Indonesian news sources are speculating that Groupe Michelin is positioning itself to take a majority stake in PT Gajah Tunggal, the Indonesian tyre manufacturer wing of Giti Tire. 
Michelin currently holds a 10% share in the company and in the next year is expected to receive around 5 million tires through an off-take agreement with the company.
Indonesian Web site VIVAnews quoted an unnamed source as saying Michelin will buy another 44% stake, making its total shareholding a majority 54%. Gajah Tunggal director Catharina Widjaja reportedly said she had not heard that Michelin would be the majority shareholder of the company. When asked the same question Herve Richert, Giti Tire international director sales and marketing, gave Tyres & Accessories a similar reply: “These are media news rumors, that we are not aware of and have no basis.”Gajah Tunggal reportedly allocated $30 million to $40 million for capital expenditure in 2010. "Capex is greater in 2010 than 2009, which was only $20 million to $25 million," corporate secretary Catharina Widjaja told the stock market recently. This follows a pattern of continued expansion and increased demand for tires from Michelin in recent years. The most recent data shows that these levels have not yet been reached, however they are likely to be achieved next year. According to an investors’ report published by Danareksa Research on Jan. 18, Gajah Tunggal will produce about 3 million tires for Michelin this year after manufacturing 2 million units for the company in 2009.
The total is set to become 5 million Michelin tires in 2011. This means that in five years, sales to Michelin have multiplied at least five-fold, suggesting the company has an increasing interest in Gajah Tunggal’s activities. (Tyres & Accessories)
