realistically given the size that we came in, volumes would go up gradually,” Kumar maintained.

The company currently rolls out about 1 lakh two-wheeler tyres per month. “We continue to be very bullish on the product segment and it will keep growing gradually and ultimately become a significant portion of Apollo’s portfolio,” Kumar noted. The company also plans to hike product prices.

“We have taken price increases of nearly 6 per cent since the start of the year, given the raw material pressure, and as mentioned earlier, we will need to further take price hikes to negate the entire raw material impact,” Kumar said. He, however, did not share details on the quantum and timeframe for the intended price hike.

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