ranjit | Feb 19, 2018 | 0
Stamping imprint globally
Apollo Tyres Vice Chairman & Managing Director Neeraj Kanwar has set his sights high. He wants to take the company to the number ten position among global tyre manufacturers in the next three years. He wants to see the turn-over jump to US$5 billion by then and build a strong global brand of choice providing customer delight and boost stakeholder value.
To achieve this vision, Kanwar has mapped out a careful corporate strategy with appropriate backup plans. That is why he does not agree with certain observations that the deal to buy US-Based Cooper Tire was a fiasco. His hope was to turn Apollo into a company with a combined turnover of US$6.6bn and push it to the position as the 7th largest tyre company in the world with presence in highgrowth markets across four continents.
But the attempted acquisition, which would have made Apollo a significant player in the world’s largest tyre market of North America by leveraging its production capacities and distribution networks, fell through. The deal, Kanwar thought offered a perfect match in strengthening Apollo’s presence in NorthAmerica and China besides its existing business across India, Europe and Africa.
In an interview to Polymers & Tyre Asia explaining his vision for the company, he said the Cooper acquisition would have been “an excellent strategic fit, but it did not pan out for reasons beyond our control,” he insisted.
“Apollo Tyres’ vision is, ‘to be a significant player in the global tyre industry and a brand of choice, providing customer delight and continuously enhancing stakeholder value’. As a growth-oriented organisation, we believe that, our strategic planning and execution will help us achieve our goals,” he insisted.
The attempt at Cooper acquisition was only one part of Kanwar’s strategy of growth. “When we had set the target of joining the elite league of top 10 tyre companies globally, we had clearly stated that we will be looking at achieving our goal with a mix of organic and inorganic growth,” he explained.
“However, with the Cooper deal behind us, we are now going full steam for organic growth which will involve new plants in Eastern Europe and South East Asia. In addition to that, we are always open to inorganic opportunities as well, depending on the strategic fit with Apollo.”Apollo is continually developing strategies to address the fiercely competitive global market, and has demonstrated its ambition to enlarge its market share and sustain growth. “We at Apollo have a three-pronged strategy to increase market share and sustain growth,” he disclosed.
“We have opened sales and distribution hubs in Thailand and Dubai to cater to the markets in the regions. Further, for the past two years, Apollo has run its high-decibel marketing campaign which has given us brand recognition. The third element of Apollo’s strategy is to look at capacity expansion via greenfield facilities,” Kanwar explained.
Currently, Apollo is exploring options of setting up greenfield facilities in Eastern Europe and ASEAN (Association of South East Asian Nations) region.
“The priority is on the Eastern Europe facility, as we are unable to meet the demands in Europe for our tyres, due to capacity constraints. This is also in line with our overall strategy to further penetrate the markets, be closer to the customers and at the same time, be competitive,” he elaborated.
Powering ahead Kanwar is not unduly worried about the uncertainties facing natural rubber, because he has factored the fluctuations in commodity and raw material prices into his expansion strategy. The shortages are part and parcel of the tyre industry.
“However, to stay ahead of the competition, you have to innovate and look at ways and means to become even more efficient. For example, we are working in the area of replacement of natural rubber with worthy alternatives,” he explained.
The tyre industry has also initiated a proposal for setting-up a public-private partnership with the Indian government to see how it can address the rubber shortage and price volatility issue in the country.
“There are possibilities of bringing in new areas under rubber cultivation or increasing productivity of the current crop itself. We are hopeful that all this groundwork will help us overcome the uncertainties of natural rubber to a large extent.”
As a keen observer of consumer trends, Kanwar is closely watching major consumer perceptions that are evolving that would have a defining impact on the global tyre industry. “We have reached a stage where, across markets, consumers are as aware on the service aspects as they are on the product itself.
While product performance, safety and right value have become hygiene factors, what really makes a difference, is the after-sales service.
He said the tyre itself is moving away from being a grudge purchase to an engaging zone. “We believe that tyre companies will be courting consumers with eye-catching tread designs, full bouquet of product benefits and at a competitive price in a customer friendly retail environment.”
He believes that this is a positive trend which will help consumers understand the true importance of tyres on a vehicle. For manufacturers it is an opportunity to make tyre retail an engaging and educational experience for the customer. Apollo has already done this through Apollo Zones, SuperZones and CV Zones.
Kanwar agrees that branding is becoming a very important and critical factor in market acceptance as the tyre is shedding its ‘commoditization’ image.
“Tyre has moved beyond from being seen as a commodity. Customers are now involved in the tyre buying process, much before the actual buying, like any other FMCG product. The need of the hour is to register our brands in the minds of the consumers, and that too, in a manner in which they understand best.”
Further elaborating on his vision for the company, Kanwar said that Apollo already has presence across Europe, and it is selling the Vredestein brand in almost all the European countries. Apollo branded tyres are also being sold in 10-odd countries, including Germany, the United Kingdom, the Netherlands, Italy and others.
However, he believes that Apollo has a long journey ahead. “Apollo is now a recognisable brand in Europe, “where we would still like to call ourselves a new entrant, as compared with some of our competitors.”
The journey has begun vigorously, and Apollo wants to make its imprint across the world stronger and more visible as it accelerates forward with expansion and consolidation.