Interview with Abhijit Bakre

Company Description: Michelin came to India almost a decade ago and today markets its range of tubeless car radial , tubeless and tube type bus and truck radial tyres. These tyres produced for the Indian market contain the best Michelin technology and have carved a niche for themselves in the marketplace. Today, Michelin in India offers product for India market for passenger cars, truck & bus, two wheeler & OTR (Off the Road). With an investment of 4,000 crore over a period of 7 years, the manufacturing facility in India is being set up on 290 acres of land, allotted by SIPCOT.  With a global market share of 15.5pc, Michelin has been equipping vehicles in India for almost a decade and today markets in India a full offer of radial tyres for two wheel, passenger car, trucks and buses, agriculture, construction and mining vehicles.

You had your stint with the FMCG industry.  Thereafter, you joined Michelin.  Did you see a lot of potential in this industry?

I joined here because Michelin is an iconic brand. It is a dream-come-true for every marketing personnel to work for big global giants like ours. That is perhaps the primary reason why I joined Michelin. And I bring with me an experience from different industries, which is an added advantage. I have been in Michelin for the last couple of years and it’s been a very satisfying experience for me. And this is not for the first time that I am in the automobile affiliated industry. I have worked in Castrol before. So I have some background about this industry.

How established is Michelin in India? Are you worried about well-entrenched players here?

I will answer this question in two different facets. As you know Michelin is a global brand and also a leader in the industry when it comes to innovation and its ability to churn out new products consistently, and also new technologies that are brought into this industry. Many of them are the first from Michelin. From that point of view, if you ask me whether it will be difficult to tackle the fairly-entrenched players, I think we are capable enough of getting tyres that are required for this particular market. The conditions, the consumers, vehicles, etc will be getting addressed in terms of how we build our product. So I really do not see any big worry. Everybody recognises the fact that if the growth is going to happen here, the right amount of investments will get done here in the industry.  As far as our product lines are concerned, we have already announced a factory establishment with a 4,000 crore investment in Tamil Nadu.  That facility will be our flagship factory and will be manufacturing truck and bus tyres. We are also present in the Indian market with the passenger vehicle tyres and two-wheeler tyres also. However, all of them are imported, but made to suit the conditions of the Indian market. Every data is collected from here to manufacture tyres that will work in these conditions. 

How important is the Indian market for Michelin? Do you see a foreseeable growth here?

Well everybody knows that India is an emerging nation. It is a fast growing market with a huge amount of growth witnessed in the automobile industry. From that viewpoint, Michelin is definitely looking at India as a strategic market. Therefore, we are setting up a geenfield facility here.

Does the Chennai plant cater to the domestic market alone or does it produce tyres for the export markets also? If yes, which are your main markets?

The idea is to cater to the domestic market as much as possible and then look for other options. We have been studying the Indian market for a fairly long period of time. And we are now confident in terms of manufacturing products for the Indian market. This is because of the huge surge in demand here. So it will cater to the domestic market more than the overseas markets. We can safely assume that upto 90-92pc of our local production will be catering to the domestic market over a period of time.

Peugeot, which sources tyres from Michelin globally, has made known its plans to enter India. Other car majors too are planning to make big-ticket investments in India. Does it all mean enhanced business for Michelin?

Right now we have tied up with Mercedes and Honda in the passenger vehicle segment. On the truck side, we supply to Volvo. As far as new OEMs are concerned, we constantly look at these opportunities as and when they come in terms of volumes so that we can synergistically tie up with them. These new entrants will obviously mean enhanced business opportunities for us.

How strong are you in the CV & LCV segments?

The big piece of the Michelin story is our desire to drive radialisaton in the Indian CV industry. What is going to be the key driver is the shift in market from bias tyres to radial tyres with better infrastructure that we see on Indian roads. And that is where we believe we will be at the forefront of driving this radialistation process. From that point of view, the plant will bring the desired number of quality tyres, both in the LCV and HCV segments. To popularise our products and to promote radialistaion, we have kickstarted a process called ‘Michelin Caravan’, wherein an open truck is plying across the length and breadth of the country visiting various transport hubs. The basic objective is to communicate the advantages of using Michelin radial tyres. It tells the benefits the drivers and fleet owners can derive out of it. And what we talk about is the increased fuel savings one can get out of it and also the enhanced safety levels of Michelin tyres.

The increase in rubber prices and other raw materials has hit the bottom lines of several tyre majors. How has it been for Michelin?

You are absolutely right. There are times when the rubber prices have gone up substantially.  Moreover, rubber is a major ingredient of a tyre. There is an extent to which you can absorb costs beyond which they need to be passed on (to the end users) to cover your rising costs of doing the business as well. But all said and done, what Michelin looks to do is always price its products and bases its benefits it offers to its end customers, whether it is on the truck side or the passenger vehicle. That is always borne in mind while pricing the products, because benefit is the main virtue of selling a Michelin tyre.

What are Michelin’s efforts towards protecting the environment? Are the technologies adopted by you, green?

I think Michelin was the first tyre to go green way back in 1996 when the GreenX technology was developed. This was the first tyre to actually promise fuel-savings on the tyre. And Michelin has been the pioneer on that front because when I say 1996 it’s actually 15 years older. So from that point of view, Michelin has been very conscientious in its efforts towards the environment.

Lastly, do you have plans to have big-ticket shows in India, like the Bibendum challenge show organised globally?

It is organised in different parts of the world. This year it was in Berlin, last year it was in Rio. Every year this initiative is organised so as to bring to a common platform various other companies which are on similar lines thinking of how to look at ‘Green’ as a virtue in terms of the auto industry. Michelin is always looking for partnering efforts on that side. Looking at how India as an emerging nation will grow in the years to come, these kinds of initiatives can also be rolled out in India. 

A lot of domestic and multinational OEMs companies are lobbying with the government to impose anti-dumping duties on Chinese tyres. What are your views on that?