Apollo Tyres is accelerating towards its strategic goals. But wearing out is a threat

IIPM PUBLICATION

For starters, Apollo Tyres, which became the first in Indian tyre industry to surpass the $1 billlion annual revenue mark in FY 2006-07, is also the most profitable in the industry, with its PAT margin of 3.1% (amounting to Rs.1.13 billion) being the highest in the industry and more than double the 1.5% PAT margin of the second-most profitable tyre-maker (MRF). It is also ranked 169th on India Inc.’s most profitable entities for the year 2006-07. During our discussion with senior Apollo Tyres officials, we learnt about the company’s belief that despite majority of mergers failing, it would still hinge its fortune on a mix of organic & inorganic moves. Just last year, the company purchased the South Africa unit of Dunlop Tyres with a purpose to take advantage of the huge growth markets of South Africa and Zimbabwe. While talking to us about Apollo’s future deal-making plans, Neeraj R. S. Kanwar, Joint MD & COO, claimed, “As a company, we are constantly on the lookout for newer areas of expansion, which could provide us the right growth opportunities in our products, markets, technology and for our employees. We are constantly looking at options and will definitely tell you closer to a closure. However, simply because statistics say that 72% of M&As fail does not mean that industry will stop looking at it as a growth option. It is in our hands, with the right processes & systems in place to ensure we succeed where others failed!”

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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