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Tiger Wheels on the fast track
With a stake of just R3 000 in 1972, Eddie Keizan and his partner of 11 years, Martin Glatt, have seen their company grow to produce a turnover of R1.5-billion this financial year, writes DON ROBERTSON
His partner and co-chairman, Martin Glatt, came into the business in a more conventional fashion.
It was, in fact, a R3 000 cheque for winning the South African Formula 5000 championship in 1972 which gave Keizan the wherewithal to put down a deposit on a micro wheel manufacturing plant and begin what has become a major supplier of aluminium wheels to the world market.
Now, at last, Tiger Wheels scores its first reckoning in the Business Times Top 100 - securing second spot with an annual compound growth rate of 93.70% for the five-year period, having been excluded on a number of occasions before because trade in the stock was below the minimum required for qualification.
From 1967 until he "retired" as a professional driver in 1979, Keizan was saloon car champion four times, Formula 5 000 champion, drove for three seasons in the SA Formula One series in Tyrrells and Lotuses and then, displaying his driving flexibility, he won the off-road Roof of Africa Rally twice.
Keizan's move into the manufacture of aluminium sports wheels and the distribution of high performance tyres was, therefore, almost destined from the start. But, how does a racing driver become joint head of an international group?
"Bruce McLaren was my hero and in his autobiography he said that being successful in motor racing requires the same attributes to be successful at anything else. I suppose I have just followed that route."
His partner, Glatt, read for a B Com and an MBL, and then "trained" himself as the astute businessman he has become while working for local conglomerates, although he believes that large groups "smother the entrepreneur".
He joined Tiger Wheels in 1987 and listed the group the same year, just before the crash.
"We listed 25-million shares at 60c with earnings of only 3.7c a share and we have been racing ever since."
Although not a racing driver, Glatt is no slouch. As a provincial swimmer for Transvaal as well as a water polo player, Glatt competed in the Iron Man competition five times, ran Comrades once, and entered cycling races as well as the Midmar Mile swimming competition.
The few hours spent out of the office are dedicated to an honorary function as head of the Vehicle Crime Prevention task team on behalf of Business Against Crime.
Hiding knowing smiles, the joint chairmen note that in 1996 Tiger Wheels would also have been second in the Top 100 with compound growth of 106.24%, just behind Nu World (with growth of 115.54%). Both groups, however, were excluded from the draw as regulations require that JSE trading of at least R1-million a year is needed to qualify.
Dimension Data in fact won that year with a compound growth of 96.54%.
Tiger Wheels was started in 1967 and in 1972 Keizan, with his brother-in-law, bought the tiny wheel manufacturer for R14 000, using the R3 000 championship winnings as a deposit. The balance was paid off in two years.
The factory was then producing about three to four customised wheels a day mainly for the Volvo and Alfa Romeo aftermarket.
When the new plants, now under construction, reach full production in 2000, plus the existing factories, more than 5-million wheels will be produced annually.
During an impressive growth phase, Tiger Wheels expanded its export efforts and by 1997 it was supplying wheels to wholesalers in 40 countries, mainly through interests held in Yokohama HPT in the UK and a company trading as TSW USA, initially established in California.
Perhaps the most significant development during this expansion phase was the purchase of 70.71% of ATS Beteiligungsgesellschaft with effect from January 1 for an effective R182-million, funded by the issue of 6.7-million shares to institutions and ATS vendors.
Agreement exists for the ATS vendors to convert at least half of the remaining stake in ATS into Tiger Wheels at a fixed price of DM33.5-million over the next seven years.
Apart from strengthening Tiger Wheels' global position, more than half of the group's turnover in the current financial year - estimated at R1.5-billion - will emanate from ATS, while a quarter of the balance will represent sales of wheels made locally, but exported, creating an extremely profitable rand hedge opportunity.
Locally, Tiger Wheels supplies wheels as original equipment to Opel, Isuzu, Mitsubishi, Toyota and Ford, while internationally Toyota and Volvo use the SA-made wheels.
ATS, in turn, supplies 85% of its production as original equipment wheels to Volvo, Mercedes-Benz, Audi, Opel, Porsche and others.
Keizan is characteristically modest about this latest acquisition, but confirms that the deal reinforces the international position of the group and moves it into the truly big league in the global wheels market.
Before the ATS deal, about two thirds of the company's wheel sales were into the aftermarket sector, but this ratio will now switch to a similar figure with original equipment supplies taking the lead - a definite vote of confidence in the quality of the product.
To achieve these goals Tiger Wheels has invested R200-million in a new manufacture plant in Babalegi which, when in full production, will add 2.4-million wheels a year to the market. ATS, in turn, is building a new factory in Poland with a capacity of 500 000 wheels annually.
But Tiger Wheels is not only about wheels. It is also about tyres.
Sales from the 25 Tiger Wheel & Tyre stores now in operation locally - 28 by the end of 1999 - are dominated by tyre sales rather than wheels.
During the five-year period from October 1993 to last September, Tiger Wheels shares have risen from R1 to R24. The group's financial performance is equally impressive.
Turnover in 1993 was R104.2-million, rising to R360.6-million in 1996 and R868.8-million in the past year to June, although this latest figure includes six months of trading from ATS of R353-million.
Earnings during the same period were lifted from 15.6c in 1993 to 52c in 1996 and 101.6c last year, each time on an increased issued capital, while the net asset value has risen from 71.4c at the beginning of the period to 285.2c in 1996 and 512.1c last time.
Dividends have shown a similar hike, rising from 6c in 1993 to 40c in 1998. Debt has risen to R150.7-million in the year to June last against R17.5-million previously. The outlook for the group is bright, with a forecast of "another year of sustained growth".