Award: NextGen Entrepreneur
Yogesh Mahansaria
Founder and CEO of Alliance Tire Group
Age: 39
Interests outside of work: He is an avid reader. The last book he read was The Everything Store, Jeff Bezos’ biography. The Mahansarias also donate for social causes
Why he won this award: For harnessing the competitive advantages of Indian and Israeli assets, and scaling up a niche, B2B business globally by paying close attention to end users across geographies. Also, for quick and exemplary execution of new product development
In 2012, an Alliance Tire field engineer noticed a growing problem on a tour of rural Europe. Industrial farmers there had been trying to move away from the traditional practice of loading harvested crops onto tractors in the field, which would then be driven out to the road and the crops transferred to the waiting trucks.
Instead, to eliminate the need for slow, expensive tractors, the farmers had started driving the trucks directly into the fields. But here was the rub: Conventional truck tyres, filled to high pressures to achieve greater speed on the highway, were damaging the soil and getting stuck in the mud.
The engineer shared this observation with Mumbai-based Yogesh Mahansaria. For the founder and CEO of Alliance Tire Group (ATG), this was an obvious opportunity. By 2013, an R&D team in ATG’s Israel plant had developed a solution, claiming to have created the world’s fastest agri-transport tyre: At twice the width and inflated to half the pressure of conventional truck tyres, the new product allowed farmers to bring the trucks directly into their fields and still reach speeds of 100 kmph on the highway. Each tyre is priced at Rs 1 lakh.
This ear-to-the-ground approach has driven innovation for Mahansaria, 39, and allowed his company to offer over 2,600 varieties of tyres. Today, ATG sells off-highway tyres such as these, used by farm tractors and heavy-duty construction vehicles, to dealers and distributors, in over 120 countries.
The company has grown at 10-15 percent per year, while the $12 billion market ticks over at 3-4 percent. The off-highway tyre business is linked to the health of heavy industries such as construction and mining. When they slow down, so does the demand for tyres, says Mahansaria. “Our international competitors are growing at two percent a year,” he says. “In 2014, almost all our European and American competitors have had negative volume growth, whereas we have had significant double digit volume growth.”
ATG’s march across the globe has been low-key, given that off-highway tyres are not the most visible products, but its success in stagnant markets such as Europe is significant. The reason for its sustained growth, Mahansaria says, is a solid need. “Nobody’s buying our tyre because he feels like it—he’s buying it because he needs to get a job done and his productivity will suffer if he doesn’t get his job done. Unlike when you’re buying tyres for your car or for your bike, which is more of an emotional purchase, this is more of a business decision—a rational decision.”
There are two myths that haunt Indian businesses: One, that they can’t scale brands globally and two, that the country isn’t ready to be a manufacturing hub. With 80 percent of his sales accounted for by the US and Europe, and a second Indian plant on the way, Mahansaria has debunked both those myths emphatically.
His journey has been an intriguing one (profiled in depth in the October 4, 2013, issue of Forbes India). This is his second swing at the agriculture, construction and forestry tyre market. After his father and he unceremoniously parted ways from the family’s off-highway tyre business, Balkrishna Industries (BKT), in 2006, private equity giant Warburg Pincus teamed up with Mahansaria for a new venture.
Together, they paid around $150 million to buy struggling Israeli tyre-maker Alliance Tire in 2007. In 2008, they set up a manufacturing plant in Tirunelveli, Tamil Nadu, and, in 2009, bought the US-based GPX, a tyre distribution company. Warburg Pincus cashed in on their successful partnership in 2013, when Kohlberg Kravis Roberts (KKR) bought out its 80 percent stake for an undisclosed amount reported to be around $650 million.
The road ahead may seem smooth, but Mahansaria has navigated tough circumstances to build a global B2B business through deft acquisitions and an attention to varying market needs across continents. After eight years, his revenues, at Rs 3,450-3,600 crore for the calendar year 2014, are almost on par with BKT, which is at Rs 3,587 crore for FY14. Without a question, then, this next-gen entrepreneur’s second innings is evolving into the defining one.
There is a reassuring forthrightness about Mahansaria. He’s not the most animated speaker, yet his simple monotone conveys a depth of knowledge and self-confidence. “You walk into a room with Mahansaria and these guys who’ve been in the industry for 30 years are all listening,” says Vishal Mahadevia, co-head of Warburg Pincus India. “He’s able to command respect with a cultural connect and domain knowledge.”
While the nascent Indian market develops, Mahansaria is keeping his eyes trained to the West. Besides market leader US-based Titan ($1.2-1.4 billion sales) and India’s BKT, Czech-based Mitas and Sweden’s Trelleborg both have off-highway tyre sales of around $800 million. And all of them are grappling with the same problem. “The health of the global economy is not robust. For a company like us, dependent on agriculture and commodities, that presents challenges,” says Mahansaria.
(This story appears in the 17 October, 2014 issue of Forbes India. To visit our Archives, click here.)
Hats off on proving 67%of Indian workforce handle 80%of offshore Business. Kudos Mr Yogesh M
on Mar 10, 2015