Apollo Tyres India Ltd.’s Growth Strategy:
Treading Global Markets
By Asams V.K
Original Equipment manufacture and replacement were the two areas where demand is high
OEM demand due to increasing production in Automobile and Construction equipments
Global tire market faced the recession in 2009-2010
Bridgestone, Michelin and Goodyear are the top 3 player in global market
India and china are the fastest growing markets
Global players had already established their presence in India
Raw material used in manufacturing are natural rubber, synthetic rubber, nylon tire cord fabric, carbon black and rubber chemicals
Price of tires depend on production of rubber and price of crude oil
Global manufacture used natural and synthetic rubber in 30:70 preposition, but Indian manufacture used in 80:20
Founder Mr. Raunaq Singh in 1976
First tier plant in 1976 at Perembra in Kerala with collaboration of General tires U.S
U.S Technology failed due to the difference in temperature and road conditions in India
By 1980, the company was at the verge of bankruptcy, later taken over by BIFR
Company was in bad shape with failed products, a negative balance sheet, poor management and labour union problems
In 1980, Onkar S. Kanwar took up the challenge of turning the company around
Onkar took up many initiatives to restructure the company
New plant at Gujarat
Restructured capital base, middle Management, New recruitments, Instilled confidence in the workers and linked the wage to productivity
Onkar focused on Truck segment, concentrating more on load and mileage requirements of customers
Later acquired premium tyres in Kochi in 1995
In 1995 entered in to JV with Continental group, set up a tyre factory at Pune for passenger car radical tyres
Later in 1997, Knawar (son of Onkar) jointed in business, he started a new department called Strategic Planning and coordination Department ,Objective was to bridge gap between company and customer requirement
He increased the production capacities of 3 plants (2 in Kerala & 1 in Gujarat)
In 2000 they entered in to car segments
He aimed to spread the roots of company to enter in to global market, with a goal to become 2nd largest player in India
In 2003 JV with continental and Michelin group for Bus radial tyres
Market Penetration
Product Development
Market Development
Diversification
New ProductsExisting Product
Existing Market
New Market
GROWTH
S
RT
ATEGY
Market Development
1) Targeted in African continent and South American Market Acquired Dunlop Tries International Ltd in South Africa in 2006
Dunlop was facing consumer apathy and an influx of low-cost tyre
They repositioned the brand
Started SBU in Zimbabwe and UK
Good deal in terms of increase in the 1) Size of the company2) No. of brand3) Manufacturing facilities
4) Dealer network and 5) Access to 32 countries in the African continent and South America
Acquired Verdestein Banden B V (VBBV) in Netherland
Europe become the third crucial market
Funded through internal accruals and external loan finance
Through acquisition Apollo got 1) Manufacturing facilities2) Distribution network 3) Access of high technology 4) Profitable brands5) R&D centre
2) Targeted in European market
Market Development: FUTURE AHEAD
Middle East Asia: Dubai
China
ASEAN countries
Latin America
Passenger Vehicle
Commercial Vehicle
FarmIndustrial & Construction Earth Movers
Heavy Commercial vehiclesLight Commercial VehiclesSmall Commercial Vehicles
Car TyresSUV TyresVan Tyres
Off Highway Tyres Vehicle
(Source: http://www.apollotyres.com/india/ApolloPresentation/2013/index.html#/2/)
Lack of Raw Materials
Flood in Thailand, Indonesia, Malaysia & India lead to increase the price of raw materials
Political factors: US special tariff on Chinese passenger/light truck tries
Lack of plantations for acquisitions
Labour problems: Plant in Kerala
Importance of Joint ventures
Importa
nce of A
cquisit
ions
Focusing on one product, rather than too many