Apollo Tyres was born when entrepreneur Raunaq Singh decided to buy a tyre license at a cocktail party in New Delhi.

How ex CM Achutha Menon kickstarted Keralas tryst with tyresApollo Tyres
Features Book Excerpt Friday, January 06, 2017 - 19:46

By Tim Bouquet

Singh was at a cocktail party and dinner at Kerala House on Jantar Mantar Road in New Delhi, when Achutha Menon the development minded Chief Minister of the state took him to one side.

‘So, Raunaq, you don’t have anything in Kerala, do you?’

‘No, it’s too far away.’

‘We’ve got a company down there called Ruby Rubber sitting on a 400,000 tyre/tube licence since 1972, but they haven’t implemented it.’ Menon, often described as a ‘no-nonsense’ Chief Minister, was desperate for industrial development in his state. Kerala had very little industry and Menon, a lawyer-turned-politician who had been active in the Quit India movement, needed to create jobs in the state. He had written a personal letter to Indira Gandhi lobbying for the licence and now he was frustrated. ‘Raunaq, I can transfer that licence to you,’ he said.

Until then, the Indian tyre industry had been run by an international oligopoly of Goodyear, Firestone, Ceat and Dunlop—which had opened its first tyre factory in India in Kolkata in 1936. The group had enjoyed a sellers’ market since 1968 and did not face any problem in marketing whatever they produced. So the quality of the product and introducing the technological innovations happening in the rest of the world, such as nylon or cross-ply tyres, did not rank high.

‘There was no competition, just a distribution of the cake,’ says Onkar Singh Kanwar. ‘In an economy driven by shortages, companies rather than the markets predetermined profits. Goodyear, Dunlop, Firestone and Ceat brought in equipment from the 1940s; they didn’t bother to modernize and anyway it was very difficult to import. When you are managing shortages and the government controls the licences, it is not a case of economic viability, it is a question of who has the pull.’

Now the government had decided to decontrol prices and open the market to encourage Indian business houses to compete. Modi Tyre Company, part of the Modi Group, had signed a technological agreement with German tyre manufacturer Continental Corporation and became the first local firm to enter the Indian tyre industry. JK Tyre, founded in West Bengal, also had a licence and was pressing on with building a factory in Rajasthan.

Raunaq Singh, buoyed by three whiskies and hip-shooting confidence, replied without a second thought to Chief Minister Menon: ‘That’s a good idea. I’ll take the Kerala licence!

With project costs rising as a result of the oil crisis in the early Seventies, Ruby Rubber Company had run out of cash to build a plant. So far all it had managed to do was tie up with General Tire as a technical collaborator and register the name of a new company.

It was called Apollo Tyres Limited.

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However, the flowers and the fireworks were soon forgotten and Menon would have been concerned to see construction on the Perambra plant grinding to a halt in the face of unofficial strikes and walkouts that were all too common in Kerala. He introduced a policy of ‘No Work, No Pay’ to tackle strikes by trade unions and government employees, but the Apollo project looked doomed.

A young subdivisional magistrate in Thrissur District, Vinod Rai, who went on to become one of India’s finest administrators, was called in virtually every week to intervene during the construction phase of the plant. Originally from the northern state of Uttar Pradesh (UP), Rai rose to become the Finance Secretary of Kerala and spent twenty-two years in the state before being appointed the Comptroller and Auditor General of India and a scourge on corruption. ‘In those days, Kerala was known for having a very active trade union movement at the unskilled labour level,’ Rai explains.

In many ways, it was the communist influence that made workers so militant. There were red flags and anti-business demonstrations on the streets most days. Now that Apollo was building the plant it was coming face-to-face with worker unrest.

Familiar intimidation tactics included gherao—forcibly confining management to their offices until they gave in to union demands—and bandh—totally paralyzing activities of the state for political ends including closing down production and blocking roads.

While Rai’s valiant and diplomatic attempts to get the construction workers back on site usually bore fruit, the Central Government was to ride to Apollo’s side on the night of 25 June 1975 in the most unlikely guise.

At the behest of the increasingly unpopular Prime Minister Indira Gandhi—on whose watch the rupee had been devalued by over a third, making it worth just 7.50 to the dollar, and who had nationalized fourteen leading banks in 1969—President Fakhruddin Ali Ahmed proclaimed a state of national emergency. The reason was ‘internal disturbance’ under Article 352(1) of the Constitution. Other destabilizing factors cited were the 1971 war with Pakistan, drought and the 1973 oil crisis, which had left the economy in bad shape. But what really sparked it was a case in the Allahabad High Court, which had found Mrs Gandhi guilty of electoral malpractices in the 1971 election and banned her from holding elected office for six years. Strikes and protests against her spread across the nation.

Within hours of suspending the Constitution, and beginning her rule by decree, Mrs Gandhi had her political opponents arrested and the power supply to all newspapers was cut. Urged on by her increasingly powerful son Sanjay and a small coterie of advisers, she suspended elections and curbed civil liberties. In the twenty-one months the Emergency lasted, nearly a thousand opposition leaders and political opponents were arrested and detained under the Maintenance of Internal Security Act, including premiers-to-be Chandrashekhar and Atal Bihari Vajpayee and other prominent political leaders, including Lal Krishna Advani. Compulsory birth control was introduced and Sanjay Gandhi embarked on a highly controversial programme of mass sterilization.

The Emergency, which remains highly sensitive to this day, did ironically bring one advantage to Raunaq Singh. It banned all strikes. ‘The Construction of the Apollo Perambra plant was then completed very rapidly in a record time of thirteen months,’ says Vinod Rai.

Excerpted with the permission of Rupa Publications from “The man behind the wheel: How Onkar S Kanwar created a global giant” by Tim Bouquet.

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