Yogesh Mahansaria, group CEO of Alliance Tire Group, based in Thane, India, is rare among his tiremaker CEO brethren. This is Mahansaria’s second go-round as head of a major tiremaker, having once been CEO of India’s Balkrishna Tyre. At Balkrishna, where he was a partner with his father, Mahansaria helped turn the tiny bicycle and scooter tiremaker into a major producer of OTR and agricultural tires.

He does not like to discuss his past with Balkrishna, which he left on his own accord, preferring to keep the focus on his latest revival product: Alliance Tire. Mahansaria, with an assist from investment banker Warburg-Pincus, took over Israel’s lone tire company in 2007 in a deal estimated at $150 million. Since then, Alliance has built a greenfield plant in India, and most recently bought portions of the bankrupt GPX International Tire.

Mahansaria sat for an interview with Tire Review and talked about his vision and goals for Alliance Tire, and how the GPX acquisition will benefit the company and its dealers.

When you purchased Alliance Tire in 2007, sales were around $200 million, and you projected growth to around $500 million worldwide by 2012. Where is Alliance relative to that plan? And where do you see Alliance being by the end of this decade?

We are making progress toward our 2012 goal, and I believe that as the economy strengthens, we will be able to achieve it. Of course, the economic downturn held us back, as it did everyone in the industry. But while many companies cut down to weather the recession, we continued to invest aggressively to position ourselves to rise with the economic tide.  

With our updated plant in Israel, our brand-new plant in India, and the manufacturing relationships in China that are part of the recent acquisition of GPX assets, we will have the capacity to supply $500 million in product. Our R&D pipeline remains loaded, and we now have the former GPX engineering team in North America to help. With all that capacity, a much larger product line – and in North America, new members on our sales team and expanded customer relationships – we are well-positioned now to achieve our goal.

The original Alliance plant in Hadera, Israel, currently produces what tires and for what markets? How has that plant been upgraded or improved since you took over?

Our Hadera plant is specializing in the manufacture of high-tech tires, including radial agriculture R1s, flotation radials, forestry tires and many large off-highway designs. We have invested millions of dollars in new presses and tire-building machines to make the Israel plant a world-class facility for high-value, technical tires.

What is the status of the new plant in Tamil Nadu, India, and what products will it be producing?

We are ramping up production and testing in our India plant, and are currently running at about 35% capacity. Our new plant is designed for high efficiency and high volume, and will be handling many of our bias-ply tires and value lines.

In terms of Alliance’s R&D efforts, what has been changed or improved since you bought the company?

Alliance has long had a very strong R&D program, with a strong focus on agricultural tires, as well as many excellent products for other OTR segments. With the members of the former GPX engineering staff now on our team, we are bringing in even more expertise in construction, industrial, earthmoving and forestry tires, which will allow our R&D efforts to cover our very broad off-highway range. We believe with our teams in Israel, the U.S. and India today, the Alliance Tire Group has the largest team in the off-highway industry dedicated to design and development.

In terms of production costs, what have you done to improve Alliance’s position?

Our manufacturing footprint makes us extremely flexible. We can locate production for any tire in Israel, India or China to best match technology, capacity, volume and price point. That allows us to optimize our production side to complement our sales and marketing efforts.

Moving to the recent acquisition of parts of GPX International Tire: First, how does this acquisition help Alliance with its core ag and small OTR segments?

Alliance has traditionally been an agriculture-focused company, and has created a very strong line of agricultural tires. The acquisition of assets from GPX International allows us to offer great complementarity to our dealers worldwide. We have expanded not only our agricultural and small OTR ranges, but also broadened our offerings in construction, earthmoving, material and container handling, forestry, turf and mining. We are positioned to offer more options and more value to tire dealers and OEMs, providing them tools that will allow them to capture a larger share of the off-highway market.

From a distribution standpoint, what advantages have you gained with the GPX acquisition?

The GPX staff joined us with thousands of dealer relationships, of which approximately 95% were new to us. That presents us with a tremendous opportunity. Our North American warehouse footprint has also grown substantially. In addition to the warehouse we established in Portland, Tenn., last year, we now have hundreds of thousands more square feet of warehouse space in Tennessee and Texas, and very skilled teams of employees serving our customers.

How are you looking to align GPX’s medium truck business into Alliance? Long-term, how do you see this addition benefiting Alliance?

The opportunity to market the Aeolus line of medium truck tires is very exciting for us and our dealers. Many of our customers group their medium truck and off-highway sales under a single commercial business umbrella, so our ability to offer them the Aeolus brand allows us to extend our value proposition to them. As with the extension of our off-highway range, our strategy revolves around complementarity.

Given the supply shortfalls in the global market, is Alliance considering getting into the giant OTR tire segment?

We are always considering the best ways to offer the tires that our dealers and OEMs require.

On an overall basis, what does this acquisition mean to Alliance? Does it fit with your original growth plans and strategy?

The acquisition of GPX assets is very much a part of our growth plan. We have invested approximately $300 million over the last three years in the acquisition of Alliance and building our new plant in India, and made a very strategic investment in December when GPX International’s assets became available. The acquisition of the Galaxy and Primex brands is very complementary to what we were doing with Alliance, and has already enhanced our customer reach, North American warehouse footprint, OEM relationships and international manufacturing capabilities. I believe we are very much on-track to achieving our growth objectives.

Long-term, what kind of tire company do you see Alliance Tire becoming?

We are currently focused on making Alliance a global leader in the off-highway market and representing the Aeolus brand of medium truck tires in the U.S.  

Publicly, the GPX acquisition appeared to come together quite rapidly. Talk a little about the behind-the-scenes aspects of the deal.

Acquisitions like this one rarely occur as quickly as it appears. We had been talking with GPX International for quite some time, and engaged in a great deal of due diligence. We saw the opportunity for a very strategic investment to build Alliance, an investment in brands, customer reach, warehouse footprint, manufacturing relationships and people. As the talks continued and opportunity evolved, we had a chance to focus our investment on the most complementary elements of GPX. With that strategic growth, we are moving smoothly along the path toward our goals.

You got into a minor bidding war with Titan International. Was this acquisition that important to Alliance…and if so, how? Do you feel, as Morry Taylor stated, that Alliance perhaps over-paid for its share of GPX?

Businesspeople value companies differently depending upon their objectives and priorities. We believe the assets we acquired make a compelling value proposition to the Alliance Tire Group and to our customers, as well. We are very comfortable with the value of our investment, and we expect an excellent return.

Strategically, what is next for Alliance? Are you now looking at other acquisitions?

Right now we are focused on achieving our growth objectives, building a thoroughly modern and sophisticated company, and offering a compelling value proposition to our customers. With the assets we have in place, we are heading in the direction we want to go.

How important is the North American market to Alliance, and what steps is the company taking to attack the market?

North America is a huge market, and it is very important to us. Alliance has had a small share and a small footprint in North America for many years. Our recent acquisition of the Galaxy and Primex brands has allowed us to increase that very significantly. Our investment in U.S. brands, distribution and sales is a clear signal that we are very committed to the North American market.

We will focus on offering OEMs and independent dealers broad off-highway product lines that suit their needs for variety, quality, reliability, price point and profitability. We are uniquely positioned in the off-highway market, and we will create opportunities for North American customers to garner value from what we have built.