And, if reports emanating from its corporate headquarters in Gurgoan, near Delhi, are any indication, more surprises are in store.

Driving this sudden transformation and aggressive growth is Neeraj R. S. Kanwar, the young, suave and dynamic joint managing director and chief operating officer, who has implemented key changes in human resources, IT management and increased the competitiveness of Apollo’s products across the board. A hands-on manager, Kanwar is blessed with enough international exposure in corporate governance and has the drive to accomplish the apparently impossible.

“Our mission is on and alive,” says Kanwar about the company’s ambitious plans to emerge as a global tyre major. “Creating the best tyres in the world is not only our mission, it’s also our very lifestyle,” he asserted while talking to Rubber Asia recently.

The brave new face of  ‘Tyre India’, Kanwar is all set not only to change the destiny of his company but also the Indian tyre industry. Within a short span of his taking over as the COO of the company in 2002, he made his intentions very clear. The first thing he did was to put in place a strong IT backup for the company. Then, he chalked out a concrete mission for the company, which saw the company scaling heights in technology, turnover and making major forays beyond Indian borders.

Apollo, which started its trek on a rough road 32 years ago with a single tyre manufacturing plant in Kerala, India, has now reached places where it is making its own inroads. Today, the company can genuinely boast of having conquered enviable horizons and creating new opportunities in margins, sales and market capitalisation.

With the acquisition of Dunlop South Africa, Apollo has made it clear that its vision and values transcend the geographical as well as the mind’s boundaries. This can genuinely be construed as the continuation of the vibrant legacy built by Raunaq Singh, the founder of the Apollo empire, later nurtured by Onkar S. Kanwar, the present chairman and managing director, and currently being carried on by Neeraj Kanwar, representing the third generation of the management bloodline. About Onkar Kanwar, who foresaw that developing in-house technology holds the key to making it big in the global tyre industry, Neeraj Kanwar proudly says: “He is the catalyst and I am the agent.”

After three decades of steady growth, today Apollo Tyres Ltd. is India’s fastest growing tyre company, with manufacturing facilities in Kerala, Gujarat and Maharashtra (India) and South Africa and Zimbabwe. Informal calculations show it is probably the second-fastest growing tyre company in the world.

“There is no single secret behind Apollo’s success,” says Onkar Kanwar. Recalling that it was a long journey, he attributes the strides of the company to its state-of-the-art technology, goal-oriented employees and the clear leadership by senior management team.

Apollo’s genesis dates back to the early 1970s when the company commenced commercial production at its very first unit located in the sleepy little town of Perambra in Kerala in 1977 with an installed capacity of 420,000 tyres and tubes each. The year 1982 saw the company venturing into the production of car radials in Kerala, closely followed by commissioning of its second plant in Baroda in 1991 and later the acquisition of Premier Tyres in Kerala in 1995.

The dawn of the new millennium saw Apollo making further inroads into radial tyre production with the setting up of an exclusive radial capacity in Baroda. The acquisition of Dunlop, South Africa, marked the commence-ment of its historic global trek.

Though its JV plans with Michelin proved to be a non-starter, Apollo never shelved its radialisation plans, which has now been revived in a big way with the company launching its mega radial tyre plant project in the south Indian state of Tamil Nadu on a sprawling 135-acre of land. The Rs 5,000 million greenfield project designed for 100 tonnes a day production will manufacture radials for trucks, buses and passenger cars. The project will be completed in two phases spanning six years.

The Tamil Nadu plant will be the company’s fourth radial manufacturing facility in India and globally the seventh. It has two plants in South Africa and one in Zimbabwe producing radial tyres under the Dunlop brand. It also has a tube-making plant in Pune, India

The combined domestic capacity of the company now is 900 tonnes a day, while the South Africa plants alone produce 210 tonnes a day. The total capacity of all plants together comes to more than 314,000 tonnes a year.

The growth of Apollo can aptly be described as one of “Passion in Motion.” It’s the pillar on which we drive ahead,” says Kanwar. Apollo’s production of automobile tyres grew by 18%, to 7 million units, in the 2005-06 fiscal, of which tyres alone accounted for 90% and tubes and flaps for the rest. Plans are on the anvil to increase production to 10,000 passenger car radial tyres from about 6,500 tyres a day at present. The production capacity of light truck radials is being increased to 50,000 units at its Baroda plant.

The company’s road map, according to Kanwar, is a wise mix of both organic and inorganic growth exploiting the emerging business opportunities to the maximum. As regards organic growth, further expansions are on the cards at the Baroda and Kerala plants aimed at increasing the production capacity to 360 tonnes a day from 270 tonnes at a cost of Rs 1,600 million.

