To further cement its relations with Metro Tyres, with which it has a joint venture for manufacturing motorcycle tyres in India, Continental Tyres has decided to buy a minority stake in the closely held two-wheeler and cycle tyre manufacturer. The Delhi based Chhabra family is willing to divest up to 49% in the privately owned company.

It is Continental’s first investment in India though it has had technical tie-ups for four-wheelers with JK Tyres in the past. After exploring potential partners in Asia, Continental decided on Metro Tyres. Rationale for investment is the potential markets of Asia, Africa and Latin America and cost competitiveness for its low-end tyres. The company stands to reduce up to 30 to 40% off the tyres’ cost when producing in India.

Metro Tyres has infused INR1 billion (approx €19 million) to increase production capacity and build new plants. Currently Metro Tyres supplies cycle tyres and tubes and will soon add two-wheeler tyres & tubes and tubes for commercial vehicles. Shipment for 50,000 motorcycle tyres is as soon as later this month.

An investment of INR300 million is being channeled into a four-wheeler tyre tube manufacturing facility to be operational by the end of this year.

Deepesh Rathore / Tilak Swarup