New Delhi: German tyre major Continental has said India will be a key focus market for the company for new investments as it expands here following the acquisition of Modi Tyres in 2011. The company said it is also open to fresh acquisitions in India to gain a sizeable foothold faster, though there are no immediate targets.
"India is a critical market for Continental and despite short-term challenges, I strongly believe that that it is a strong long-term prospect," Nikolai Setzer, member of Continental's executive board and head of tyre division, told TOI here.
The company sells truck/bus radial and bias tyres, which are manufactured at its plant at Modipuram in Uttar Pradesh. Also, it is present in the passenger car tyre market, while making two-wheeler tyres in partnership with Metro Tyres.
Setzer, who heads Continental's 9.6 billion euro tyre business, said India and other BRIC countries are crucial for registering growth as traditional strongholds in the West decline. "Europe and North America contribute 83% to our sales. But, these regions are only stable and not growing. Out of these mature markets, you can only get a growth of 1-2%.From emerging countries, you can still expect a growth of 4-5%. It can be more in a certain year."
"Last year, we invested about 800 million euros in the tyre division... (and) it is fair to assume that a big portion has gone to BRIC countries." The company has similar investment plans for this year, and Setzer said a substantial portion will again come to BRIC countries. "BRIC will remain a big focus in 2014 as well."
Speaking about the Indian market, he said that having local production adds strength to the company's product portfolio. "We have found the right set-up. We have an installed capacity for bias tyres and these are expected to be a substantial part of the market for some time. Installing radials in that plant also gives us great economies of scale and a leverage that we can use."
Setzer conceded that competition in the Indian market is intense considering that there are strong local players like Apollo, MRF and JK Tyres apart from global biggies like Michelin. "I have not found even one market in the world that is easy to crack... But looking at the market here in India for us, we have now local production for our range. We have premium technology, we have a very experienced sales team that knows the market very well, and we have good dealers. We believe we have everything which we need and a very good package to be successful in the market and find our market place. We see there is room for us."
Asked whether the company is open to fresh acquisitions after buying out Modi in 2011, he said there are no immediate plans, though the company is always open for the right opportunity."We just acquired Modi Tyres in 2011. We have invested 50 million euros which is substantial and which we are currently ramping up. The appetite right now for an additional acquisition is very limited. We have to ramp this up first and make it successful. However, we have the financial means and we are open, and do monitor the market. If there is a great opportunity, we will never rule it out."
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