APOLLO TYRES’ GLOBAL GROWTH JOURNEY
By TA News Bureau:
From a small town in rubber growing south Indian state of Kerala, Apollo Tyres has traversed a long road to become one of the top brands in Europe. Thanks to its acquisition strategy, when it brought into its fold the iconic Dutch brand Vredestein, it signalled Apollo’s declaration to be a global leader in tyres in various segments that customers accept because of quality, durability and safety. This arduous journey, during which it faced many challenges including the aborted attempt to acquire Cooper Tire & Rubber Company – the American company that makes replacement automobile and truck tyres – only strengthened the resolve of company Chairman Onkar Kanwar and his son Vice-Chairman & Managing Director Neeraj Kanwar to keep climbing the ladder to become one of the top global players
Top companies frequently review past records of performance and experiences however unpleasant these may be as they firm up future strategies. They do not ignore setbacks, but consider them as opportunities to learn and move forward. Apollo Tyres is no exception. It has gone through many diverse and complex situations, but came up winners. It has a dynamic determination to be a leader. It is in its DNA.
Adversities and setbacks only steeled Chairman Onkar Kanwar and his son Vice-Chairman & Managing Director Neeraj Kanwar to relentlessly pursue their dreams. Even when they were confined to a single plant making truck tyres, they had set their sights on the bigger picture. They wanted to see Apollo Tyres as a multinational brand with global footprint.
At a personal and professional level, the Kanwars are committed to growth not only for the sake of expanding business and enhance shareholder value, but also to corporate social responsibility emphasising sustainability issues.
The Kanwars have consistently demonstrated their iron-clad belief that any venture that is sharply customer-focussed can succeed. Careful planning and execution – not swayed by adverse circumstances and bottlenecks – are fundamental requirements to rapid business growth. Apollo Tyres is an example of how corporate entities can overcome adversarial situation and come up on top.
When Apollo Tyres forayed into Europe in 2009, there was scepticism. It acquired the subsidiary of a bankrupt Russian company and took control of the Dutch brand Vredestein Banden. In it the Kanwars discovered the potential gem to grow the business.
It was the same sense of discovering and acquiring world-class companies that prompted Apollo to look at Ohio-based Cooper Tires to further develop Apollo’s market reach. In 2013, sensing the fast-growing lucrative US market, it made an aggressive $2.5-billion bid for Cooper.
Neeraj Kanwar was confident that if the deal had come through, it would have taken Apollo on top the global league. The deal failed because of opposition from Cooper’s Chinese subsidiary.
Not to give up the ambition to become a global player, Apollo launched a vigorous plan to expand into Europe on the back of its acquisition of Vredestein. The greenfield project in Gyongyoshalasz, 90 kilometres from the Hungarian capital Budapest, is part of Apollo’s growth strategy and further expansion into Europe.
Built over 72 hectares, the Hungarian tyre plant is designed to have a total capacity 5.5 million passenger car and light truck (PCLT) tyres and 675,000 commercial vehicle tyres at the end of Phase I.
The plant with state-of-the-art production facility is highly automated and is driven by cutting-edge information technology tools, including robotics. It is Apollo’s second manufacturing facility in Europe and its sixth global manufacturing plant.
“This is the first time the company has set up a plant outside India from scratch,” said Chairman Onkar Kanwar in the presence Hungarian Prime Minister Viktor Orban, who inaugurated the plant. The Hungarian government’s interest in the project was reflected in the presence of top officials, including Foreign Affairs and Trade Minister Peter Szijjarto.
As Kanwar said the opening of the Hungarian manufacturing facility, one of the most advanced in the world, was yet another milestone in Apollo’s global growth journey. It also marked Apollo’s 40 years in the business of manufacturing and selling of tyres.
“This facility will help us further increase our presence and market share in Europe,” Kanwar said. “From being a replacement market-focused company in Europe, we would soon be starting supplies of our tyres to all the leading OEs in Europe.”
The Hungarian plant will complement Apollo’s existing facility in the Netherlands, and produce both Apollo and Vredestein brand of tyres for the European market. It is already supplying OE tyres for top-quality cars giving a powerful push to Apollo’s OE journey in Europe.
When one looks back, Apollo’s growth story was remarkable. It was in mid-1970s that it began manufacturing truck tyres in its plant in Kerala and soon became the market leader in the segment.
The Hungarian plant is located near the production facilities of OE manufactures such as Volkswagen, Daimler and Suzuki Motor Corp. This strategic location will further strengthen Apollo’s regional market expansion strategy. It has already nudged into the supply chains of world-leading carmakers such as Volkswagen, Ford and SEAT.
“While these are the first few, there are several other OE approvals in the pipeline for our passenger car tyres,” said Neeraj Kanwar. “Such OE approvals are a testimony of our high quality products and our focus on superior design.”
Mathias Heimann, President, (Europe) of Apollo Tyres explained that he would like at least 25 per cent of tyres to be sold to OEMs. It will be a hard job, but for Apollo it is such a challenge that always helped the company accelerates its growth.
Driving Apollo’s rapid expansion is its R&D breakthroughs. It recently opened a new global R & D Centre at Oragadam, the industrial hub to the west of Chennai. It will service the product development needs for the entire Asia Pacific, West Asia and Africa regions. It is the second global R&D Centre, after the Netherlands facility, which has been operational since 2013. About 300 people are working in its two R&D facilities.
Besides the two Global R&D Centres, Apollo has also established two satellite R&D Centres in Bengaluru and Germany. The R&D spend as a percentage of turnover has grown from 0.74 per cent in 2011-12 to about two per cent now. These research centres work closely with OE manufacturers and replacement clients, test centres, raw material suppliers and research institutes.
“Going forward, R&D will continue to be the cornerstone of our vision, as we plan to ramp up the R&D spend to 3 per cent of our sales revenue,” Neeraj Kanwar said.
In January this year, as part of its expansion in India – the world’s fastest growing emerging market – Apollo Tyres is investing in building a state-of-the-art manufacturing facility in Andhra Pradesh. It has provisioned for the future capacity expansion requirements in India for the next 5 years and more.
This will add to Apollo’s India manufacturing facilities – two (including a leased facility) in Kerala, and one each in Gujarat and Tamil Nadu.
As Apollo steadily rolls into the European market, the most competitive in the world, it is padding up the marketing muscle to further enlarge the global market share. There is no end to innovation. It is continuum.