Off-highway tyre maker Alliance Tire to invest Rs 1,240 crore in third plant at Visakhapatnam

MUMBAI: Off-highway tyre-maker Alliance Tire Group (ATG), owned by the Japanese major Yokohama Group, is setting up its third plant in the country in Visakhapatnam with an investment of $ 165 million (around Rs 1,240 crore). The proposed $ 165-million plant will add over 20,000 tonnes per annum (55 tonne per day rubber weight) capacity to the 2.3-lakh-tonne annual production from two India plants and will be commissioned by the first quarter of 2023. The plant will generate around over 600 new jobs, adding to its 5,500-strong headcount, Nitin Mantri, chairman of Yokohama India and director of ATG, told on Sunday.
ATG has one plant at Dahej in Gujarat with an annual capacity of 1.3 lakh tonne (360 tonne per day) and another at Tirunelveli in Tamil Nadu with an annual capacity of 1 lakh tonne. The group has a 45,000-tonne plant in Israel as well where it has its main R&D centre as well. The TN facility also has an R&D centre.

These two plants produce all the three key off-highway tyre brands of ATG-Alliance for agricultural machinery, Galaxy for construction & industrial machinery, and Primex for forestry machinery and over 90 per cent of the production is exported to over 120 countries.

When asked about such a capital investment amid one of the worst recessions in the history, Mantri said they were looking for a suitable location for the third plant for almost three years now and had identified Vizag before the pandemic broke out.

"From a demand side we see one of the best farming seasons ahead here and forestry is also doing well globally. Only construction is down."

Asked any plan to enter passenger vehicles/ commercial vehicles tyres, Mantri said "ATG is an off-highway brand and will remain so. But we have made an exception with our Dahej facility where we make radial tyers for heavy vehicles. The new plant will also be for off-highway tyres only."

Yokohama has since the acquisition of ATG in 2016 invested over $ 200 million in India so far, he said.

Asked about India's contribution to the group's total production and $ 650 million revenue (in 2019), he said the country contributes 50 per cent each to both.

With over 90 per cent of its India output exported, Mantri said the focus remains exports and farm segment is the only one where it has around 4 per cent market share in the country.

He said while the off-highway segment was growing under 5 per cent, thanks to affordable pricing they have been clipping at 10 per cent per annum for the past many years and hopes to continue with this growth rate.

The privately held ATG offers 3,000 types of tyres globally including in the US and Europe and has under-5 per cent global market share.

The new plant, with a daily capacity of 55 tonne (rubber weight) will come up in the special projects zone at Atchutapuram industrial park near the Visakhapatnam port.

The Yokohama Group has eight off-highway tyre plants across four countries - Japan, India, Israel and Vietnam.

The six-decade-old ATG specializes in design, development, manufacturing and marketing of agriculture, forestry, construction, industrial, earthmoving, mining and port tyres serving 120 markets across all the continents under the Alliance, Galaxy and Primex brands.

ATG's India connection began in 2007 when the Mahansaria family, in partnership with Warburg Pincus acquired the Israel firm then known as Alliance Tire Company and began India production in 2009.

In 2014, Warburg sold its stake to KKR. In July 2016, ATG was acquired by The Yokohama Rubber Company of Japan for about $ 1.1 billion.

Domestically ATG competes with the Mumbai-based Balkrishna Industries that sells under the BKT label --a company that was founded by Yogesh Mahansaria.