Apollo acquires Dutch tyre maker

INDIA’S largest tyre maker Apollo Tyres has acquired Dutch tyre maker Vredestein Banden for an undisclosed sum, gaining a foothold in the lucrative European tyre market and raising its annual turnover by a quarter. Vredestein Banden, with an estimated annual revenues of 300 million euro ($403 million), was a subsidiary of Russia’s largest tyre manufacturer Amtel-Vredestein, which went bankrupt last month.

“This strategic acquisition will bolster Apollo’s plans for its European customers. We have acquired one of the most profitable tyre makers in Europe, and will get direct access to Vredestein’s large market in Europe,” said Delhi-based Apollo Tyres’ chairman and managing director Onkar S Kanwar on Monday.

The Dutch firm, which is likely to be renamed Apollo Vredestein, will be integrated with BSE-listed Apollo in the next few months. The process will be undertaken jointly by both the companies to develop synergies in the field of marketing, technology, manufacturing and human resources. Apollo Tyres’ share price jumped 9.43% to Rs 29 on BSE on Monday from Friday’s closing price of Rs 26.50.

Vredestein has a compounded annual revenue growth rate of 8.5% for the past five years, and has capacity to produce 5.5 million tyres annually, which takes Apollo’s total tyre capacity to 16.8 million.

The acquisition will push Apollo Tyres’ annual turnover to Rs 7,200 crore. The company targets Rs 10,000 crore revenues by fiscal 2010. Apollo Tyres raised funds for acquisition through a combination of internal accruals and debt. The company was advised by KPMG, Nomura and CMS Derks Star Busmann on the transaction.

Mr Kanwar said Apollo has deferred its plan to set up a greenfield plant in Hungary with a proposed investment of 200 million euros to produce 70 lakh tyres a year. This is due to land acquisition problems in the East European country. Instead, it will now concentrate on consolidating operations in Holland. Vredestein is Apollo’s second international acquisition.

Car majors build on digital marketing

AFTER the rural market rejuvenated car sales, auto companies are now building on digital marketing activities to tap onto a new set of tech savvy customers. The strategy is to generate business through consumer interface over internet and mobile phones, say auto marketers.

Maruti claims over a lakh cars it sold last year originated from digital marketing initiatives while Tata Motors saw 4,000 customers booking its low-cost car Nano over the internet. Other automakers are also witnessing a similar response on their digital platforms.

Honda’s third generation of flagship car, City, regained its leadership position in the mid-size car segment in the first month of its launch in November on the back of strong digital interface with customers. Not to be left behind, Volkswagen is using Net and mobile to tap the 2.5-lakh strong customer base in India, owning cars over Rs 10 lakh, for its Jetta and Passat premium sedans.

Passenger carmaker leader Maruti Suzuki India (MSI) first tasted success with online marketing with its small car A-Star, which generated huge interest on the net with over 2.5 lakh online hits. “We sold around 4,000 A-Stars based on customer interface on internet and have doubled online marketing activity for the new hatchback Ritz with a microsite launched a week ahead of the launch and offering various exclusive options to loggers. Around 17-18% of our sales now are estimated to originate from digital marketing from mere 2-3% in 2005,” MSI chief general manager (marketing) Shashank Srivastava said. Other carmakers are also actively tapping the interactive social networking sites and blogs on the web advertising space.

Honda is launching a new programme in July to track sales originating from net. “Our cars are primarily targeted at rich and younger customer who are net savvy and take keen interest in blogs and different web activities. Digital marketing helps us build a strong brand,” Honda Siel Cars veep (sales & marketing) Jnaneshwar Sen said. He added that preliminary estimates suggest internet is responsible for 5% of Honda’s total sales in India.

Earlier, Tata Motors’ dedicate website on Nano got a little over 30-million hits from the date of launch of the car to the closure of the booking. “It’s easier to reach professional like doctors and engineers and other target audiences with a strong influence on their purchase decision,” said Amardeep Bajpai of Webisdom.

By Chanchal Pal Chauhan NEW DELHI, chanchal.chauhan@timesgroup.com

Mysore Paints’ sales poll-vault 144% in FY09

In the ocean that democracy is, one drop from a little known state-owned company, based in a city known more for its silk and sandalwood, has churned governments. Mysore Paints & Varnish (MPVL) can etch its name in history for contributing to the democratic process from Afghanistan to Nepal with a secret weapon packed in a bottle: indelible ink.

The company is the only one manufacturing and supplying voter’s ink, the chief ingredient is not known to all, in India. It holds a record of marking votes (on the index fingers of voters) for all parliamentary, assembly and local elections in India since 1962.

From the shadow of the monarchy, King Krishnaraja Wodeyar IV established it in 1937, the company has come a long way, helping conduct democratic elections in Cambodia, Maldives, South Africa, Mangolia, Ghana, Turkey, Canada, Denmark, Nepal and Afghanistan.

And, for the recently-concluded 15th Lok Sabha elections, MPVL despatched 19,31,870 bottles of indelible ink. It took just 40 days for the inkmaker to roll out the order placed by the Election Commission.

The polls in Cambodia, a few local elections and the 2009 election to elect the 15 Lok Sabha has helped it post a 144% rise in net revenues to Rs 21.7 crore in FY09. MPVL packs voter’s ink in 10 ml bottles, which bears a per unit cost of Rs 64 (excluding tax). One bottle of indelible ink can mark the index or middle fingers (nail to skin) of 700 voters.

“Voter’s ink is manufactured using a secret compound formulated by the New Delhi-based National Physical Laboratory. The curing of ink has more to do with the body temperature of each individual; the ink dries out in 30 seconds flat. Traces remain on the nails for a minimum of 15 days,” says KJ Suresh, managing director, MPVL.

Among states that received the maximum number of bottles are Uttar Pradesh (2.86 lakh), Andhra Pradesh (2 lakh), Madhya Pradesh (1.05 lakh), Maharashtra (1.84 lakh), West Bengal (1.46 lakh), New Delhi (35,000) and Lakshadweep (120).

“More than 65% of our current year’s revenue is from the indelible ink segment. We log good numbers in election years. Our industrial paints and coatings segment contributes to revenues when there are no elections,” Mr Suresh added. MPVL is one of the few profit-making PSU in Karnataka.

Shailesh Menon, ET Bureau