Off-highway tyre maker ATG to expand capacity, eyes 25% market

Off-highway tyre maker Alliance Tire Group, owned by Japanese tyre major Yokohama, is looking to grab 25% of the domestic market share in the next five years.

Alliance Tire Group (ATG) mostly exports its 1.4-lakh tonne capacity from its two plants - Dahej in Gujarat and Tirunelveli in Tamil Nadu - to Europe and the US and serves a meagre 3 per cent of the USD 1.5-billion domestic market.

The 60-year-old firm was born after Alliance of Israel, and Galaxy of the US came together some years back under the ownership of KKR and in 2009 was acquired by Yokohama Rubber Company. Since then it has grown from a USD 80-million company to USD 600 million in 2017, making it the fifth-largest off-highway tyre maker in the world.

To meet its aggressive growth plans here, ATG plans to sew up alliances with mostly tractor original equipment manufacturers (OEMs) over the next one year as the domestic agriculture sector has lots of untapped potential. It also has plans to increase its capacity.

"We don't have a market share number here. Currently it should be under 4 per cent of a market that's worth about USD 1.5 billion. But globally, India a key market for us, with maximum production happening taking place here already," Angelo Noronha, president - Apac, the Middle East and Africa, ATG, told PTI.

"We've set a target to increase our market share manifold to around 25 per cent over the next five years, which will make India the third largest market for us," he added.

Noronha said India revenue is around USD 25 million now but sees the replacement market as a big opportunity.

He said the company has already developed 60 products from India, and 40 more are underway which would mostly be catering to the fast-growing domestic agriculture sector.

Noronha said ATG, present in 120 markets, spends 3-4 per cent of its USD 600 million turnover on R&D annually. Globally agriculture contributes 50 per cent of the revenue, followed by construction (35 per cent) and forestry the rest.

From a revenue perspective, Europe and the US contribute 40 per cent each for ATG and the remaining comes from the rest of the world. Globally off-highway tyre market is a USD 15 billion opportunity.

"How important India is to us can be seen from the fact that we have developed 60 products for this market with another 40 underway where the farm sector has three main products (front, rear and trailing equipment on tractor), besides other products for the construction sector," he said.

Since the past nine years, ATG has invested around USD 400 million here, primarily to set up the two plants - the 80,000-tonne plant in Tirunelveli in 2009 and a 60,000-tonne facility in Dahej in 2013. It has a 20,000-tonne plant in Israel as well.

"These plants are running at over 90 per cent capacity now and will get saturated by December. So, by early 2019, we will have an expansion plan ready, which may be both brown and greenfield. For the next five years, we will be investing in capacity expansion here," he said.

It has 350 agri-sector dealers spanning 20 states, and 70 dealers for construction tyres in 22 states.