Apollo Tyres to cut back big spends in revenue boost

Neeraj Kanwar, Vice-Chairman and MD, tells Shahkhar Abidi that the company has had a heavy capex cycle for a decade and time has come to think intelligently while boosting the top line to $5 billion by FY 26.

-  Shahkhar Abidi

Apollo Tyres will leverage technology, digitalisation, branding, sustainability and people growth as its five key enablers to reach $5 billion revenue by FY26, nearly twice from the present level of $2.8 billion.

The growth is expected to be achieved at minimal capex as it has already made substantial investments over the decade. Neeraj Kanwar, Vice Chairman & MD, told Autocar Professional that the last 11 years had a “very heavy capital-intensive cycle” with the setting up of huge plants in Chennai, Hungary and now in Andhra Pradesh.

From his point of view, the time is now right to turn to machine learning and artificial intelligence to optimally increase productivity. "There is enhanced capacity and in the next two years it is going to be a capex light for us," said Kanwar.

Apollo wants to achieve its goal without compromising on return on capital employed which it expects to be 12-15 percent. The target for earnings before interests, taxes, depreciation and amortisation is around 15 percent while the net debt to- EBITDA ratio is targeted at less than 2x.

Apollo is also keen on becoming carbon-neutral by 2050. Kanwar said there were a host of issues to deal with — thanks to the war in Ukraine and the recent lockdown in China — which has dealt a body-blow to the industry.

“The supply chain situation today is cumbersome and we have resorted to digitalisation to help us in goods movement from the factory to customers and even further to vendors,” said Kanwar. The company has commissioned a digital innovation centre in London.