Apollo Tyres inks pact with French tyre major Michelin

Leading truck and bus tyre manufacturer Apollo Tyres and French tyre major Michelin have inked a pact to set up a joint venture company Mich...

Leading truck and bus tyre manufacturer Apollo Tyres and French tyre major Michelin have inked a pact to set up a joint venture company Michelin Apollo Tyres Ltd to produce truck and bus radial tyres in the country.

Michelin will have 51 per cent shareholding while Apollo would own 49 per cent equity in the new entity. Both the partners plan to invest Rs 322 crore over the next four years to set up a greenfield facility, Apollo Tyres Chairman Onkar S Kanwar announced at a news conference. With this decision, Michelin’s existing subsidiary in India has been merged into the new joint

venture. Kanwar said that the company is talking to the governments of Karnataka, Tamil Nadu and Maharashtra to set up the facility and decision would be taken according to the best concessions available. The commercial operations are expected to begin by September 2005.

Meanwhile, as part of broader agreement between both the parties, the Apollo board of directors has also approved Michelin’s purchase of 14.9 per cent equity from Apollo Tyres Ltd through a preferential allotment for about Rs 129 crore.

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“With this agreement, Michelin fully intends to establish its presence and to grow in India with Michelin-technology, together with a partner with whom we share mutual obligations,” Michelin group head Edouard Michelin said.

Michelin will provide the technical assistance to both the upcoming joint venture and existing Apollo Tyres as well for passenger car radial tyres. The partnership could not have been better timed in view of the growing bus and tyre market in India as the ongoing highway projects hold immense potential, Kanwar said.

The products would be sold in both Michelin and Apollo brand names.