Mumbai: Apollo Tyres Ltd has entered into a memorandum of understanding (MoU) with the Tamil Nadu government for setting up a radial-tyre manufacturing unit. The state government has allotted 60 hectares (135 acres) of land at the Oragadam Industrial Park for the new facility.
The company said it proposes to invest Rs 300 crore during the first phase of the project, within three years. The investments will go up to Rs 450-520 crore within five years from the date of the MoU.
Continental Tyres, the fourth largest tyre company in the world, will provide technology for the radial tyre unit.
The investment, the company said, is subject to all necessary clearances and approvals.
Apollo Tyres has reported a lower net profit of Rs 16.2 crore for the first quarter of the current financial year against Rs 16.7 crore during the same quarter in the previous financial year. Total income, however, was up at Rs 757.3 crore from Rs 568.3 crore.
With units in Pune, Baroda and Perambra in Kerala, Apollo Tyres is a leader in the industry, controlling 21 per cent of the country's tyre market.
The tyre market in the country has been growing at an average 14-15 per cent a year while growth in the current year is expected to be higher at 20 per cent.
With a small share of the original equipment (OE) segment of the tyre market, Apollo is mainly into the replacement market, which forms about 58 per cent of its sales. The OEM segment contributes about 22 per cent while exports account for about 15 per cent.