INDIA-BASED Apollo Tyres is studying setting up its first tyre manufacturing operation in Indonesia, Vietnam or Thailand that will be large enough to support not only the automobile market in the region but also beyond.
“Our tyre plant in Asean will have big capacity and big economies of scale,” president Satish Sharma said last week.
Apollo Tyres achieved US$2.08 billion (Bt74.6 billion) in sales for the fiscal year ended in March.
Sharma – who guides strategy and oversees the implementation of key functions like manufacturing, sales and marketing, customer relations and profitability for Asia-Pacific, the Middle East and Africa – said the company’s vision is to be a significant player in the global tyre industry by establishing its own footprint or taking the mergers and acquisitions route.
The aim is to achieve both organic and inorganic growth.
The company’s tyres are available in more than 100 countries around the world.
“We have a sales and marketing subsidiary in Thailand to be in charge of the Asean bloc. We have also a subsidiary in Dubai to take care of the Middle East, East and West Africa, and in Johannesburg to look after South Africa and its neighbouring markets,” he said.
Asean is a very important bloc for the company. Under its global strategy, the company expects to grow its Asean sales to $100 million in 18 months. It also targets doubling its market share in Thailand to 10 per cent by 2020 on a value basis.
Exports contribute about 11 per cent of sales and 35 per cent of exports are from the Asean region. This is expected to increase to 15 per cent of sales and half of exports by 2020.
Three years ago, the company conducted a preliminary study on investment opportunities in Asean, and Thailand was found to be a very attractive location.
“So many factors have been changing. Thailand has c
“The country however has good advantages in strong manufacturing and ecosystem with world and local players already having a strong presence. Thailand has also a mature culture in manufacturing as well as stable growth,” he said.
The Philippines has a strong advantage in English proficiency, but natural disasters are its weak point. Indonesia has lots of minerals and high economic growth.
“We recognise ourselves as a learning organisation and put our sales and marketing subsidiary ahead of the manufacturing vision. We have learned about various markets in Asean including the Philippines, Malaysia, Indonesia, Vietnam and Cambodia, from our wholly-owned subsidiary set up about two years ago in Thailand,” he said.
“Once we are able to complete our product portfolio and understand the market completely with a good brand presence, we will intensify the market through manufacturing operations,” he said.
Headquartered in Delhi, Apollo Tyres runs four major plants in India. The largest is in Limda in the western state of Gujarat. Two others are located in the southern rubber-producing state of Kerala, and the fourth is near Chennai, Tamil Nadu.
These four plants have combined production capacity of 1,450 tonnes a day.
In May 2009, Apollo acquired Apollo Vredestein, originally known as Vredestein Banden, in the Netherlands. It is a producer of niche high-end passenger car and specialty tyres with a manufacturing facility in Enschede and an extensive distribution network across Europe.
The Enschede plant in the Netherlands adds 195 tonnes a day, taking the company’s capacity to about 1,650 tonnes a day.
Apollo Tyres is investing 475 million euros (Bt19 billion) to build a green facility in Hungary, which will start its commercial manufacturing operations in April 2017.