"All the competitors, including us, were surprised at the drop in OEMs and particularly the extent of drop in OE business. Because of that, from the announced plans, the capexes have been slowed down by everybody like we have," Gaurav Kumar, chief financial officer of Apollo Tyres
"Based on the market information that we get, all the players have slowed down their capital expenditure. So is there specifically some capacity coming up, which will alter the demand‐supply economics in near term? (The answer is) No," he added.
Speaking about the Andhra Pradesh facility, he said, that the plant ramp up may depend on how the demand situation pans out. The ramping up is scheduled to happen over two years, and the full capacity will be available in Fiscal 2023. When it reaches 100 per cent utilisation, it can genrate over Rs 4,000 crore in revenue.
The plant will start making tyres by the end of this year and then its capacity will be expanded to 15,000 car tyres and 3,000 truck radials over a two-year time frame, that is by FY22-end.
The company expects the fourth quarter raw material prices to be lower than the December quarter. The major rubber manufacturing countries may look at offloading their output, as the Chinese market has been weak in the recent past, said analysts.
While the coronavirus outbreak may impact the supply of Chinese tyres to Europe and offer a widow of opportunity Indian manufacturers including Apollo Tyres, it could also disrupyt the supply chain considering China's presence across different geographies is significant. The firm expects to start realising all the benefits including a fully-scaled up plant in Hungary, Europe by FY22.