Apollo Tyres: Tech-driven capacity growth
Capacities at Apollo Tyres Ltd.’s production facilities in Europe were 88 per cent utilised between March and June 2022. The utilisation figure for the tyre maker’s plants in India was around 85 per cent, reports chief financial officer Gaurav Kumar. This gives the company little leeway for further growth in volumes, but Apollo Tyres believes it can address this issue without resorting to a greenfield or brownfield capacity expansion project.
During a conference call for analysts and investors on 16 August, vice-chairman and managing director Neeraj Kanwar explained that Apollo Tyres will instead optimise its existing capacities through the use of artificial intelligence and machine learning. “We are starting to extensively use IoT, machine learning and artificial intelligence to drive efficiency gains in our plants,” he stated, adding that Apollo is also using cloud technologies to transform its business.
Kanwar believes these measures will give Apollo Tyres a ten to 15 per cent increase in productivity by speeding up equipment and enabling it to produce more. “That will look after the growth in India and in Europe,” he added.
As to when these technologies will boost capacities, the managing director said the project is “still in a planning phase.” Investments may take place in the financial year ending 31 March 2024 or even the following year; Kanwar comments that “we don’t know because the markets are very volatile.” In the meantime, Apollo Tyres will follow a “capex light” approach and debottleneck its plants.
European demand remains strong
Gaurav Kumar confirmed that although Apollo Tyres increased its passenger segment prices for Europe by up to nine per cent in the quarter ending 30 June 2022, it does not expect demand for its tyres to suffer. He considers Europe’s passenger car tyre market growth of about five per cent during the period to be “higher than what is usual for a mature market,” and Kumar thus opines that “all indications are for a very strong demand.”
A portion of this demand may relate to volumes other tyre makers previously produced in Russia. Noting that some 8 to 10 million passenger car tyres are no longer being imported from Russia to Central Europe each year, Neeraj Kanwar said the war “opens up a huge opportunity” for Apollo Tyres to meet this shortfall.