India
The lockout at Apollo Tyres’ Perambra factory in India’s Kerala state is now in its second week, and the company’s chief of India Operations, Satish Sharma, has released an official statement broaching the issue:
Goodyear India Ltd. shares remain listed on the Bombay stock exchange following a failed delisting offer from parent company Goodyear Tire & Rubber. The US tyre maker made an offer to acquire close to six million shares in the Indian company, a figure representing 26 per cent of its equity capital. However it only received bids for around 1.136 million shares at a discovered price of Rs 340 (₤4.96) each. According to the Bombay Stock Exchange’s delisting regulations, the delisting offer would have only been considered successful if at least 3.69 million shares had been tended at or below the discovered price.
Shandong Linglong reports that despite import restrictions upon Chinese tyres in a number of markets including the US, Argentina and India, the company has relied upon a “flexible marketing strategy” and introduced new products to counter any resulting downturn. And the company’s approach appears to be working – according to Shandong Linglong, between January and April 2010 the total amount of foreign exchange it earned through exports has grown 56.47 per cent year-on-year. This is, the company states, a sufficient amount to have enabled it to already realise its 2010 export target.
Shares in Apollo Tyres Ltd have fallen around five per cent since the announcement of a lockout at its Perambra factory. This plant accounts for nearly a quarter of Apollo’s global tyre production and has a capacity of 850 tonnes per day, yet even before the lockout it was not reaching anything near this amount – and it is thus not surprising that investors are showing signs of nervousness.
Ruia Group company Falcon Tyres is to establish a new factory in Uttaranchal state, in Northern India, a move accompanied by an increase in production in the company’s Mysore factory. Group chairman told reporters after the company’s 83rd Annual General Meeting on June 15 that “following the establishment of the new plant about 30 km from Haridwar in Uttaranchal, and upgrading the capacity of [the] Falcon Tyres Mysore plant, the total production for two-three wheeler tyres would go up from the present 150,000 units a month to over 230,000 pieces.”
In June 11 filing to the Bombay Stock Exchange, Apollo Tyres has reported the initiation of a lockout at its Perambra factory in Kerala. “With reference to the earlier announcement dated April 29, 2010, Apollo Tyres Ltd has now informed BSE that the management has declared Lock-out at company's manufacturing facility at Perambra,” stated the filing, quoting “labour unrest relating to long term settlement negotiations” as the reason for its action.
At an Exane BNP Paribas seminar on June 11, Michelin outlined its intention to double passenger car and light truck tyre capacity in growth regions by 2012 and to increased truck tyre capacity by 40 per cent within this timeframe. This growth will in part be facilitated by the construction of three greenfield plants – a new US$800 million truck tyre facility in India, an $800 million passenger car and truck tyre factory in China, and a passenger car tyre facility in Brazil. All three plants are anticipated to enter production in 2012.
Apollo Tyres has confirmed that its OE arrangements with Volkswagen may be extended into the European market. Addressing journalists in Cologne, Germany, Neeraj Kanwar stated “only recently, five years ago, we went into the OE segment in India. Today in India we supply to all the top automotive industry. Recently we’ve gone into VW, supplying them tyres for the cars that they’re launching in India, and we are in discussions with them to supply tyres to them in Europe.”
Cooper Avon’s Reifen 2010 location next to the main entrance to Hall Three has helped give the company access to attendees making “good genuine enquiries,” according to European marketing communications manager, Sarah McRoberts. She said Cooper has enjoyed “easy access” to both developed and emerging markets, with visitors from “Eastern Europe, India, China and the Middle East” taking time to speak with the company. Therefore Cooper Avon sees Reifen as a “truly international fair” for the industry, yielding enough business opportunities to make it the “only real” European tyre focused event it attends.
Michelin managing partner, Michel Rollier, has spoken of the French tyre manufacturer’s plans to invest $2 billion in increasing its capacity in emerging markets between now and 2012. French newspaper Les Echos quoted Rollier as saying "our problem is that the growth of our capacity is insufficient compared with demand" at this year’s Michelin Challenge Bibendum event in Rio de Janeiro. “We cannot equip a manufacturer in North America and tell him we're not able to do it in South America," he reportedly explained.
Michel Rollier’s comments follow suggestions from some sources that Michelin is lagging behind its main competitors when it comes to its presence in the emerging BRIC (Brazil, Russia, India and China). However, in the future BRIC countries are expected to have “an increasing share in the sales revenues of Michelin tyres,” managing partner Jean-Dominque Senard said.
Apollo Tyres has officially launched its namesake brand in the European market, and announced plans to bring its Vredestein brand to its home country. The launch came just ahead of this week’s Reifen Essen, where Apollo is holding its first major display. Apollo said it plans to offers its flagship brand in Germany, the Netherlands, Italy and the UK this year, and will open new European markets in coming years. "Our current range, catering to the small and mid-size segment, will meet the growing demand in Europe. We will be available only at established retailers. We will not walk the wholesale route," Apollo managing director Neeraj Kanwar said.
At the same time Apollo Tyres introduced its moniker to the European markets at the Essen Reifen Show, the Indian company was also introducing the Vredestein name to its domestic customer base ahead of a launch taking place in the next 12 months. "We are working on launching the Vredestein brand in India. We will look at introducing it within a year… We have been studying the demands of the Indian market in the premium segment. The only thing is that in India, tyres are of low-level and heavier ones, and more in the mass segment," the Press Trust of India quoted Apollo Vredestein chief executive officer Rob Oudshoorn as saying.
During the 2009-10 financial year sales at Apollo Tyres’ operation in India, the Netherlands and South Africa increased 63 per cent to Rs 81.2 billion (₤1.2 billion), with operating profit growing from Rs 4.4 billion to Rs 11.9 billion (₤175.0 million) and net profit leaping 364 per cent to Rs 6.5 billion (₤95.6 million) – a result company chairman Onkar S Kanwar described as “an impressive performance by the company.
For the year ended March 31, 2010, JK Tyre & Industries reports consolidated net sales of Rs 45,706 million (₤672.2 million). A comparison with the previous financial period is not possible, notes the tyre maker, as the fiscal period ending March 31, 2009 was an 18-month period. Net profit for the year to March 31, 2010 stands at Rs 2,197 million (₤32.3 million). JK Tyre & Industries comments that its sales and profits for the year “are the highest ever, despite disruption of operations at Kankroli Tyre Plant, Rajasthan for three months owing to [an] illegal strike by workmen during the year.” Revenue from the company’s operations in India amounted to Rs 36,777 million (₤540.8 million) while those in Mexico came to Rs 8,934 million (₤131.5 million).
India’s JK Tyre & Industries has outlined plans for a new greenfield facility capable of producing 2.5 million passenger radials and 400,000 truck and bus radials per annum. “We will set up a greenfield plant near Chennai and invest Rs 930 crore (₤136.7 million) in that. The plant will be completed by 2012,” JK Tyre & Industries Vice chairman and managing director Raghupati Singhania. JK Tyre & Industries has reportedly already acquired more than 100 acres of land for the factory. According to the company’s president and director, Arun K Bajoria, just under a third of the total planned investment will be funded through internal accruals and the rest will be raised from various financial institutions.
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