At Apollo Tyres Ltd.'s 39th annual general meeting in Kochi, India, Chairman Onkar S Kanwar shared the company's fiscal year results ended March 21, 2012, with shareholders. Here are his remarks.
"In a nutshell, the year gone by, has been one of laying a strong foundation to pursue your company’s growth strategy for the next five years. It seemed the perfect time to undertake this exercise, given the uncertainty in the global economy. An uncertainty which is not showing any signs of decreasing, especially in India.
"But mark my words: The global and Indian economy will both recover. Growth will be back and so will jobs and opportunities. At Apollo, we have always believed that good times are ahead of us. And the time for preparation is now.
"Let me begin by briefly capturing the year for you. Overall, our revenues have grown by 37% over the previous year, with profits continuing to remain depressed due to higher input costs. Despite this, with your support, the company has continued to perform.
"On an operational level, your company’s manufacturing bases in India, Netherlands and South Africa have undergone substantial investments and product expansions. There has been a restructuring in the critical area of research and development to create greater focus and customer-centricity. Business Quality as a process has been deployed across geographies to create higher efficiencies and to ensure that the customer’s voice is heard, and suggestions implemented.
"So what next? There are four strategic directions we are globally pursuing with vigour:
1. "deepening our presence in our home markets;
2. "expanding into new markets;
3. "a clear focus on the environment, green technologies and society; and finally,
4. "growth to enable all of this to take place as planned."
Deepening our presence in our home markets
"Through a combination of the right products, focus on specific categories, your company, plans to further consolidate its position in each of its home markets of India, South Africa and the European Union. This would be balanced with a focus on profitable segments of the tire market. In India, for example, where your company is already the number one tire manufacturer and a leader in both passenger car and truck-bus radial tires; the focus would be in increasing the gap between us and our competitors with a larger and more meaningful portfolio for our customers.
"This would include the entry of the Vredestein brand to take on a leadership position in the ultra-high performance tire and car segment. This would also include a higher penetration of mining and specialty tires in South Africa.
"In Europe, the focus for the next two years will continue to be on deepening and strengthening our passenger car tire brands of both Apollo and Vredestein. Currently in Europe, demand outstrips our capability to meet with supplies. And therefore, your company is actively looking at ways in which we can fulfil this increasing European demand in passenger car tires.
"To lend greater focus to these markets, your company’s commercial vehicle research center is being recreated in Chennai in India; while the entire passenger tire research and development center has been relocated to Netherlands in Europe. This reorganization will enable your company to address evolving car and customer requirements more effectively. As hubs, they will work with country level research centres to further customise product ranges to address local needs actively."
Expanding into new markets
"In each of our home markets, we see your company growing at a rate higher than the local industry rate, especially India. Given that, we feel the time is right to expand this base. Currently, Apollo is sold in over 118 countries across the world. Your company has been seeding many of these markets through exports for some years now. But over the course of the past year, we have identified the specific geographies of the Middle East, South East Asia, Australia and Brazil as potential future home markets, some with manufacturing bases.
"This requires from your company a firm commitment to further expand our product range, sales and service network and a serious commitment to a substantial capital expenditure to create fresh infrastructure of new manufacturing bases and people. Over the short term, the outlay in capital might put further pressure on margins; however, this is a much-needed expenditure to enable your company to build a future of growth.
"As you are aware, time and again, your company’s investments during difficult and uncertain times have always paid off, clearly manifesting the need not to shy away from planning for the future."
A clear focus on environment, green technologies and society
"Our other three strategic directions meet here. It is one area where the interest of our customers, the efficiency of our manufacturing processes, the effectiveness of our research and testing and the needs of society, all come together in one place.
"Multiple functions across the company have been working to bring alive a true green movement for the future. Work is on in alternative sources of rubber, in low noise and fuel-efficient tires, in water conservation and the use of renewable sources of energy.
"While this work is being done under the guidelines of the 'Global Reporting Initiative,' enabling us to map our progress, our investments in community development, education and skill building of young people has increased 150% in the past year. Over 200 youth in our three home markets have undergone skill development programmes and job placements.
"In addition, in India, we have started setting up driver training schools for commercial vehicles to create a strong pool of safety and health conscious drivers. I believe this work in your dompany will go a long way in ensuring stronger communities wherever we go."
"It’s the magic word today. But in your company, we believe that our core duty is to aggressively pursue business growth, tempered with a keen eye on society’s well-being. This is the only way we have to meet the requirements of our people and our customers, making appropriate investments in people, processes and plants for future business needs; alongside timely investments in the education and training of communities around us -- empowering them to continue the growth cycle we trigger in our communities.
"On this note, I would like to thank each one of you. The support that we receive from our banks, financial institutions and the state governments of Kerala, Gujarat, Haryana, Maharashtra and Tamil Nadu, and the Union Governments of India, South Africa and Netherlands continues to remain critical to our progress.
"Apollo Tyres is ready to move to the next level in its journey around the world. And like always, we are grateful for your continued support and for being the inspiration and support for our actions."