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