Davos WEF 2022 | Apollo Tyres' Neeraj Kanwar Says Supply-Chain Logjam, Coal Shortage Major Problems

Apollo Tyres Ltd.'s Managing Director Neeraj Kanwar said recent supply chain logjams and coal shortages hurt the company's exports and production, leading to higher costs, loss of customers in European markets and lower supply in the Indian market too.

Freight rates have increased by five to seven times since the beginning of the Covid-19 pandemic, Kanwar, also the vice-chairman at the tyremaker, told BQ Prime's Menaka Doshi on the sidelines of the World Economic Forum in Davos, Switzerland. Now it takes over four months for a ship to reach Rotterdam from India, he said, against 30-40 days in the past.

The company also caters to the European market through the two plants in Hungary and the Netherlands. It's looking at de-bottlenecking its Hungary plant and unlocking capacity at its Netherlands facility to close the supply gap in the short term.

Infrastructure and efficiency of Indian ports also has to improve, Kanwar said. Large warehouses have to be created and such infrastructure is necessary to make India an export hub, he said.

Also, Andhra Pradesh government's decision to cut electricity supply to industries by 50% has led to severe coal shortage, forcing the company to cut its plant's production by 50%, Kanwar said.

• Kanwar is optimistic about Indian demand as semiconductor shortages have reduced and people have once again begun to buy private cars.

• European demand a concern due to Russia's war in Ukraine.

• Cost increases on account of supply-chain issues have been partly passed on to the customers.

• The European market, being a mature one, is more price insensitive than India and the company has been able to increase prices.

• The company is focusing on production of ultra-high performance tyres in Europe.

• Apollo Tyres is investing heavily in solar energy to overcome energy problems in the long-term.

• The company is also investing in digitisation, and created a digital hub in London.

• It’s studying how machine speeds can be improved and equipment breakdown time can be cut.

• The net goal is to improve return on capital employed.