An Asean tyre factory will make us more competitive
Nov 25 2012 , Chennai
Interview | Satish Sharma, chief of India operations, Apollo Tyres
on these plans and more. Excerpts:
We gather that your Q2FY13 margins (standalone) were below estimates despite lower rubber prices. What were the key reasons?
According to us, our performance in Q2FY13 was reasonably good considering the challenging circumstances. Our margins have improved sequentially, as well as YoY.
How do you see the current quarter for sales and margins? While the slowdown in auto demand remains a concern, will stable raw material prices help you post higher margins in Q3?
While stable raw material prices would be an advantage for us in the next few months, sluggish automotive sales, especially commercial vehicles, could be a dampener. However, there is healthy demand in the replacement market, which has helped us grow quarter-on-quarter.
When are you likely to announce Asean facility and what are the potential locations for this project?
We see the Asean region as a growing market for our products, and to be competitive in this market it is important to have our own manufacturing presence in the region. We will proceed with this at the earliest and shall make the necessary announcements at the appropriate time.
What is the rationale behind the plan to establish a unit in Asean and what will be the key benefits through this venture? How much are you proposing to invest in this project?
This is a large and growing market which we have already been serving through exports, while other global tyre majors already have their manufacturing presence in the Asean region. We are aiming to start with having a sales & marketing office in this region in Q4 of this financial year.
n What is the share of Asean region in your exports?
Asean region presently contributes over 30 per cent to our exports out of India.
We also gather that you could revive plans to put up a greenfield venture in Eastern Europe in the next couple of years. What are the advantages you see through such a venture?
Our plans are based on the acceptability and the demand for our products, which in Europe has been good. We have been selling summer and winter tyres of both Apollo and Vredestein brands in Europe. As the demand picks-up further, exporting tyres out of India would not be a viable business option in the long run.
Is the momentum for truck radialisation continuing in India amid sluggish CV market?
The radialisation level will continue to improve irrespective of the sluggish commercial vehicle OE market, as demand for radials have increased in the replacement market as well. This is evident from the increased sales of our truck/bus radials in the past quarter.