Apollo opens global R&D and branding centres

Apollo Tyres Ltd has opened a global R&D centre in Enschede, the Netherlands as well as a global branding centre in London, UK. Opened just days apart, the two moves follow earlier commitments to put European activities in the driving seat for passenger car tyre development and, in company chairman Onkar S Kanwar’s words, to fuse the company’s three cultures into one team. Hints towards increased OE activity and the potential of a more international investor base are also evident.

The global marketing office has been situated right at the heart of London in Westminster, giving it very close access to both the financial and political centres of the UK. So does this mean the company is planning any specific financial market activity? “Not really”, Apollo vice-chairman Neeraj Kanwar told Tyres & Accessories, adding that these steps have been taken with a view to building the company’s identity around the world and across its three key brands. However there is a financial dimension to the decision, currently around 22 per cent of Apollo shares are held by non-Indian or “foreign institutions”. However, the target is for the company to increase this to around 40 per cent, with German and Dutch investors mentioned and with the proximity to the British financial markets – which themselves offer a doorway to the rest of the world – suggesting that this is by no means an exclusive list.

With reference to recent speculation relating to Apollo’s apparent potential interest in purchasing Cooper Tire, Neeraj Kanwar reiterated the company’s official stance of not commenting on speculation. What he did say was that the company is aiming to achieve its goal of attaining annual sales of US$6 billion via “both organic and inorganic growth”. That said, the company is “not in the race to buy something” and in any hypothetical case any decision will be based on three key considerations – as it was in the case of the Vredestein purchase in 2009 and the Dunlop South Africa acquisition before it. According to Kanwa,r it all comes down to brand – will any product or brand gaps be filled?; geography – are blank or strategically valuable positions covered?; and talent – do the right people come along with any transaction?

Price positioning and strategising will also be led from the new global branding office, along with media planning and product communications. Apart from providing an overview for other departments and regions, this global centre is intended to act as something of a hub for Apollo’s increasingly international business. The relative proximity to the company’s Eschede manufacturing site and the new global research and development facility were also said to have been key considerations.

New global R&D centre

Just around the corner from the Vredestein plant in Enschede and a stone’s throw away from FC Twente stadium that dominates the local skyline, the Apollo Vredestein’s new Tyre Information Centre (as employees call it) is situated in a modern building in the local science and technology park. And it represents a milestone towards both the company’s continued OE aspirations and its commitment to raise R&D spending to 3 per cent of turnover.

The new facility will serve as a hub for the development and testing of car and van tyres for all three of the company’s brands — Apollo, Vredestein and Dunlop (one of the office walls is emblazoned with this logo although it is only distributed through 32 countries in Africa). Apollo Tyres Global R&D BV opens with 104 R&D specialists from various parts of the world, including 20 car tyre specialists from India and South Africa, and will later be scaled-up to nearly 150 people.

“This world-class centre will play a key role in bringing cutting-edge technology and innovation in the development of car and van tyres of the future,” said Onkar S Kanwar during the inauguration of the R&D centre, pointing to the key OE flavour of the endeavour.

The decision to open the new R&D centre follows an earlier decision to restructure the company’s global research and development team, across its 3 key geographies. The new structure is designed to connect the entire organisation via two major R&D centres – the facility in Holland will take the lead in terms of passenger car tyres, while the company’s Indian centre in Chennai will take the helm for agricultural, off-the-road and commercial products. Geography was key to their placement – The Middle East and Asia forms nearly 59 per cent of the global market for commercial vehicle tyres, while Europe and North America represent 51 per cent of the car tyre market. Both R&D departments will be in close contact with OEMs and replacement clients, test centres, raw material suppliers and research institutes. 

According to Peter Snel, group head, PV R&D, Apollo Tyres Ltd: “Apollo has taken a bold strategic decision to centralise its R&D activities for car tyres in Europe. Given that Europe is one of the most advanced automotive markets in the world, the facility will help Apollo to further step up efforts to build tyres for the future. It will also strengthen our relationship with the global OEMs.”

As well as Apollo’s chairman and vice-chairman, deputy chief of mission from the Indian Embassy to the Netherlands, R K Singh and Mayor of Enschede, Honourable Peter den Oudsten were present to inaugurate the R&D facility.