Apollo Tyres is planning to produce commercial vehicle (CV) tyres at its upcoming facility at Andhra Pradesh, where the company plans to invest around Rs 20 billion. Originally, the company was planning to produce only car tyres, but it now plans to add truck tyres to cater to growing demand.
The company already has a big facility in Tamil Nadu that rolls out nearly 8,000 tyres a day, and plans to raise the number to 12,000.
Gaurav Kumar, CFO, Apollo Tyres, said that production at the Andhra Pradesh greenfield plant would start in the second half of FY2020.
"We are on the drawing board right now, given the strong revival in demand and the significant volume growth outlook now in Andhra Pradesh we are considering both car tyres and truck tyres. Earlier the plan was to consider only car tyres, but we are now looking at a capacity for truck tyres also in Andhra Pradesh."
At the Chennai facility, there is no way production can be expanded beyond 12,000. The average run rate for FY2018 would be somewhere in the vicinity of 8,000 tyres a day, so there is enough scope of growth in terms of the capacity utilisation in Chennai this year, Kumar said during an analyst call.
Earlier, Apollo had talked about considering a capacity that would produce 16,000 car tyres a day to start with.
However, given the recent strong demand, the production capacity is still under consideration. Based on machinery configuration, it is usually in multiples of 1,500 tyres per day, said Kumar.
"The exact quantum, based on the demand outlook and our own capacity, would get finalised shortly," he added.