None of our competitors has what we have: Yogesh Mahansaria

Interview with founder, Alliance Tire

Last week, Yokohama Rubber bought Alliance Tire for $1.18 billion. Yogesh Mahansaria, founder, Alliance Tire, tells Ranju Sarkar over a brief telephonic interview how he turned around the ailing company.

What's been the key to Alliance Tire's turnaround and success?

I would say the right combination of brand and distribution network worldwide, coupled with a made-in-India cost advantage (Alliance has two plants in India, one in Tirunelveli, Tamil Nadu, commissioned in 2009, and another at Dahej, Gujarat, commissioned in 2015). Our unique position is that we are competing with reputed but high-cost brands or producers playing purely on price. None of our competitors has what we have... We have invested over Rs 1,000 crore in India in the two plants (around $200 million).

Who are your competitors?

We compete with Titan International, Trelleborg, Michelin, Bridgestone and Balkrishna Industries.

How did KKR, which bought out Warburg in 2013, help you?

KKR added valued as a partner. They played a proactive role in strengthening the management team worldwide. They helped us strengthen the management structure, hire the right people. KKR teams in Europe and the US helped us refine our go-to market strategy and enhance our competitive advantage in sales and marketing. The proof of the pudding is that we outperformed our peers: even as the market declined, we grew volumes 15-20 per cent in the last two years... The business is much more mature now than three years ago.

How is this business different than consumer tyre business?

This involves be-spoke production (customised production), where we make large varieties of tyres but each in small quantities. We use flexible manufacturing as we need many changeovers - we produce lots of sizes and varieties. The lot sizes could be as low as ten pieces. This is labour intensive (than a plant for say passenger radials which produces tens of thousands of tyres of similar sizes).

How have you expanded your presence?

When we acquired Alliance, it had a plant in Israel and was largely selling to the European market. Then we acquired the assets of GPX International in 2009, which helped us penetrate the US market. After plants in India came up, we built out the emerging markets business. We now have a presence in 120 countries.