According to an article published in the Indian financial daily Hindu Business Line, Metro Tyres group managing director Rummy Chhabra said that a share of the company could be offered to Continental when Metro’s planned IPO – from which the company hopes to raise about Rs 1 billion (£12 million) – takes place in 18 months time, or possibly even beforehand.
Metro plans to increase their presence in Europe and Continental’s assistance has been invaluable to this end. Chhabra said Continental was willing to help Metro enter its home European market as both company’s products complement each other. “While we address the budget segment, Continental plays in the premium end of the market. Hence, our products do not overlap each other.”
The Indian tyremaker has already opened an office and warehouse in Barcelona, from where it will market its Ortem brand tyres and tubes to European markets. Chhabra said the company expects European sales to contribute up to £10 million to its total revenue during the first year.
The German company sources 200,000 tyres and 300,000 tubes from Metro each month and reportedly wishes to increase its sourcing from the company. To meet with this anticipated greater demand, Metro intends to build a new £6 million plant, with an annual capacity of almost 5 million units, within the next couple of years.
This new facility, along with increase in capacity at Metro’s four existing plants, will, according to Chhabra, enable the company to potentially increase its domestic market share from 3% to 20% within two years. Metro state that business derived from Continental, both domestic market and export, contributes a total of £7 million to the company’s £50 million turnover.
