By Vikas Srivastava
Jun. 19 – The world’s second largest tire manufacturer, Michelin, is opening its own manufacturing unit in Tamil Nadu and investing US$1.48 billion in the next 10 years.
The company’s decision to invest in a new manufacturing unit resulted from an unsuccessful joint venture deal with Delhi-based, Apollo Tires, where the French company still holds an 8 percent stake. Apollo Tires has already given its No Objection Certificate for Michelin to open its own operations in India.
Michelin had sought government approval for acquiring a 100 percent stake for Michelin India in Tamil Nadu. Under the investment plan, the company aims to establish a plant in a 290 acres industrial park developed by State Industries Promotion Corporation of Tamil Nadu.
The new company will also set up a Greenfield unit to absorb investment of around INR4,000 crore in the first phase running into 2016.
It is also expected that the first phase of investment in Tamil Nadu will create job opportunities for around 1,500 to 2000 people if there is a further addition of INR 3000 crore by the company.
The investment will not only boost the Indian tire market but will also provide support to all other major tire markets especially those in the U.S. and Europe where sales have declined in the past months.
Vikas Srivastava is a legal associate of foreign direct investment at the Mumbai, India office of Dezan Shira & Associates. For more inquiries, email mumbai@dezshira.com.
