Conti to expand, add radials to Indian tyre plant (updated)

ERJ staff report (TB)

New Delhi, India -- Continental AG plans to invest $71 million through 2013 in its newly acquired tyre plant in Modipuram, India, to expand bias-ply truck tyre capacity and add capacity for radial car and truck tyres.

The projects, announced in India earlier today by Continental India Ltd., will double bias truck tyre capacity to more than 1 million units annually and create 600 to 800 jobs.

The investment primarily will cover adding capacity for radial tyres - 900,000 passenger and 230,000 truck/bus tyres annually by the second half of 2013 - to the 37-year-old plant, Conti said.

Conti acquired the Modipuram plant, along with an inner tube plant in Partapur and access to 110 regional distribution centers, in July from India's Modi Rubber Ltd. for approximately $25 million.

Citing rising demand in India for vehicles with “high-quality tyres,” Nikolai Setzer, head of the Conti's tyre division, said Conti is “convinced that radialisation will be the driving force in the Indian truck tyre market” and investing in radial capacity “will prepare a solid base in order to meet that demand.”

Setzer did not comment on Conti's annual revenue expectations for the Indian operations. Modi Tyre Co. Ltd. reported an estimated $78 million in sales in its last fiscal year.

While Conti expects to continue Modi's strong focus on the replacement market through a network of about 1,400 truck tyre dealers, it said it also will work to build its OE business with vehicle makers.

Citing Conti's “legacy” as a leading tyre maker in Europe, Continental India CEO Andreas Penkert said, “…we start this first direct initiative of the tyre division here in India with full strength and dedication to make it a success-for our customers, for Continental and our employees and for the region.”

Conti reported more than $500 million in tyre division sales in Asia in fiscal 2010, or 5.4 percent of global tyre-related revenue, according to Conti records. It also operates tyre plants in China and Malaysia.

From Tire Business (A Crain publication)

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