By Prof T.N. Kalamani
As part of a bid to expand global presence, the Indian tyre giant, Apollo Tyres Ltd., is currently concentrating more and more on Europe as well as other geographies. At present, Apollo is fast moving ahead with the construction of a Greenfield facility in Hungary which would be rolling out tyres within 2 months.
In an exclusive interview to Rubber Asia at a time when the formal inauguration of the new Greenfield facility is scheduled for early April 2017, Apollo Vice Chairman & MD NeerajKanwar shares some of the key facts about the upcoming company such as the multiple factors for choosing Hungary to set up the facility, the initial investment, the most advanced machinery and updated manufacturing technology of the plant and its other unique features. He also explains Apollo’s efforts towards enhancing its global marketing operations and its latest R&D activities across the world.
According to Neeraj, while Apollo is confident of further growth in Europe, the company will invest upwards of Rs 35,000 million in India towards adding capacity and setting up a new manufacturing unit. Excerpts:
What is the present state of the construction of Apollo’s new facility in Hungary? When is it expected to start operation?
The construction of our Greenfield facility in Hungary is moving ahead in full steam. We would be rolling out tyres from this facility within 2 months, and a formal inauguration of this unit is scheduled for early April 2017.
How much is the total investment planned?
We are looking at investing Euro 475 million in this facility in Phase 1, which should be completed by 2019.
Why has Apollo chosen Hungary to set up the new facility?
Hungary was chosen after a consideration of various factors over some of the neighbouring Central Eastern European countries. There are multiple factors that we consider before shortlisting and finalizing the location for a Greenfield. A few of these include: manufacturing costs, availability of skilled manpower, government policies, including incentive for manufacturing, logistics cost, proximity to highways and a variety of softer factors.
Please explain what support you are getting from the Hungarian Government?
The Hungarian Government is offering a regional investment aid of approximately Euro 100 million for our Greenfield facility as permitted under the EU norms. This is towards the development of the Gyongyoshalasz region, where our plant is located and towards providing direct and indirect employment to hundreds of people.
Please explain how advanced the facility would be on completion. What about the machinery and equipment?
This would be Apollo Tyres’ most advanced manufacturing facility across geographies. The Team has used their learnings and experiences in procuring the most updated manufacturing technology for our Hungary plant.
What would be the facility’s unique features?
Among various other advanced features that we are incorporating in this facility, we are using the most modern, contemporary mixing equipment and technology, for producing the best of high performance and full silica tyresfor passenger vehicles and to produce the best of TBR tyres. In addition, this plant would have the best in class manufacturing & quality systems and energy efficiency.
What types of tyres would be rolled out from new facility?
We are looking at producing both passenger vehicle (PCLT) and heavy commercial vehicle tyres in this facility.
What will be new facility’s initial capacity?
As you would understand, any facility would start with manufacturing limited number of tyres initially, and then the capacity would be gradually ramped up. Once Phase 1 is completed, this facility would have a capacity to produce 5.5 million passenger vehicle tyres and 675,000 heavy commercial vehicle tyres per annum.
What are Apollo’s latest initiatives to reinforce R&D activities across the world?
Our research and development team is always working towards creating better and technologically advanced products for our customers worldwide. Similarly, several research projects are also underway in collaboration with several of our raw material suppliers and universities.
We have already secured a leading position in the Radial Tyre Technology in India across categories, and gaining a majority share in new products from OEMs, would be the key for R&D going forward. To support the OEM journey and competitiveness in passenger car tyres, new technologies are under development, specifically focused on extended mobility and fuel saving.
In parallel, an Advanced Engineering department is fully focused on development of new systems, technologies and tyre sensors to enhance the tyre management, and the integration between tyre and vehicle electronic systems.
Also, please explain the company’s efforts to enhance its global marketing operations.
Building the Apollo brand, as a company and at product level, is a key strategic lever for us. Campaigns along with Manchester United, and on dimensions of CSR and OE partnerships, is being used to promote the positioning of Apollo as a corporate, where as the different product segments are speaking directly to consumers and customers on why they should choose Apollo. Besides TV and Print, the company spends on Digital and OOH is becoming more salient and visible. We have recently launched a new corporate and brand website, which is future-ready and gives higher user-friend
Another important aspect of marketing, which we are focusing on, is modern retail. Given the shape, size, location, category and other variables, a range of modern retail solutions are offered — Super Zone, Zone, Point, Corner and on the similar lines, different variations to extend our rural outreach, especially in India.
Please tell us about the new markets Apollo is currently focusing on?
We are focusing on the ASEAN, Middle East and US markets for our next phase of growth. We have been using our existing regional Sales and Distribution hubs in Dubai (for Middle East region) and Bangkok (for ASEAN region) to enter newer markets in their respective locations. We have recently hired a senior resource person for the US market, who, along with the R&D Team, is working on the products to suit the US market requirements.
Why is the company more and more concentrating on expansion in Europe? Please explain.
In addition to Europe, we are looking at other geographies as well. Since 2009, we had a certain base in Europe which we grew further and hence the confidence to plan further growth in Europe.
What are Apollo’s latest expansion / modernization plans in India? What is the investment set apart for these?
As you would be aware, we are in the process of doubling our truck-bus radial capacity in Chennai. We are investing close to Rs 25,000 million towards this. The 6,000 truck-bus radials per day capacity would be doubled to 12,000 tyres per day (in addition to the 16,000 passenger vehicle tyres per day that the Chennai facility also produces). In addition, we have also signed anMoU with the Andhra Pradesh Government for setting up a manufacturing facility with an investment of Rs 5,250 million for future. Further, there are investments going on in all other existing plants in terms of modernization or de-bottlenecking.
What is the company’s response to the Make in India initiative by the Indian Prime Minister?
In line with the Prime Minister’s Make In India initiative, as mentioned above, we are investing upwards of Rs 35,000 million in the country towards adding capacity and setting up a new manufacturing unit.