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In Conversation
Onkar Singh Kanwar |
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A European Base
On 18th May, Apollo Tyres, India's premier tyre manufacturing company, announced that the acquisition of premium European tyre manufacturer Vredestein Banden BV, based in the Netherlands, was formally complete. Team Connect caught up with Onkar Singh Kanwar, Chairman and Managing Director, Apollo Tyres Ltd, to bring you the story behind the deal. |
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| How and why did Apollo zero in on Vredestein Banden? What were the factors considered, especially since this is a recessionary period? |
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Actually, we had identified Vredestein Banden BV as one of the last major independent European tyre manufacturers, a few years back, during one of our strategic planning exercises. But in 2005, Amtel bought Vredestein. Now when the opportunity presented itself, we were ready.
As far as the recession is considered, all I can say is that recessions are always tough and acquisitions are never really easy. What eventually matters is the long-lasting value you create for the business and its stakeholders, and Vredestein provides us with an opportunity to do both.
For starters, it gives us access to the highly competitive, quality-conscious and tech-savvy European market with its well-established distribution network in Europe and select regions of the world, including the United States. Moreover, Vredestein is a strong, premium brand in Europe and is recognised for its world-class passenger car tyre technology. It has a manufacturing unit in Enschede, near Amsterdam, which has a production capacity of 5.5 million passenger car radials. Yet another gain is the pool of talented individuals who have now come into the Apollo fold. And, of course, it is a profit-making and fast-growing enterprise.
This acquisition couldn't have come at a better time; we-both Apollo and Vredestein-see it as an ideal strategic fit.
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| Were there other companies that Apollo was looking at? |
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| As a part of our strategic planning exercises, we always look at options for organic and inorganic growth. Given Vredestein's inherent strengths and our business requirements in Europe, it emerged as the natural choice for now. |
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| How different are the regulatory processes in the Netherlands for mergers and acquisitions? What was the company's experience like while undertaking this acquisition? |
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| It has been a pleasure working with the Dutch authorities. Given that this was an acquisition we were making from a parent company that had declared bankruptcy, we were amazed by the speed, sense of urgency, transparency and complete attention to detail in the entire process. The role played by Dutch administrators in cases like this cannot be over emphasised and the administrator's role in ensuring that the process meets with the approval of all interested parties was key. It's a model system where acting in a timely fashion can often be a lifeline for companies in bankruptcy situations. |
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| This marks the entry of Apollo Tyres into the European market. What are the plans for this market? |
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| Europe, being the apex of tyre technology, is an important market for us. At the moment, all plans for the European market will be finalised post the integration process, which has already started. However, our basic aim remains the same-to offer brands of choice and services to the discerning European consumer. As always, we are committed to offering the benefits of technologically superior products at optimum value points. |
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