Apollo opens Middle East hub
Infrastructure and tyre usage in the Middle East is very similar to that in India, says Apollo Tyres, and this is the accepted reason why its products have enjoyed a high level of acceptance throughout the region. In total, the Middle East accounts for some 30 per cent of the Indian tyre maker’s export revenues, and in the last years it has built up a 23-partner distribution network there spanning 14 countries. Now, Apollo Tyres has extended its Middle East presence with the opening of its first office outside the company’s operations in India, the Netherlands and South Africa. This new Dubai-based office will serve as a hub for distributing Apollo’s India-manufactured tyres.
“As a company we are currently in our second phase of global expansion,” said Satish Sharma, who is chief of Apollo Tyres’ India Operations and also responsible for the company’s ‘Zone I’ (Asia, the Middle East, Asian CIS, Turkey, Australia and New Zealand). “The Middle East region has always been a natural extension of our markets in India. Our tyres have enjoyed a very high demand in the region for years now. However, due to capacity constraints at our end we have not been able to fulfil the local demand. I am happy that we have crossed that. With an active sales and service team based here, we will now be able to provide our customers in the Middle East the service and operational excellence they deserve.”
Dubai is the world’s largest free trade zone and Apollo cites its “strong financial systems and legislation” as reasons why it is the “perfect business destination” for the tyre maker. Dubai is also strategically located with easy access to the 1.5 billion strong consumer market in the GCC (Gulf Cooperation Council) states, Western Asia, Africa and Eastern Europe. Dubai itself is the largest tyre distribution hub in the region, and its ratio of one car to every 1.8 individuals makes it a booming domestic market.
The new office is located in Dubai’s JAFZA Free Economic Zone and will be the reporting base for Apollo employees in Iran, Saudi Arabia and Turkey. In addition, the company has also taken up an expandable 10,000 square feet (929 square metres) of warehousing space in Dubai to enable rapid regional supply from stock and to free its Business Partners from the need to hold large inventories. Apollo Tyres says it has already invested around US$250,000 in creating appropriate permanent infrastructure for its business needs in Dubai and projects, starting this year, annual investments and expenses of around US$ 1.5 million.
“The office, network of employees and local warehousing facility will allow us to address customer demands effectively; while our entire range of tyres tuned to this market, along with our service proposition, will allow us product leadership over time,” commented Sharma. “This is a high potential market, where the Dubai tyre distribution and re-export trade is valued at US$ 1.5 billion and expected to grow by 30 per cent in the next five years. In that timeframe I am looking at Apollo garnering a high single-digit, if not ten per cent, of this market’s share.”
The full range of Apollo commercial vehicle – both cross-ply and radial – and consumer tyres will be offered through the Dubai operation. Apollo Tyres notes that, like India, Middle Eastern truck fleets still to a large extent utilise cross-ply tyres, a segment in which it considers itself the undisputed leader in product performance and reliability.
Apollo’s ‘Zone I’ is the company’s largest revenue earner, accounting for 62 per cent of the company’s US$2 billion turnover. Tyres for this region are produced in Apollo’s four plants in India. Exports out of India grossed US$106 million in the financial year just ended (FY2010-11), and Apollo projects this to grow at a double-digit rate in the next few years due to strategic initiatives currently being taken.