The President and Director of Apollo Tyres speaks on how the industry has evolved in the past 75 years and what it will look like in future.
10 Oct 2022 | 8907 Views | By Hormazd Sorabjee
We are celebrating 75 years of India’s independence and we are also looking back at 75 years of the auto industry. One company that's been there for a large part of that journey is Apollo Tyres. Apollo tyres founded in 1972 and started making tyres in the 70s when the ...
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We are celebrating 75 years of India’s independence and we are also looking back at 75 years of the auto industry. One company that's been there for a large part of that journey is Apollo Tyres. Apollo tyres founded in 1972 and started making tyres in the 70s when the industry was very regulated. I just want to get your perspective on how things were back then.
I wasn't around at that point in time; I was born in 1967. But I know that was a tough period for the tyre industry in general and Apollo tyres in particular. The technology for a large portion of the tyre industry was coming from outside; at least theoretically it was coming from outside. I was told that nothing much really came. The Indian terrain was very hostile and therefore the Indian tyre industry had to evolve on its own and develop products which were India centric.
Quite honestly, I don't think the kind of tyres that we needed existed anywhere in the world. So, we had to stand on our own feet very early on. We developed unique products, and the tyre industry was able to evolve itself fairly rapidly in tune with the country's growth.
So, what you are saying is we had our unique conditions which in a way are still very relevant now. Do you think these attributes which Indian consumers have wanted for decades are still relevant?
Answer to that question is both a yes and a no. Our inherent desire for more life out of any product in India is just insatiable and that's what makes us uniquely different. But with the changing infrastructure and regulations, the Indian market is very fast merging with the rest of the world.This brings in unique performance parameters which are important and there are many consumers which are beginning to realize the importance of these. But I don't see
the need for mileage going away.
Sometimes these requirements are conflicting, aren’t they?
Yeah, but the magic lies in optimising the polarised worlds. I think that is what most Indian automotive companies are good at.
That is why many outside companies have not been so successful here though we have such a huge market. The uniqueness of our market still challenges the best in the world.
After liberalisation, but not at the cost of independence?
As it progressed, there were certain portions of it which did not play out as expected. We felt that perhaps we are giving away too much for this dream that we visualized. One of the biggest things in life really is self-reliance and we need to stand on our own feet. This realisation was a pivotal shift for Apollo. Our vice chairman made that call. We were getting self-reliant on technology, and he felt if India can send a man to space then the entire tyre technology should be within our reach; we know our rubber well. So that was the clarion call and everybody in the company harked to that call and wonders happened after that.
There was a lot of competition coming in. Joint ventures were a trend in the auto motive industry. Was Apollo Tyres worried? Did you feel you had to collaborate? Your tie-up with Michelin had a honeymoon period but it never worked out. What was it like?
Honestly, for us, the market opening up was always an opportunity. We never felt that it was something which was going to wipe us away. We were looking forward to working along with the world's best. There was, and always has been an inherent sort of way that our organization is built. So, when this joint venture with Michelin was happening, we were actually very much energized by it. We believed that both the organizations put together something which we both believed was going to work out.
After this whole push towards self-reliance and independence, was the next strategy to be as global as possible and acquire technology and organisations rather than just partner?
We set up an audacious goal when we set ourselves free. From $500 million we said we would reach $2 billion in a span of four to five years. We did not really know exactly how that was going to happen. That's the first time we said inorganic is also a key strategic element for us. Two acquisitions happened in quick succession in 2006. That exposes you to the world and what's out there. It also gave us a lot of self-belief in what we were doing. Learning was one of our organisation’s core values then and still is. So, we absorbed a lot and we reinvented ourselves. Technology and the performance of the product are two things which we will not compromise. We invested in these things, and we were the first ones in India who really looked at research and development. This is not just a re-engineering game. It is something that you need to front load and front invest, and the rest of the magic is going to follow.
You talk about technology, but for a company coming out of decades of being sheltered and unable to have access to global technology, was it a steep learning curve?
Yes, it was a very steep learning curve. Our chairman Onkar Kanwar has led us from the front for this journey. He has always gone and met people outside and created those networks for us to build on. In the early days, we looked at what we knew, and we got the best from outside. They worked with us, and we learnt from them. Success is a funny thing, you know! It is a virtuous cycle. Once you get on that virtuous cycle, there's no turning back. The R&D people who were there with us are still with us. They just got stronger and stronger, and they have reinvented themselves. Each one of them is now a specialist of mammoth proportions and they are right at the cutting edge of what you get anywhere else in the world.
About Vredestein, I think this is another turning point for Apollo tyres in the sense that you've got a really strong European brand in your kitty.
Vredestein is a huge move. It really helped shore up Apollo's car game in a very big way. I would say as far as the car market is concerned, the acquisition of Vredestein has been a key point. Vredestein has some great technology and 111 years of experience.
Just coming back full circle, economies are de-globalising. A lot of protectionist policies are coming back, maybe for geopolitical reasons. How do you feel about that? Because at some point, it was all open and you were even having to deal with cheap imports coming in. Now, there's a bit of a control on that. So, do you still think we need some level of protectionism?
There's an answer in your question, which is that one must distinguish between injury to the industry versus protecting your market. It is a very capital-intensive industry. If India wants to go from a 15 percent manufacturing contribution to 25 percent contribution to GDP, you must give a fair play to the industry for some time to be able to deliver that to you. There are a lot of investments happening now and you cannot allow all that to be squashed by dumping practices and killing its potential.
In terms of scale, especially in the larger sizes, is there really a market for people to invest in manufacturing?
Scale is a very important point in India. Nobody puts up a scale plant in India because of the fear of labour, power or logistics issues or strikes. So you are anti-scale by design. But all that is changing. Our Chennai plant is now a thousand tonne plant. It is one of the largest plants in Asia and it does give you economies of scale. India has a huge exporting potential. The Indian tyre industry could really be a poster child for the country and do wonders for our exports. For example, we have increased 50 percent this year and are sustaining this number. Because we are converging with the rest of the world. We have the technology, and we create great products which the world needs.
What do you see as a strong emerging future trend in the tyre space?
One thing is that our vehicle power is expanding in various dimensions. For example, the motorcycle market, which was forever a commuter market is suddenly becoming a performance market. In the passenger vehicles space, SUVs are gaining prominence. In the tractor space, a lot of implements are getting made, so you have a requirement for all kinds of earth movers and construction equipment. There are airports and ports getting made so you have very specialist products that you need there.
So, this is the speed and scale at which it's happening. India has an insatiable demand for all kinds of products of mobility. So, we have decided to be an all-range play in India. Tyres must become more intelligent and have sensors embedded in them and capture data.
On the business model side, things might change in the sense that we might go the subscription way. We
might go for cost per kilometre. The whole retailing of tyres might get challenged. We feel that all these disruptions are exactly the kind of playground that a company like ours looks forward to because we believe we can create something out of this which will make sense to customers.
We are seeing a sudden interest in tyres. Do you see that interest growing? How do you keep the consumer engaged, going forward?
Consumer engagement in tyres has always been tricky. You have consumers who know their tyres very well and that tribe is growing.
But at a larger level, it is still something which the industry must tackle in their own way. We need to come out with innovative ways to engage the consumer; digital technology, social media etc. all have played their part. We continue to build awareness but it's always challenging.
Lastly, what are Apollo's immediate future plans?
Our current focus is to be wedded to our vision which is to be a five-billion-dollar company by FY2026, to have great financials and for all our stakeholders to enjoy the ride with us and share in that journey.
This interview first appeared in Autocar Professional's 1 October, 2022 issue.