India's largest tyre maker Apollo Tyres has acquired Dutch tyre maker Vredestein Banden for an undisclosed sum, gaining a foothold in the lucrative European tyre market and raising its annual turnover by a quarter. Vredestein Banden, with an estimated annual revenues of 300 million euro ($403 million), was a subsidiary of Russia’s largest tyre manufacturer Amtel-Vredestein, which went bankrupt last month. “This strategic acquisition will bolster Apollo’s plans for its European customers. We have acquired one of the most profitable tyre makers in Europe, and will get direct access to Vredestein’s large market in Europe,” said Delhi-based Apollo Tyres’ chairman and managing director Onkar S Kanwar on Monday.

The Dutch firm, which is likely to be renamed Apollo Vredestein, will be integrated with BSE-listed Apollo in the next few months. The process will be undertaken jointly by both the companies to develop synergies in the field of marketing, technology, manufacturing and human resources. Apollo Tyres’ share price jumped 9.43% to Rs 29 on BSE on Monday from Friday’s closing price of Rs 26.50. Vredestein has a compounded annual revenue growth rate of 8.5% for the past five years, and has capacity to produce 5.5 million tyres annually, which takes Apollo’s total tyre capacity to 16.8 million.

The acquisition will push Apollo Tyres’ annual turnover to Rs 7,200 crore. The company targets Rs 10,000 crore revenues by fiscal 2010. Apollo Tyres raised funds for acquisition through a combination of internal accruals and debt. The company was advised by KPMG, Nomura and CMS Derks Star Busmann on the transaction. Mr Kanwar said Apollo has deferred its plan to set up a greenfield plant in Hungary with a proposed investment of 200 million euros to produce 70 lakh tyres a year. This is due to land acquisition problems in the East European country. Instead, it will now concentrate on consolidating operations in Holland. Vredestein is Apollo’s second international acquisition.

Royal Philips plans to make India its
manufacturing hub

Royal Philips Electronics, Europe’s biggest consumer electronics group, plans to make India a hub for developing and manufacturing products for global markets and sourcing components across its core areas of lifestyle, healthcare and lighting, a top company executive said.

“India is much less affected (by the global slowdown) than other global markets and represents a huge opportunity to not only grow sales in India, but even develop products and manufacture them for our global consumers,” Gottfried Dutine, board member and executive vice-president at the Dutch-based Philips, told ET.

The group’s global management is evolving a long-term plan, running until 2015, to invest in and grow its Indian business, he added. The strategic shift towards markets like India comes in the wake of the company recently reporting a 15% drop in sales in the more mature US and western European markets during the first quarter of 2009. Philips’ finance chief Pierre-Jean Sivignon recently told analysts that two key emerging markets — Brazil and India — had performed better than mature markets with just a tiny mid-single digit drop in sales. Sales were shored up by good performance in the healthcare businesses in these markets. Clearly, Philips, which has reduced to a minor player in the Indian consumer electronics market, that is currently dominated by Korean companies LG and Samsung, is looking for an image makeover in India. “We recently felt the need to give special attention to big emerging markets like India, China and Brazil. We are now taking a fresh look to emerge as a differentiated player across our businesses,” Mr Dutine said.

The game plan is to drift away from cluttered segments like TV and audio. “By 2015, we wish to transform Philips’ image in India from a pure consumer electronics brand to a health and well-being company,” Philips Electronics India MD and CEO Murali Sivaraman said. “We are now much less a TV company,” Mr Dutine said. “In the consumer space, Philips will focus more on products built around nutrition, beauty, mother and childcare,” he added.

Philips recently made an inroad into the home healthcare segment in India with products for obstructive sleep apnea and respiratory care. The company plans to expand the home healthcare portfolio. Last year, Philips acquired two healthcare companies in India, Meditronics and Alpha X-Ray, to develop a manufacturing base. “We are scanning the market for more such acquisitions,” Mr Dutine said. “We have very good cash flow and finance will not be a constraint,” he added.

Arcelor-Mittal plans 35 million tonne captive port in Orissa

Arcelor-Mittal, the largest steel maker of the world, has evinced interest to set up a captive port at Barunei Muhan to the north of Mahanadi river near Paradip in Orissa. The port will be used to serve two mega integrated steel plants of the company proposed in Orissa and Jharkhand. The steel projects, which will have capacities of 12 million tonne each, require import of raw materials like coking coal and limestone and export of finished products. The captive port is projected to have a cargo handling capacity of 35 million tonne per annum (MTPA) to be attained in two phases.

However, the company has not indicated the quantum of investment for the port. A team of company officials led by Sanak Mishra, chief executive officer (CEO) of Arcelor-Mittal’s India greenfield projects, today made a presentation before the Orissa chief secretary Ajit Kumar Tripathy and other senior officials of the state government on the port project.

The proposed port will have a cargo handling capacity of 10.62 million tonne in the stage-I of first phase which will be expanded to 17.3 million tonne in stage-II. After the completion of 2nd phase, the cargo handling capacity will go up to 35 million tonne. The port will handle cargo like coking coal, PCI coal, limestone, slabs, billets, HR coil, steel products among others. It will have 5 berths in the first phase and 7 berths by the end of the second phase. While 391 vessels are expected to visit the port every year by the end of the first phase, the number will grow to 582 ships when it is fully commissioned.

In its presentation, the company stated that it will be prudent to design the first phase with Panamax size vessels which can be upgraded to handling cape size vessels in the second phase. The channel will have a depth of 16 metres and a length of about 6 kms. This will further increase to 20 metres and 10kms by the end of second phase. The company proposed to construct double lane rail line to connect the port with the Paradeep-Haridaspur main line. Similarly, new sidings will be constructed for railway connectivity. Besides, a 4 four-laned road will be constructed to connect the port with the National Highway no.5.

The captive port will have steel servicing centre, downstream processing and finishing line, ancillaries such as automative industry, technical training institutes and fabrication workshops. The company has indicated that about 6000 acres of land will be required for setting up the project and related infrastructure, sources added. Interestingly, the port site will be about 270 km away from the site of its 12 million tonne greenfield steel project in Patna tehsil in Keonjhar district of Orissa. The preliminary project report was prepared by Department of Ocean Engineering (DoOE), Indian Institute of Technology (IIT), Chennai. DHI was entrusted with the task of preparing feasibility report for the port. However, the fate of this proposal remains uncertain as the state government is not in favour of captive ports to come up in the identified location which it fears will result in under-utilisation of the port potential of the state.