“If you look at our history, what has kept us ahead is the number of firsts we have to our credit,” says Onkar Kanwar. Yes, it was Apollo which was the first Indian tyre company to segment the truck and tyre market, catering to specialised needs of various load factors, the first to introduce radial farm tyre, the first to introduce customer loyalty programmes, the first to introduce packaging, the first to successfully buy out a major foreign tyre brand (Dunlop, SA).

The pioneering strides of Apollo also include the first Indian tyre company to get ISO certification, the first to raise plant safety environment standards and the first to become IT-enabled. According to the company, what actually has played a major role in its success is the right market research, technology and R&D.

“Being young, dynamic and hungry is an added plus point of ours,” Kanwar pointed out, adding that currently the company is in the process of creating the right technological platform befitting its newly gained global stature.
 
It was as part of this that the company recently launched a series of ultra-high performance (UHP) tyres for new-generation passenger cars and sport utility vehicles. “The new range was developed cent per cent in house without any foreign technological tie-ups and successfully tested for international quality in world-class testing facilities in Europe,” Kanwar told Rubber Asia, adding, “we don’t any more consider ourselves to be a domestic player; we are an India-based international company.”

The company currently has a healthy mix of HCV, LCV, PCR, farm and retreading tyres and is looking to grow in all these segments. Alongside is the entry into UHP PCR tyres for the growing segment of niche cars and radials for the commercial vehicle.

“The idea is to emerge as a 360-degree product and servicing company for all mobility needs,” explains Kanwar.

“We are not present in the areas of two and three wheeler tyres and only in a small way in OTR tyres; these are gaps we will fill over the coming years, depending on business imperatives,” he said. The proposed Tamil Nadu facility mainly meant for further inroads into radials is expected to enable the company to bridge some of the existing demand-supply gap as well as that could open up in the industry in the coming years. Already the company’s truck and bus radials, Regal brand of 10.00R20 tyres, is the most popular size in India. “Later, we will be undertaking further launches in the TBR category to fulfill the demand within the segment,” says Sunam Sarkar, chief of corporate strategy and marketing as well as a member of the board of directors.

He pointed out that the market for TBR is still very low at 2%. “However, newer vehicles, better roads, environmental norms, need to save fuel, increased awareness on safety and ride comfort will gradually see this market grow over the next few years – may not be exponentially but will definitely grow,” he said.

Asked why radialisation, especially in the TBR segment, did not pick up in India as compared to China, he said radialisation got a boost in China mainly because of the government support by way of tax incentives and curbs on overload. He also feels that radialisation is more of a concept selling for which the drivers need to be educated. The company has developed its own product line and technology platform for TBRs which are scheduled for an early launch.

From being the fastest-growing passenger car tyre player to launching India’s pioneer range of most advanced ultra-high performance (UHP) tubeless V-speed rated asymmetric car radials and W-speed rated directional tyres the company is all set to redraw the rules of modern tyre industry offering gennext technologies for the customer. In the process the Kanwar duo is breaking the very pattern of Indian tyre business as well.

Of the recently launched UHP premium tyres named Apollo Acelere Sportz (safe up to 240 km/hour) ‘Apollo Aspire’ (safe up to 270 km/hour), the former is India’s first complete range of asymmetric tyres, known for their performance, aesthetics, fuel efficiency and safety features. This premium tyre can be fitted on an entire range of sedans including those of Hyundai, Ford Honda, Mercedes and Audi. Currently, Apollo commands a 15% share of the tubeless radial market, with Acelere Sportz this is expected to grow to 20% in a year’s time. The product has successfully tested at the ATP in Papenberg, Germany. While India will be the key market, Acelere Sportz will also be available to the demanding European customer.

Releasing Aspire at the recent Autocar Performance Show in Mumbai, Onkar Kanwar said this high-end tyre is meant for the youthful, sporty car lover. The 17-inch Aspire can be shod on the Mercedes E and C Class, Audi A6 and A4, Toyota Camry, Skoda Superb, Laura and Octavia and the Honda Accord. More sizes are going to be added in the coming months. Aspire, too, has been tested extensively at the ATP proving grounds in Papenburg (a DaimlerChrysler test facility). A few more UHPs from Apollo’s stable is getting ready.

The company is also toying with the idea of entering into the lucrative off-the-road (OTR) tyres segment comprising specialty tyres, industrial tyres, floatation tyres, docking tyres, etc.

One of the latest forays of the company is into retreads. This is currently being manufactured at the Kalamassery plant. At present, the idea is to service the domestic market with limited production. Its brand of retreads named DuraTread is being marketed through select dealers across India. So far, the response has been quite good, says N. Sreekumar, head of the Kerala operations. “As the capacity expands, we will look at the international market of retreads,” he adds. It is estimated that India’s total tread market is about 150,000 tonnes a month.

