Neeraj R. S. Kanwar, Chief Operating Officer, Apollo Tyres Limited

“We are seeing a change in the market now. Apollo Tyres is giving a lot of education and training on the advantages of tubeless tyres. It’s a learning journey for the customer and people will have to start believing in it and experiencing it. It’s a slow process but will eventually happen. The world today is going tubeless. We are in discussion with OEMs for our new brand, Acelere, for tubeless radials.”

As the Chief Operating Officer of Apollo Tyres Limited (ATL), Neeraj R. S. Kanwar has been instrumental in bringing about key changes in the company’s human resources and IT management besides increasing the competitiveness of Apollo products across the board. He also led the team that led to the formation of the joint venture between Apollo Tyres and Michelin in 2003.

Kanwar graduated from Lehigh University, Bethlehem, Pennsylvania, USA, with a Bachelor of Science in Industrial Engineering and a specialisation in Management Systems. In 1991, he underwent summer training in Apollo Tyres’ Cochin plant. In 1992 he was recruited as a Management Trainee in American Express Bank, New York, and in 1994 he joined the Investment Banking division of Global Finance Ltd. After a brief stint there, he joined Apollo Finance Ltd in its corporate financing and leasing operations.

Kanwar began his career with Apollo Tyres in 1995 as Manager, Product and Strategic Planning, and was instrumental in creating for the first time a bridge between the two key functions of production and marketing. In 1998, he became Director and Chief, Manufacturing and Strategic Planning, with all unit heads directly reporting to him. In July 2002 he took over as COO. Kanwar speaks to Malini Menon of exchange4media on the company’s plans to boost the passenger car radial segment this year and reach double-digit growth. Excerpts:

Q. What is your advertising strategy?

We use a mix of media for the target audience we are looking at for a particular product. For commercial vehicles, we don’t advertise too much because that is more face-to-face and interactive. For car radials, we use a mix of media depending on the target group.

After the launch of Acelere, which is a high performance tyre, we are now looking at going a step further by introducing ultra-high performance tyres. These will target the D segment, which requires ultra-high speed performance tyres. We are looking at OE fitments for these too and discussions are on.

It’s already started and the leveling jobs are still going on. The project got a little delayed but everything should shape up by early 2006.

Not because of cheaper rubber. However, they are bringing in products in the truck segment. Chinese tyres are available and their market share has gone up from 2 per cent to 5-6 per cent. But we are also launching products in India to counter these products and the critical thing in truck tyres is after-sales service. Only people who are in India can give this to customers. You have to be very close to the customer in this segment. Moreover, the truckers are always on the road and Apollo today has 120 stocking points with technical staffers. We are well equipped to provide after-sales service.

There was a campaign we ran a year ago called WOW. It was primarily targeted at the passenger car segment. The campaign’s objective was to educate customers that when tyres are worn out, they need to get new tyres or repair them. What we did was that teams went out to crowded parking lots, shopping malls, etc., and had digital photographs taken of the tyre. The photographs were later put up with an evaluation of the tyre’s condition. It gave instructions on what needed to be done. This was a successful campaign and we plan to carry forward this campaign this year too.

Apollo today is a leader in the tyre industry in three segments. We are clearly the leader in the truck tyre market (replacement and OEMs), light truck commercial market and in the farm category, which are the rear tractor tyres. We segregate the market as commercial and personal. Commercial constitutes light trucks, heavy trucks and jeeps, which constitutes 90 per cent of the entire tyre market of India. The rest constitutes the personal transportation, primarily cars driven for personal reasons. In fact, even taxis come under the commercial segment. So it’s just the 10 per cent of the market where we aren’t dominating whereas in the rest 90 per cent we have a leadership position.

As far as passenger car segment is concerned, Apollo has started its journey very recently with high technology products. It was in 2000 that we started the passenger car radial journey and in the past five years, we have attained the number two position in this category.

Yes, it is an awareness campaign. What we are doing in the Airtel One India challenge is to set up our offices across 23 cities where the rally will take place. All our boys are present at these points and are educating customers on Acelere versus tube type tyres. The response has been good.

Our basic principle for this joint venture is to produce truck/bus radials under the new company called MATL. It is a dual brand strategy wherein Apollo and Michelin brands are on the same tyre. The other side of the joint venture is that Apollo gets the technology in PCR (passenger car radials) from Michelin. The JV is 51 per cent Michelin and 49 per cent Apollo.

According to published ATMA figures, our market share for truck and bus segment is 25.6 per cent, in light commercial vehicle segment we have 25.2 per cent share, and in passenger car radials we have 12.8 per cent share.

Today, in the car segment we supply to all the large OEMs, which includes Maruti, Tata and Mahindra and Mahindra. Other than this we are also talking to other multinationals. As of now, we supply the older brand, Amazer XL -- which is our value brand -- to Maruti. We are in discussion with them for our new brand, Acelere, for tubeless radials. They are in the testing phase and doing pretty well. Very soon they are going to be approved and Esteems are going to come out on tubeless tyres. Other than that, we supply to Mahindra and Mahindra and to Tata Motors for all their vehicles from Indica to Safaris.

Acelere is primarily for the B,C and D car segments. Though we are more skewed towards the replacement market, we are slowly making an entry. In India 80 per cent of the market is still tube type tyres and 20 per cent is tubeless tyres and this is in the replacement. In OEMs, tubeless tyres are mostly in the upper D segment, like Honda Accord and Toyota Camry. B and C segment models are still on tube tyres. So it all depends on the customer preference and mindset.

We have just expanded our PCR facilities in Baroda. Today we are producing 7,000 tyres per day in passenger car segment. We plan to take it up to 10,000 tyres in the coming year. We will put in additional investment Rs 80-90 crore in Baroda. In Kerala, we are upgrading the facilities. Every year we invest in better safety, modernization, quality besides expansion. Another Rs 40-50 crore has been earmarked upgrading technology.

Our growth for the last three years has been close to 17 per cent. Our focus will be on all areas. In terms of technology the focus will be more on passenger car segment. On the other hand, being a leader in the commercial vehicle segment, there has been a lot of product innovations. We came out with five to six new products for trucks to meet various customer needs. We see speeds and mileage going up. There are five or six products in the truck segment that have come up. Again, in light trucks, there are three or four products. In farm radials, we have constantly upgraded the products, something that not many companies have focused on. This gives huge benefit to the farmer because he gets 25 per cent more mileage; fuel efficiency goes up by five to six per cent, which is actually a saving for him. This is a segment which is growing steadily. In this area also we will be coming up with four to five new innovations. But, yes, the focus will be on building the PCR segment.

No, we are seeing a change in the market now. Apollo Tyres is giving a lot of education and training on the advantages of having tubeless tyres. It’s a learning journey for the customer and people will have to start believing in it and experiencing it. It’s a slow process but will eventually happen. The world today is going tubeless.

Truck owners take much more precautions than passenger car drivers. It’s a huge money pillar for them and if they have any problems with the tyres or any other major part of the vehicle, they tend to lose business. Truckers are far more enlightened and cautious when it comes to tyres. However, what we are doing for this segment is an AIDS awareness campaign. Today, we have four or five centres in India that are running AIDS awareness campaigns because, sadly, a big chunk of the population that is carrying HIV in India constitute our customers, mainly the truck transportation segment. At these centres, we also run eye awareness campaigns.