‘Apollo Tyres will stay invested in tech & branding’

G Balachandar Chennai | Updated on March 08, 2019

Neeraj Kanwar, Vice Chairman and Managing Director, Apollo Tyres, at the launch of the 'Acti' series two-wheeler tyres   -  File photo

Country’s leading tyre maker Apollo Tyres is in the midst of many activities. While the company’s undertaking a few greenfield projects in India and Europe, it has also been strengthening its technological capabilities across categories. It recently came out with a new range of tyres for large SUVs.

BusinessLine caught up with Neeraj Kanwar, Vice-Chairman and Managing Director, Apollo Tyres, at Goa earlier this week during the company’s inaugural edition of #BadRoadBuddies, an off-roading event in which former cricket star Sachin Tendulkar and others participated. Excerpts:

Are you trying to showcase your technological capabilities in the SUV segment through this event?

We are actually targeting the SUV market, one of the fastest growing segments with double-digit growth rate. We see this as a platform (offroading event) for us to take the lead. This is the beginning of a kind of a cult or communities type event where we want to travel to different parts of India on our tyres to evaluate the performance. We have invested a lot in developing and bringing these tyres to the market. Also, we have come out with the white sidewall for high-end SUVs.

Are you looking at OEM tie-ups for these new SUV tyres?

We have OEM tie-ups with everyone up to the compact SUVs. Now, the idea is to go beyond compact SUVs. So, it is an organic journey we have started in the fastest growing segment of the Indian auto market. Car segment is growing at 5-6 per cent. But, SUVs are becoming 25 per cent of the pie in vehicle market. In regions like ASEAN, Africa and the Middle East – 4/4 is good culture and pick-ups are a growth segment. So, we see a good opportunity for us.

Is the recent slowdown in the auto market a concern or you see this as a temporary thing?

Q3 was a blip for many reasons. But in this quarter (Q4), we see a come back in the OEM sector. As far as Apollo Tyres is concerned, we grew at 22 per cent in Q3. While we are growing with the market, we are also increasing our market share in various product categories such as truck radials, cars, farm tyres. As a company, we are doing well despite ups and downs in the auto market.

Is there any preparation for tyre companies like yours for BS VI?

As emission norms become stringent, fuel efficiency will increase. For that, you need a low rolling resistance. So, the direction is towards low rolling resistance and BS VI will further that across categories. Rolling resistance is there worldwide. In India also, it will be driven by the OEMs in the car segment, you will see a big change coming. A lot of Indian companies will find it challenging in meeting the rolling resistance requirements as they don’t have the technology. Apollo has made a lot of headway in this as we are supplying to OEMs in Europe already. We are getting this technology localised for Indian requirements by our R&D team.

Will you continue to maintain the status of highest R&D spender among Indian tyre companies?

On a consolidated basis, Apollo Tyres is spending three per cent of the revenues on R&D. Even on building the brand, we are spending 2.5-3 per cent. In the past 4-5 years, we have said our main pillars would be technology and branding. That is the reason we have tied-up with Sachin Tendulkar. So we will continue to spend on technology and branding. Three per cent or more is the norm for international companies. But, Indian companies spend generally spend one per cent or below. But Apollo believes in investing back in technology as we want to keep pace with the technology not just in India but globally.

Is Apollo Tyres pursuing any inorganic growth option like the one you attempted a few years ago?

Since the big acquisition (Cooper Tire and Rubber Co) didn’t happen, we set up a unit in Hungary where we spent €515 million to set up a Greenfield factory. We are now setting up a new unit in Andhra Pradesh and investing more than ₹3,000 crore in that. We just doubled the capacity of truck radials at our Chennai plant. From capital deployed level, we are at the highest level. Now, we need sit back, consolidate and start rolling out tyres from all our new facilities where high investments have been made. Right now our hands are full. Organic mode will give us growth for the next 3-4 years.

What is the trend on you see on the raw material price front?

Right now crude has started going up again. There was a correction that took place in the past. But since December/January, prices have started going up which will have an impact on us and we may look at price corrections.

Published on March 08, 2019

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