Apollo Tyres chief executive Neeraj Kanwar sits behind the wheel of a company with an impressive legacy. Mr Kanwar’s grandfather, Raunaq Singh, a refugee from Pakistan, paved the way for the family’s business selling steel bicycle tubes. Now, two generations later, Apollo is listed on the Bombay Stock Exchange and is the 17th largest tyre manufacturer in the world.
Speaking to fDi from his newly opened headquarters in London, Mr Kanwar says he has taken the India-based company from strength to strength, achieving 20% year-on-year growth for the past five years. Following the acquisition of Dutch tyre manufacturer Vredestein in 2009, Apollo is on course to open its second European plant in Hungary, with operations due to begin in 2017.
“[The Vredestein acquisition] really gave us a stepping stone into the western European market, the most advanced tyre market in the world,” says Mr Kanwar. “The decision to expand production to Hungary was helped by its cost structure and its greenfield market, which caters to both the European and US markets.”
Made in India
Apollo is among the top three passenger tyre brands in India, where the company earns 55% of its sales. The remaining sales are primarily European, with about 1 million passenger tyres sold annually in Europe with the Made in India brand.
R&D and marketing have been particularly important in driving this success. “There are two key pillars going forward: R&D and building brands," says Mr Kanwar. "We are one of the very few Indian brands selling in these high-end technology markets. That reflects the confidence we have in the R&D and marketing team.”
Mr Kanwar’s growth strategy focuses on building brand recognition before expanding physically. His expansion plans cover nearly every region, yet operations outside India and Europe will remain in sales for the next five to six years. “Our philosophy is to create brand awareness,” says Mr Kanwar. “Once we reach a critical mass in the market, we look for a sourcing facility. Either we put up a greenfield [facility] or we look for an acquisition.”
Current sales operations are under way in the Middle East, north and east Africa, south-east Asia, Australasia and Brazil, as the company looks to establish a foothold in Latin America. “We put our own people on the ground, spending money on marketing, on building a brand, a network, tyres for those customers. We are treating them as domestic markets,” says Mr Kanwar.
“The goal is to see these operations become as big as we are in India,” he says, adding that he has ambitions to put Apollo in the top 10 tyre manufacturers globally within the next five years by pursuing both organic growth – through building and expanding Apollo’s Indian plants – and inorganic growth, exemplified by the acquisition of Dunlop South Africa and Vredestein. This two-pronged approach has earned the company $2.4bn in yearly revenue.
Part of the brand’s expansion includes Mr Kanwar’s opening of a European headquarters in London, as well as Apollo’s sponsorship of English Premier League football club Manchester United. The London base signifies a dramatic move away from the thinking of previous management generations and is motivated primarily by the search for global talent.
In 2013, Apollo was ranked first for 'best quality systems' by the Federation of Indian Chambers of Commerce and Industry. “Quality is a philosophy that must run through the organisation. It should be in your DNA,” says Mr Kanwar, adding that everything from procurement, vendor and supply needs – not simply product quality – should be given acute attention. “The award has given us more passion to get it right,” he says.
When the rubber meets the road, Apollo seems to be on the right track.