India’s second largest tyre manufacturer Apollo Tyres will invest INR 900 crore as capital expenditure this year, the bulk of it towards more than doubling the capacity at its new factory in Chennai which is expected to come on stream later in the year.

Apollo’s capacity expansion comes on the heels of the French tyre giant, Michelin, finalizing plans to pump INR 11,000 crore, also in Tamil Nadu, to set up a radial tyres, tubes and ancillary products plant.

Of the INR 900 crore earmarked for this financial year, the Chennai plant will see an investment of INR 700 crore, while the balance will be used for off the road tyres and also for expanding production at the Baroda in Gujarat plant.

The company had earlier set aside INR 700 crore as capital expenditure, 90% of which was planned for the new plant. However the New Delhi based company decided to increase the output of commercial vehicle tyres by more than two fold to meet demand, which is expected to rise in the second half of the year.

The revised output will now be 3,000 truck and bus tyres per day as against 1,100 units decided earlier, with plans to increase it further in later stages. The plant will also produce passenger car tyres. Apollo’s commercial vehicle emphasis comes at a time when the truck and bus market in the medium and heavy segment has slumped by 30% in the first four months of this financial year.