Apollo Tyres Eyes New Growth Areas

Apollo Tyres, the over-Rs 1,200 crore flagship company of Onkar Kanwar, has decided to identify a new project for growth -- other than tyres -- as part of a new strategic initiative.

The company expects 20 per cent of its turnover to emanate from the new area in the next five years.

To shape the initiative, Apollo has appointed Onkar Kanwar's son, Neeraj Kanwar, to head a strategic planning unit within the company. At the moment, Apollo depends on tyres for the bulk of its turnover.

Sources in Apollo say that the process of identifying the new area is underway and there is a consensus that it is not necessary for it to be in an area which has synergy with tyres.

The decision to go in for a new area has been taken after looking at the possible slowing down of growth in the tyre market in the country, as has happened in developed countries.

A consensus has also emerged that the Kanwar's are virtually the only group which are dependent for the bulk of their turnover on one product, unlike their competitors in the country like the Singhanias (J K Tyres), the Birlas (Birla Tyres) or the RPG group (Ceat).

The company is also working out a five-year strategy plan which would envisage investments required for expanding the tyre business. Apollo, which has signed a joint venture agreement with Continental AG for a 50-50 company to manufacture passenger cars in the country, is now planning to downsize the size of the project due to the slower growth expectation of the tyre market.

Earlier, the plan envisaged an investment of Rs 400 crore to manufacture 13,000 radial tyres per day. Talks are on to downsize the project by nearly half, which will also serve to reduce the investment size. A final decision on the size is expected to be taken in a few months.

The slow growth in the automobile sector together with the Government decision to allow the import of tyres on the open general license, has prodded the two partners to rework the size of the plant.