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Interview: Neeraj Kanwar, Apollo Tyres

The Apollo Tyres MD discusses the company’s plans to increase its OE business in Europe and the current climate of trade in and between the EU and India

 

How is construction of the new Apollo factory in Hungary progressing?
We are happy with how things are progressing, we’ve had a lot of support from both the Hungary government and the local Gyöngyöshalász government, where we are constructing the factory. We’ve also had plenty of support from neighboring universities in hiring new employees. We have around 150 experts who have been trained both in India and in Enschede, in the Netherlands. In the first phase, the plant will produce 5.5 million passenger car tires per annum and 675,000 truck radials. We will be installing very highly automated, robotic systems with new generation equipment sourced in Europe from suppliers such as ThyssenKrupp and VMI. We’re on schedule to produce the first tires in January 2017.


Are Apollo’s plans for growth affected by Brexit?

Brexit does not currently affect us as we do not manufacture in the UK; we do sell there but only in small volumes. What’s more concerning now is how Europe is going to react longer-term, and that’s a concern with our head office and logistical operations in the Netherlands. The affect Brexit has on Europe itself in the longer-term may disrupt a lot of our investments.

Have you any other news in terms of Apollo R&D?
We have recently expanded our R&D bases in India and in Europe, in terms of man power; we now have close to 300 working in both centers.

We have also just opened a new R&D sub-center in Raunheim in Frankfurt, Germany, focusing on global OEMs in and around Europe. There are 25 experts based there, most of whom have been transferred from our other center in Europe. That team is responsible for not only creating OE relationships but also testing tires at various test tracks in Europe. We are looking at entering the OE market in 2017.

We have also increased our marketing operations in the USA focusing on the East Coast region to begin with and all the way up to Canada. That’s still in the planning stage, but tires will first be supplied from Europe and India until we reach a sustainable state and then we will look at launching new products.

Why should Indian companies be looking to Europe to expand and develop?
Apollo moved into the European market because it has the most advanced tire technology and automotive industry, which makes us internally raise our technology platform. Germany, in particular, is the most advanced in automotive and especially in tires, given the speed and the winter conditions that are found in Germany and the roads that are there. The second reason to enter Europe is the potential to create brand awareness. The third big reason being that Europe offers the largest profit boost among world economies given that drivers need UHP tires for both cars and trucks.

How would you summarize the current climate of trade between the EU and India, and why is there increased foreign direct investment into India from Europe and vice versa?
It’s very positive, there is industry trade happening between both regions, which can benefit from the advantages of labor costs in India and higher technology in Europe.

The FDI increase into India is due to the present government being very positive and proactive and making India a brand. It is encouraging investment that is coming in not only from Europe but all parts of the world. That includes a lot of infrastructure FDI, specifically energy and road infrastructure, and a lot of FDI in the digital space. That’s basically given India a large boost in the economy.

How has India improved its image as a manufacturing hub since the Make in India campaign, and how does this affect Apollo?
The Modi-led government has its eye firmly on India’s growth in future, which has enabled international players to come in and set up shop quickly. Some states in India are still behind but many are progressing.

As far as Apollo is concerned, we are still in an investment stage; we are investing in modernizing some of our old plants in India and expanding one of our largest plants in Chennai, which makes truck and bus radial tires. There we are the doubling capacity and spending close to US$425m over the next two years.

July 21, 2016

 

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