Founded by his grandfather Raunaq Singh, further established by his father OS Kanwar, Neeraj RS Kanwar is now holding the reigns of this US$ 1 billion company. He talks to DARE about his journey as a third-generation entrepreneur and shares insights about the industry.
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| NEERAJ KANWAR, APOLLO TYRES LTD. |
Can you begin by telling us bout your journey at Apollo?
Back in 1995, when I joined Apollo, my grandfather Raunaq Singh was the Chairman and my father OS Kanwar was the Vice-Chairman and Managing Director. Since I am an engineer by qualification, I had to undergo a lot of training at the shop and plant floor. Subsequently, I went for training on how tyres were being sold in the market.
I did not have any of the head office responsibilities for quite some time. In fact, I started with handling one of our smaller district offices in Piragarhi (Delhi). I was constantly on the roads; meeting the consumers, understanding their needs, taking their feedback, understanding how we were with our after-sales services, etc. It was really a hardcore understanding of the business. I remember an experience when we were launching a two-wheeler scooter tyre and I was out there on the road putting stepnee (spare tyre) covers on the scooters.
In 1997, I entered the head office and immediately started integrating marketing with manufacturing and technology. There was a huge gap between these departments, so I built a bridge of communication and transparency between them. I started a department called Strategic Planning and Coordination, the primary objective of which was to bridge the gap of understanding what the customers required and what we could give them. In this way, we saw a lot of improvement in what we produced for the customers.
Slowly I moved up the ladder and went into manufacturing. I started looking after the three plants (two in Kerala and one in Baroda) we had in 1998. I had to bring in a sense of globalization, global benchmarking, and global scale production at these plants. Our Baroda plant then was at 70-80 tons per day capacity, and the Kerala plants were sitting at 110 tons per day capacity. Today the economy of scales is up to 200 tons per day in any given plant in the world. Our Baroda plant is running at 420-450 tons per day and Cochin is at 310 tons per day. So these plants saw a manifold increase in output, which gives me a sense of achievement.
Around 2000, we brought in passenger radials. We were pretty late in tapping this segment, as our competition had already entered it long back. At that point, 50% of the Indian cars were on radials. I brought in a new expansion by starting the state of the art passenger radial plant in Baroda. We came up with a new scheme called B2K (Battle 2000) which shook up the tyre industry by bringing in radials at the price of cross-ply tyres, which was really affordable for the customers. The customer understood the value we were giving—better fuel efficiency and mileage. Then we saw a change in the OEMs buying tyres. When Maruti went radial, the entire country went radial. Today, 99% of the country’s cars are on radials.
We were at number five in the marketplace then; today we are clearly at number two. We have seen growth at the rate of 25-30% since 2000. Now, I aim at taking us to number one in the passenger radials market by 2009.
The move from being a very commercial tyre (trucks, tractors, etc) oriented company in the ‘90s to catering to the new and upcoming customer segment (passenger cars); and thus making Apollo a more ‘all aspects of tyres’ company is one of the key changes I brought in. Apart from this, a sea-change was brought about in after-sales servicing. I remember in the late ‘90s, a service claim took about 4-8 days. Today, we have brought that down to 1.5 days, and there are times when we have done it in couple of hours.
I believe when you want to create a new wave, you have to start it from the ground level—you have to change yourself, and get the whole organization to think the way you are thinking. The customers benefited by the changes, and we also benefited as we got repeat customers coming in. I would say hats-off to the organization and to its people who are very open to change. Change in small or big ways comes in every six months at Apollo. For example, we have just launched XT-100K, which is a truck tyre that will run for 100,000 kilometers, as compared to the average 60,000 kilometers. With this tyre, we are offering a tyre as good as a radial in the cross-ply segment. The catalyst for all this has always been my father and our Chairman.
We have noticed that many non-first generation entrepreneurs work as management trainees at different organizations before joining their own company formally. What is your reason for the same?
The idea was to get an experience outside of what I have grown up with. It was for getting a different flavor of how the professional world runs—an eye-opener and confidence-gaining exercise before joining the company.
Besides this, before I joined Apollo in 1995, I started a company called Apollo Global Capital, which I ran for two years. This non-banking finance company (NBFC) was pushed to me by my father. In those days (1993) NBFCs was really considered a big business. I understood aspects of money and dealing with people. It had nothing to do with our tyre business. I lost good money in that business, which made me understand the value of money and people.
Tyres are not generally seen as a glamorous industry. Did you really want to do tyres all your life or did you want to do something else?
The tyre industry becomes glamorous when you are on the highway, and you are cruising at 110 kilometers per hour. What one does not realize is what goes into giving you complete control at those speeds, which in my opinion makes this business glamorous. A normal customer just looks at it as black, round, and un-sexy; but a tyre is a highly engineered product. The number one tyre company in the world, Michelin spends close to one billion euros in just the research and development of this product. After all, it is about the safety of the customer. When you look at highways abroad, the vehicles are running at speeds above 100 miles per hour.
We test our tyres in a test track owned by DaimlerChrysler in Papenburg (Germany). Here our tyres are tested at various conditions. We are talking about testing this product to the extreme speeds, weather, and road conditions. We are the first Indian company to launch winter-tyres (for Europe), and these tyres have been tested in snow, ice, etc. It really gives a kick in itself. Having said that, I do not feel it is an unglamorous industry. I always wanted to join this industry, and I think it is very sexy. Besides this, I make sure that my calendars are extremely sexy too (grins).
It is said that Apollo aims to hit US $2 billion turnover by 2010; how are you ensuring that this aim will be achieved?
In April 2008, we were at $1.2 billion. Our vision is clear: $2 billion by 2010. This is going to be met with organic and inorganic growth. In terms of organic growth, we are on an expansion mode throughout the company. We are expanding in Baroda, both in passenger radial (by 50% more than our current capacity) and a new product line—for the road tyres for, say, mining vehicles, etc. Then we are getting into a green-field project in Chennai, where we are setting up our largest passenger radials outfit with truck radials also. Out there we are looking at 20,000 tyres capacity for passenger radials, and 1,500-2,000 truck radials. Our South African plants are expanding by 30-40%. Besides this, we are always in the market looking at opportunities for inorganic growth. We are looking at opportunities in the tyre space around the globe, mergers and acquisitions, etc.
Your father, Mr Onkar Kanwar, places the board of directors and management at a very high level as a factor of the company’s success. In your opinion, what makes that magical board and how do you rope in the right people for this job?
The mantra at Apollo has always been transparency and empowerment. My father plays a very important role in the organization. He gives a good macro overview of where he wants the company to be. As I mentioned in the beginning, he is the main catalyst for bringing about changes. We are the people who have to implement those changes, and we also sometimes question those changes.
I have a good set of people around me. They are my strategic thinkers. How we manage ourselves in this environment of dynamic change is by having open dialogue and transparent communication with each member of the management. My core team is empowered to take decisions on its own. This is not only at the senior level, but even down the line. We have a cross-functional team culture, there is a culture of go-and-get-it-done, rather than endless meetings. I believe that the DNA of Apollo is transparency and empowerment.
Today Apollo is organized in three profit centers—India, South Africa, and International. Then we have corporate functions, like HR, accounts, finance, purchasing, etc. But within India and South Africa they have their own functions, and they are supposed to run it, and supposed to bring in profitability and growth in the business. That is how we really manage the entire organization.
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written by Priyanka Gupta, August 25, 2010
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