The Rs 1,400-crore Apollo Tyres is in talks with Continental AG of Germany for setting up a tyre manufacturing joint venture in Malaysia.Apollo vice-chairman and managing director Onkar S Kanwar is likely to discuss the project in detail with Continental for technical collaboration during a visit to Germany.

Apollo vice-president (manufacturing and projects) U S Uberoi refused to comment on the proposed joint venture. "We are exploring various possibilities. It is a continuous process," he said.

When asked about the possibility of Apollo-Continental combine venturing into Malaysia, Uberoi said, "the project proposal is yet to be worked out especially with regard to financial matters".

Uberoi further said Malaysia as a site for the factory has certain disadvantages like labour shortage and the country does not allow permanent immigration of any technical or managerial work force.

He also stated that Apollo is being continuously approached for technical collaboration from companies in different countries and the latest offer has come from Bangladesh.

Continental and Apollo's proposal to set up a joint venture in a third country assumes significance in the wake of the slowdown in the implementation of their radial tyre project here in India.

The slow pace in setting up the project is attributed to the poor growth in the car tyre segment in 1996-97. The 50:50 joint venture company was to start commercial production at the Pune plant by 1998-end. The total project cost of Continental-Apollo joint venture at Pune is about Rs 400 crore in which Apollo is to contribute Rs 200 crore as equity, to be generated from internal accruals.

Out of the total production 80 per cent were to be picked up by Continental for foreign markets and Apollo was to market the rest 20 per cent in the domestic markets under the joint brand name of Apollo and Continental.Apollo's export performance during fiscal 1996-97 suffered due to low production in the first few months of the year as a result of power shortage.Apollo International, a subsidiary of Apollo Tyres and its export arm, had to depend on Chinese and Korean tyre companies to fulfill its export commitments.

However, this year Apollo International expects to do better with turnover from tyre export projected at nearly Rs 150 crore. During the current financial year the prime markets that Apollo is targeting are that of the Gulf countries including Iran, Iraq and UAE.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.