Apollo Tyres, India's second largest tyre maker, will invest ¤ 200 million ($296 million or about Rs 1160 crore) to set up a manufacturing facility in Hungary that will make passenger car radials for the European and North American markets.
Apollo hopes to begin construction of the plant by April and complete it in 18 months; Chairman and Managing Director Onkar Kanwar told a news conference.
"This will be our European hub. It is the first step taken to service Europe and North America," he said. The plant will make seven million car radial tyres a year and employ 1,000 people in the first phase. It will also make ultra-high SUV tyres.
The company will soon sign an agreement with the Hungarian authorities for 50 hectares of land in Gyongyos, near the capital city of Budapest.
Apollo, which has targeted a revenue of $2 billion (about Rs 7,800 crore) by 2010, will use internal accruals to fund the plant. It expects the European business to contribute ¤ 300-400 million (up to Rs 2,200 crore) by then.
The company, which bought Dunlop Tyres South Africa in 2006, has ramped up its radial tyre capacity to meet rising demand in one of the fastest expanding auto markets in the world.
It is also spending Rs 500 crore (Rs 5 billion) in phases to set up a new plant at Oragadam Industrial Park, outside Chennai, to make truck radials as better roads and heavier vehicles spur the use of radial tyres in trucks and buses.
At the ongoing auto show in New Delhi Apollo launched its range of winter tyres designed for Europe and North America.
"Apollo Tyres is in a growth mode and the investments are part of our ongoing product and capacity expansion plans. The Indian market is crucial for us and we will continue to ensure both market and customer demands are fulfilled at the earliest," Kanwar said.
The company has four plants in India and two each in South Africa and Zimbawe.
Apollo shares closed up 4.52 per cent at Rs 54.30 on the Bombay Stock Exchange in a weak market on Wednesday.