Apollo Tyres to get $124-mn aid for tyre plant in Hungary

Apollo Tyres will get a €96 million ($123.9 million) in grants for setting up a tyre plant in Hungary, after the Hungarian government secured European Union regulatory approval to grant €95.7 million in aid to Apollo Tyres to build a tyre plant in the north of the country.

Hungary is offering a direct grant of €48.2 million, an employment grant of €2.8 million and tax allowances of about €44.7 million for the new facility.

The European Commission said the Hungarian support complies with EU state aid rules and would boost regional development.

Apollo Tyres plans to set up a new plant in Gyongyoshalasz, in Northern Hungary, at an investment of €442.2 million (about Rs3,450 crore).

The project involves investments of €442.2 million and is expected to create over 975 new jobs. It is to be carried out in Gyongyoshalasz, in Northern Hungary, the commission said in a statement.

"The Commission found that the aid granted by Hungary favours regional development while any distortions of competition will remain limited," it said.

"Apollo Hungary's investment project is expected to create 975 new jobs in Gyongyoshalasz. It will contribute significantly to the development of the region without unduly distorting competition in the Single Market," Commission vice president in charge of competition policy Joaquin Almunia said.

Hungary notified plans to support the construction of a new tyre plant in June 2014. The project is to be carried out in Eszak-Magyaroszag region, an area with high unemployment and a GDP well below EU average, making the region eligible for aid under EU rules.

"The state aid is granted in the framework of existing aid schemes but had to be notified to the Commission for individual assessment and clearance because of the high aid amount that carries a higher risk of distorting competition," the commission said.

Apollo Tyres had envisaged an annual production capacity of 5.5 million passenger car tyres and 6.75 lakh heavy commercial vehicle tyres.

Apollo Tyres opted for a plant in Eastern Europe after it failed in its $2.5-billion bid to take over US-based Cooper Tire (See: Cooper Tire terminates merger agreement with Apollo Tyres).