“We are targeting at least 30% of the Indian retread market in the next five years,” says Satish Sharma, chief of India operations, of the company. The capacity of retreads will soon be doubled from the 100 tonnes at present. Meanwhile, the company has launched a truck tread range and is working on the light truck range also. “We will also launch OTR and farm sector range next year to complete the product portfolio,” adds Sharma. Entry into retreading business is also in the pipeline.

The company is also not averse to the idea of entering into manufacture of industrial tyres. “This again is an area we are looking at. It will have to be balanced with our other products, our capacities and market demand,” adds Sharma.

Apollo continues to be the leader in the commercial vehicle segment with 28% of the market share. It is the leader in rear tractor tyres for the farm segment with 23% of the market and has a fast-growing passenger car segment with 16% of the market share. According to ATMA data, the company is currently the largest PCR tyre exporters from India.

The replacement and OE supplies of the company are currently at a healthy 70:30 ratio, according to company sources.

The company’s export market includes the Middle East, the U.S., Southeast Asia and South America. Kanwar says that, in the recent past, the company has given exports a major focus and is already seeing some of the results. For the first six months of this year, Apollo was the largest passenger car radial tyre exporter from India. “We expect our exports to grow further, especially to Europe with UHP and specialised tyres,” he said, adding that Dunlop South Africa is presently exporting to Europe its Regal brand of tyres.

Apollo took the Indian tyre world by surprise with its acquisition of Dunlop Tyres International (Pyt) Ltd South Africa, the world’s 39th largest tyre company, in a Rs 2,900-million all-cash deal in April 2006. It has two manufacturing facilities and has cent percent ownership of the Dunlop Zimbabwe, which has one manufacturing facility. This, in a single stroke, took the company to the numero uno position among the Indian tyre majors.

The South African and Zimabwe manufacturing facilities provided Apollo with a distinct set of synergies for the company in terms of product profile, market access and ability to optimise on cost and manufacturing facilities. The South African facility produces truck radial and bias, passenger car radial, farm and industrial  and mining tyre, while the Zimbabwe facility is for truck bias, light truck radial and bias, passenger car radial and farm tyres. Also included in the deal are a 47% shareholding in National Tyre Services, Harare, Zimbabwe, which is engaged in the sale and trading of tyres and retreading under the Dunlop brand.

Both Onkar Kanwar and Neeraj Kanwar admit that the Dunlop SA acquisition has added enormously into the company’s learning. “We are keen to expand in a measured manner and are always on the lookout for opportunities that could add value to our customers and expand the market we operate in.” Analysts see in these words plans for similar global forays through acquisitions. The recent mobilisation of funds to the tune of Rs 2,500 million from qualified institutional placements (QIP) also adds credential to such moves.

One thing is certain: similar synergies like that of Dunlop SA, if found any-where else, will be really tempting for Apollo. The guiding consideration for any further acquisition will be the local market base. Incidentally, the raising of Rs 2,500 million through (QIP) has resulted in dilution of the equity stake by French company Groupe Michelin in Apollo from 14.9% to at least 12%. The Kanwars admitted that the proposed JV with Michelin does not hold any longer. “However, we remain good friends,” says Kanwar.
 
The aggressiveness with which Apollo is going ahead is raising many an eyebrow, especially among market analysts. To the question whether the company is prepared for eventualities like an economic slowdown or recession, Kanwar recalled that Apollo has the track record of successfully meeting such eventualities in the past like what had happened in 2000-01. “We were able to make the best out of the worst situation. In fact, we had the record of growing steadily when the market scenario was bleak and when others were struggling,” points out Sarkar.

It was because of the vision of Onkar Kanwar that the state of the R&D centre of the company located at Limda (India) has grown as the country’s leading research and development facility in the field of tyre sciences and technology. Backed by state-of-the-art equipment and a highly professional team, the centre’s achievements include development of new-generation bias tyre with high-speed capability and low rolling resistance, advanced run-flat technology, ultra-high performance and winter tyres for European markets and fine-tuning of all steel truck/bus radial tyres for Indian road conditions.

“The efforts of our R&D centre has helped Apollo in achieving its aggressive growth plan by developing the latest quality products in a short span of time,” says Kanwar, adding that the centre is now closely working with Dunlop South Africa for aligning technology and to nurture the best of Apollo and Dunlop.

According to P.K. Mohammed, chief of research and technology, the R&D Centre has facilities and expertise for development of compounds for improved performance, raw material development, analytical re-search, reverse eng-ineering, advanced design using CAD, finite element analysis and many more.

Apollo is always on the lookout for newer opportunities. “And, when they do not come our way, we go ahead and create them; over the years, we have created opportunities for success; opportunities for growth; opportunities for a brighter future. Our never-ending pursuit for excellence has made us travel through almost every road and create opportunities others do not notice,” says a beaming Kanwar, brimming with confidence.