We enter the Taj Mahal Hotel in New Delhi and head for the business desk at the reception. “We have a meeting with Mr. Onkar Kanwar and his son Neeraj Kanwar from Apollo Tyres,” I say to the woman behind the desk. The woman looks down at some sort of calendar and back up at us again. “They are expecting you in the Emperor’s Lounge,” she says. “Please follow me.”
“Welcome to New Delhi! My name is Neeraj Kanwar and this is my father, Onkar.” Neeraj is an athletic-looking man, dressed in a grey suit. His father is a distinguished-looking gentleman wearing a traditional turban. “Please have a seat,” Neeraj says, pointing at two arm chairs.
“Thank you,” I say. “Thank you for meeting us. We know Apollo has always been an important player in the Indian tyre market, but now it looks as if India is not big enough any more for Apollo?”
Onkar clears his throat to signal that he is going to speak. “We’re doing very well in our home market,” he says, “but the entry of multinational tyre brands into India brought new practices and new products… and is eating a part of our market share. Of course we improve our products and fight for our market share, but we’re not going to sit and wait. The choice in this business is either to wait and be eaten or be aggressive and grow globally. We chose the second option.”
“Of course,” I say, “with a brand named after a Greek god, you can’t sit and wait. What does the company strategy look like?”
“The first step was the acquisition of Dunlop tyres in South Africa. Now known as Apollo Tyres South Africa,” Neeraj says. “Being one of the BRICS countries, South Africa has a similar market to India’s, which made it a relatively easy first step into the global arena. After building a strong foothold in South Africa, we were ready for step two of our expansion strategy, Europe.”
“Europe is the home ground of the biggest global tyre brands,” Onkar says, “the same brands that are entering the Indian market for a piece of the Indian cake. The European market is dominated by the big four: Bridgestone, Michelin, Goodyear and Continental. It is crucial to break into the Original Equipment market, providing tyres to European car manufacturers.”
A waiter enters the Emperor’s Lounge with a silver tray and puts a silver teapot and delicate china cups on the table. “Jasmine tea,” he says, serving the tea.
“So, to enter the European market, you bought Vredestein in the Netherlands?” I ask.
“For Apollo, the acquisition of Vredestein serves a dual purpose,” Neeraj says. “First of all, it has the technology to make premium-quality tyres for European customers. Secondly, Apollo Vredestein has distribution channels in 13 countries.” Neeraj waits a few seconds to let his words sink in. “Next to that, we’re building a greenfield plant in Eastern Europe,” he continues, “which will be ready in two to three years. It will have a capacity of seven to 10 million passenger car radial tyres.”
“So you will have a piece of the European cake,” I say with a smile.
“That’s the plan,” Neeraj continues. “Success in Europe will pave the way to other markets, like Latin America.
We’re already looking into the Latin American market and we’ve opened an office in Brazil. At the moment we’re studying the market to start operations. The plan is to set up a plant and begin construction in the next two years.”
“Will there also be acquisitions in Latin America?” I ask.
“We’re exploring the possibilities for a joint venture or any kind of tie-up with a local player,” Neeraj replies.
Onkar clears his throat again, announcing his addition to the conversation. “Our next five-year target is to increase the company’s revenue to $6 billion and rank among the top 10 tyre makers in the world,” Onkar says with pride in his voice. “In five years we want to increase Apollo’s revenue from overseas operations from the present 39% to 70%.”
Onkar takes a sip of his tea before continuing. “And we want to do it while remaining the market leader in India, where we have built a new plant in Chennai city which is commonly referred to as the ‘Indian Detroit’.”
“Wow, these are huge plans,” I say. “Plans worthy of a Greek god.”
“Or an Indian god…” Onkar adds.
© 2012 CoolBrands – Around the World in 80 Brands
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