Apollo Tyres marks $2 bn topline milestone

With an eye on the global tyre market pecking order, Apollo Tyres wants to become a $2 billion company next fiscal.

By then, not only would the company have a clear strategy for greater penetration in Europe and other export markets, it would also have further increased share in the domestic radial tyre supplies, according to the tyre maker.

For the nine months ended December 2009, the company saw sales turnover of $1.29 billion, while in 2008-09 it was $86.4 million.

The company has four distinct brands in its portfolio—Apollo, Vredestein, Dunlop and Regal. The flagship Apollo brand is for all markets. Vredestein caters to premium segments for ultra-high performance cars and high-end bicycles in Europe. For Dunlop, the company holds rights only in the South African market whereas
Regal is price warrior brand in the entry-level segment.

Neeraj Kanwar, vice-chairman and MD, told DNA Money that his team is currently studying the whole branding matrix to determine how to use all these four brands to maximum advantage across the globe.

“Vredestein will come to India and Apollo will go to Europe. We could use the Vredestein network to sell the Apollo brand of tyres in Europe…a global marketing team sitting in Brussels is currently doing an extensive brand study.”

Kanwar said the company wants to be among the top-10 global tyre manufacturers within the next five years, which means climbing up five rungs (it is currently placed 15th). Its turnover grew more than 100% last year with the acquisition of Dutch tyre company Vredestein BV and Kanwar said future growth too will come through a mix of organic measures and acquisitions.

Apollo’s truck radial facility coming up at Chennai is on course for commissioning next month. In all, Rs 2,000 crore has been earmarked for this facility and it will produce 6,000 truck radials per day at peak capacity. The plant already makes over 8,000 passenger car radials a day. Another $30 million is being invested in enhancing capacity at its South African facility for both truck radials and cars. Passenger radial tyre capacity will increase to 12,500 tyres from 10,000 tyres a day now, while truck and bus tyre capacity will go up to 1,500 from 800 tyres a day now.

Asked whether Apollo was mulling a price hike, Kanwar replied in the negative. Tyre prices have already risen over 10% since April 2009, while input costs have simultaneously risen by almost 25%.
Apollo last increased prices in January and Kanwar said that the differential is being absorbed, as of now.