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Last Updated : May 14, 2019 01:54 PM IST | Source:

Ceat, Apollo and MRF to invest Rs 5,400 crore in FY20

Though SIAM has predicted a muted growth for FY20 for most of segments, tyre companies are upbeat on volume outlook.

Swaraj Baggonkar @swarajsb
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The broader slowdown in automotive demand notwithstanding, tyre companies are making fresh investments in adding new manufacturing capacities and launching new products.

Though SIAM has predicted a muted growth for FY20 for most of segments, tyre making companies are still upbeat on volume outlook. This is because more than half of their production is routed to the after-market (replacement) section.

Gurugram-based Apollo Tyres has lined up investment to the tune of Rs 3,000 crore for the current financial year much of which will go in for the greenfield plant coming up in Andhra Pradesh.

Gaurav Kumar, CFO, Apollo Tyres, confirmed that capital expenditure for FY20 is Rs 3,000 crore while for the next year it could be Rs 1,600 crore. Apollo is India’s second largest tyre maker in tonnage capacity.

"We had good growth in both passenger and truck radial replacement during Q4. Truck and bus radials grew by 7 percent and passenger car redials grew by 8 percent. The share of OEM for us is 55 percent presently," added Kumar.

Mumbai-based Ceat said it will incur a capital expenditure of Rs 1,300-1,400 crore this financial year. Last year the company had set aside Rs 1100 crore towards capex. A further Rs 200 crore will be spent on specialty tyre business.

Speaking to analysts, Anant Goenka, Managing Director, Ceat, said: "We had earmarked Rs 1,000 crore for Halol 3 expansion half of which is spent already. The truck and bus radial plant will have a capacity of 80000 tyres per month and its full ramp up will take place in about a year and a half time."

Chennai-based MRF, the leader in the Indian tyre space, is understood to have lined up an Rs 1,000 crore investment for the year. MRF could not be reach for comment.

Besides truck and bus radials, all tyre manufacturers are increasing capacity for two-wheeler tyres. While MRF and Ceat have been in the two-wheeler space since last few years, Apollo which has entered the segment in recent years is ramping up its presence.

Despite the challenges, two-wheeler sales during FY19 grew by nearly five percent to 21.18 million units led by a resurgence by motorcycles, as per details shared by the Society of Indian Automobile Manufacturers (SIAM).

However, commercial vehicles growth outpaced each of the other segments posting with nearly 18 percent increase during the same year to cross 1 million sales for the first time ever. Passenger cars growth slowed to less than three percent last year.

In the replacement market of two-wheelers, Ceat claims to have a market share of 28-30 percent. About 65 percent of its production goes to the after-market while the balance of 35 percent comes from the OEMs.

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First Published on May 14, 2019 01:54 pm
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