Apollo Tyres India Ltd.'s Growth Strategy: Treading Global Markets
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Case Code: BSTR397 Case Length: 18 Pages Period: 2005-2011 Pub Date: 2011 Teaching Note: Not Available |
Price: Rs.500 Organization: Apollo Tyres Industry: Tyres Countries: India; Europe; Africa Themes: Globalization, Industry Analysis, International Business |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Apollo Tyres: The Journey
The history of Apollo dates back to the 1970s when a licensing regime was prevalent in India. In 1948, Raunaq Singh (Raunaq) had migrated from Lahore, Pakistan, to India and started a steel pipes business which flourished. In 1974, he obtained a licence for setting up a tire manufacturing company and incorporated Apollo in 1976. Apollo began its operations by entering into a technical collaboration with General Tire International Corporation , US (General Tires) and started its first tire plant in 1976 at Perembra in Kerala...
From Indian to Multinational
In India, Apollo had a secured market in 2005, but it had not ventured outside the country. To achieve the ‘US$ 2 billion company' goal it set its eyes on the international arena. For the first time, in 2006, Apollo ventured outside India and acquired Dunlop Tires International (Pty) Ltd in South Africa (Dunlop South Africa), taking Africa as its second market...
The Acquired Companies
Both the companies that were acquired by Apollo had a presence in the global markets and a past history of more than 100 years....
Dunlop Tires International (PTY) Limited
The company traced its origins to 1889. To commercialize John Dunlop's pneumatic tire technology, Dunlop Pneumatic Tyre Co. Ltd was formed in Dublin. In the early 1890s, Dunlop established branches in Europe, North America, and Australia. By 1902, the company had its own manufacturing company called Dunlop Rubber Co. Ltd, in Birmingham, England...
Vredestine Banden BV
Since 1908, Vredestein had been manufacturing rubber. But it was only in 1946 that the tire company Vredestine Banden BV came into being as a Dutch-American alliance between Vredestein and BF Goodrich, with the establishment of its first tire production plant in Enschede, the Netherlands...
Success in Trading Global Markets
Apollo's acquisition of Dunlop and Vredestein made it the undisputed leader in India, in terms of size, reach, technology, and range of products. It also enjoyed the distinction of being the first Indian tire company to undertake an acquisition abroad. While Apollo ranked 16th globally before the acquisitions, the company expected to rank 13th or 14th in terms of size after the acquisitions. And in 2009, the company ranked as the 13th largest tire manufacturing company globally. The company considered these acquisitions as a springboard to positioning itself as a global player and furthering its base for future growth...
Challenges
The tire industry as such is capital intensive, and requires rubber as the main raw material apart from others like crude oil. The supply and demand of this raw material keeps fluctuating thoroughout the year and had increased many times during 2009-2010. These increases and fluctuations cause a drastic rise/fall in the price of the final product...
The Road Ahead
Apollo Tyres had big plans for the future. It planned to grow three times to US$6 billion by 2015-2016 and aimed to break into the league of the global top 10 tire companies. "We have set our 'vision' to be a $6-billion company by 2015-16," said Satish Sharma (Sharma), Chief, India operations...
Exhibits
Exhibit I: List of Global Top 10 Tyre Companies 2010
Exhibit II: Competition in the Indian Tyre Industry 2010-2011
Exhibit III: Segmental Market Share of Key Industry Majors by Volume in India
Exhibit IV: Investment Plans of Tyre Manufacturers
Exhibit V: Revenue Information about Apollo's Primary Segments
Exhibit VI: Profit & Loss account of Apollo Tyres (in Rs. Million)
Exhibit VII: Balance Sheet of Apollo Tyres (in Rs. Million)
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