Apollo Tyres targets $2bn club in 3 years

Apollo Tyres, the country's second largest tyre company (in volume terms) following MRF, is aggressively looking to become a $2 billion company in the next three years (2010). The company took 30 years to reach the $1 billion mark.

Self-proclaimed as the first Indian tyre company to get into the $1 billion club, the total worth of Apollo Tyres in the next three years could be in excess of Rs 8,400 crore. The company is aiming at a compound annual growth rate (CAGR) of 19 per cent in the next five years.

Neeraj Kanwar, joint MD and COO, Apollo Tyres, said, "Through 100 per cent utilisation of our existing capacity and aggressive persuasion of targeting overseas companies for acquisition, we are optimistic of crossing the $2 billion mark by 2010."

The acquisition will most probably take place in Europe, though the company has kept the choices wide open for opportunities in the US and the Americas. "Margins are better in Europe with good product acceptability and confidence in technology," added Kanwar.

It is aiming to become a significant player in the European region in the next five -six years. The company has seen considerable rise in demand for radials from the region. Exports to Europe and south east Asia came from its facilities based in India and South Africa.

The company is planning to set up a marketing and sales distribution team in the region (Europe) for build up the Apollo brand. The company is already in the process of inducting senior officials from various organisations to work at its European centre.

On the domestic front, the company has earmarked a capital expenditure (capex) plan of about Rs 500 crore to be spent in the next three years. About Rs 200 crore will be spent on the new plant coming up in Chennai.

The chennai plant will have a capacity to produce 5,000 passenger radials and 1,000 truck radials per day. It will raise the company's total capacity to about 19,000 passenger radials and about 10,000 truck radials along with 2,500 light truck radials.

The company's share in the industry exports stands at around Rs 525 crore or 17 per cent, of the estimated Rs 3,000 crore export by the industry till March 2007. It is also looking to strengthen its foothold in the replacement market where it has a 24 per cent share and is currently the second biggest in the country following Bridgestone. The company has grown at 35-38 per cent CAGR in the passenger radial segment alone during the past two years. About 64 per cent of its Rs 3,200 crore revenues came from the non passenger radial segment which constitutes HCV, LCV and off-road tyres.