Cheng Shin says India plant to start in June

Tire maker Cheng Shin Rubber Industry Co (正新橡膠), which sells its products under the Maxxis brand, said its new plant in India is to start production in June, as it eyes business opportunities in the region.

New motorcycle sales in India are expected to reach about 18 million units this year, company vice president Liao Cheng-yao (廖正耀) told an investors’ conference earlier this month.

With an annual capacity of 6 million motorcycle tires, the plant in India’s Gujarat Province will mainly produce tires for its Japanese customers.

Cheng Shin, the world’s 10th-largest tire manufacturer, said the Indian plant could break even in three years.

The company is also expanding in Indonesia, but plans for a new motorcycle tire plant to start operating in the third quarter might be delayed as it is still awaiting permission from local authorities.

The plant, which is based in West Java’s Greenland International Industrial Center, will have an annual capacity of 6 million tires, Cheng Shin said.

The two ongoing expansion projects are expected to raise the revenue contribution of motorcycle tires, which accounted for 13.9 percent of sales last year, the firm said, without elaborating.

Car tires remained Cheng Shin’s main source of revenue last year, accounting for 44.4 percent of its total sales, while truck tires contributed 17 percent, company data showed.

The Changhua-based company — the nation’s largest tire maker — operates 10 plants in Taiwan, China, Vietnam and Thailand.

Cheng Shin’s board of directors yesterday approved plans to distribute cash dividends of NT$3 per share, which translate into a payout ratio of 73.3 percent, the company said in a filing with the Taiwan Stock Exchange.

The company posted a net profit of NT$13.25 billion (US$439.5 million), or NT$4.09 per share, last year, up 3.7 percent from previous year, while sales edged up 0.56 percent to NT$117.39 billion, company data showed.

Based on Cheng Shin’s stock price, which closed at NT$62.10 yesterday, the proposed cash dividend would translate into a dividend yield of 4.83 percent.

The tire manufacturer is to hold its annual shareholders’ meeting at the company’s headquarters on June 15.