Professional Documents
Culture Documents
Contd.
While the tyre industry is largely dominated by the
Contd.
Indian tyres are meant, and expected to perform, under
balance by rubber based non-tyre industries. Interestingly, worldwide, the proportion of natural to synthetic rubber in tyres is 30:70
Total weight of raw-materials consumed by tyre industry 15.50
Lakh M.T.
Total Cost of Raw Materials consumed by tyre industry Rs.16,000
Crores
Tyre industry in FY
2009-2010
Turnover of Indian Tyre Industry Rs. 25,000Crores
Tyre Production (Tonnage) 13.50 lacs M.T.
Tyre Production All Categories (Nos.)
Tyre Export from India (Value) :
Number of tyre companies:
971 Lacs
36
years.
Improved capacity utilization by all major manufacturers
(>80%)
Decrease in custom and excise duties to nullify increase
commitment
Contd.
2) Personal purchasing power
As the economy booms and disposable incomes in the hands
of the Indian middle- class burgeon, the sale of passenger
cars has been witnessing an upward swing over the past
decade. Since tyre sales are directly linked to car sales, both
through OEMs and the replacement market, the tyre industry
has witnessed a corresponding increase in its sales figures.
3) Automobile sales
The demand from the OEM segment is a derived one and
directly correlated to the level of automotive production. The
recent Slowdown in automotive industry and global economic
in general negatively impacted the Indian tyre industry in
2009. The industry growth was only 2.19% during first nine
months of FY09, compared to 7.38% growth experienced
during the same period last year
Contd.
4) Exports
Due to the slowdown in the domestic market brought about by
Radialization (contd..)
Though radial tyres offer multiple benefits, low level
EXPORT ISSUES
Low radial tyre production capability hampers
export potential
COMPETITION
Indian tyre industry is facing intense competition from
USED TYRES
Developed and industrialized countries are facing a
in import duty (i.e. 15% customs duty vs. 20% normal duty rate).
South Korea and China are signatories of the Bangkok Agreement. Tyre
passenger car radial tyres into India from South Korea and truck/bus
tyres from China.
However, since major raw-materials of tyres are not included in the
Government policies
TAXATION RELATED:
Incidence of excise duty on tyres continues to be high @ 24%, the
Octroi, Cess etc.) take the total tax incidence on tyres to an even
higher level.
Truck and Bus tyres are used in vehicles for transportation of common
Embossing of Maximum
Price (MRP) on
Truck/Bus Tyres
In February, 1988, as per a directive of the Ministry of Industry,
Manufacturers (OEMs)
Replacement Demand
Exports
Design
Flatless Tyres- Drill holes
Commercial
vehicles
MHCV
HCV
Passenge
r vehicles
Farm
vehicles
LCV
Cars
Others
Motor
Cycles
Scooter
s
OTR
Industrial
vehicles
Category Wise
Truck/Bus
Jeep
Tractor
Passenger Car
LCV
Market: OEM;
Replacement; Export
Sales Segments
Replacement
Exports
OEM's
14%
7% 5%
2%
21%
24%
65%
62%
Industry Analysis
Strengths
Established brand names (key in the
replacement market)
Extensive distribution networks - For example,
Apollo Tyres has 118 district offices, 12
distribution centres and 4,250 dealers
Good R&D initiatives by top players
Weaknesses
Cost Pressures - The profitability of the industry has high
Opportunities
Growing Economy, Growing Automobile Industry, Increasing OEM
to economies of scale
Steady increase in radial Tyres for MHCV, LCV
Threats
Continuous increase in prices of natural rubber, which
Basis of competiton
Being a homogenous product, there is not much
Critical success
factors
1. Quality: If the quality of tyres is at any point
Porters 5 forces
with respect to tyre
industry
Apollo Tyres
Apollo Tyres Ltd is engaged in manufacturing
PRESENT
Turnover of US$ 1.74 billion
Over 16,000 employees
Producing around 1200 tonnes of tyres across
vehicle categories
Manufactures out of 9 facilities across 3
continents
Operates through 3 Zones with headquarters in
Apollo Tyres
BSE Sensex
Mar '07
Mar '08
Mar '09
Mar '10
2,619.
76
3,290.94
3,705.93
4,090.86
5,045.99
Operating
Profit(cr Rs.)
235.24
331.41
490.21
356.37
817.11
Net Profit(cr.
Rs.
78.17
113.42
219.30
108.12
414.99
Shares in
issue (lakhs)
383.38
464.02
4,884.45
5,040.25
5,040.25
20.39
24.44
4.49
2.15
8.23
Earning Per
Share (Rs)
Equity
45.00
45.00
50.00
45.00
75.00
Dividend (%)
Here there is a drastic change in EPS from 2007 to 2oo8 because the
company spilt its shares from face value Rs.10 to Re.1.
50
40
80
30
20
10
0
43
47
50
FY 07
FY 08
FY 09
26
FY 06
FY 10
10,000 tyres/day.
Expansion of passenger car range to include 4x4
and Zimbabwe.
Launch of DuraTread, treading material and
solutions.
Launch of India's first range of ultra-high
Rs1/-.
Apollo diversified into transport and logistics.
Financial year
2008(contd.)
It has achieved all time high profit and
Financial year
2009(contd.)
Net profit, after providing for interest,
Key Risks
Cyclicality of its end-user segment.
Continued volatility in raw material prices
such as rubber and crude oil.
Absence in two and three wheeler tyre
segments, especially in India where it is a
high growth segment
Foreign currency fluctuation
22%
13%
18%
26%
MRF
Apollo
JK Tyre
Ceat
Others
Ratio Analysis
Investment Valuation on Shares
Mar
'06
Mar '07
Mar '08
Mar '09
Mar '10
Apollo Tyres
4.50
4.50
0.50
0.45
0.75
20.00
20.00
20.00
25.00
--
1.80
4.00
--
MRF
CEAT
JK Tyres
2.50
Goodyear
5.00
2.70
6.00
4.00
2.70
3.50
6.00
Company
Apollo Tyres
MRF
CEAT
JK Tyres
Mar
'06
Mar
07
Mar '08
Mar '09
683.33
709.22
75.87
81.16
10,398.6
8,834.15
11,932.66 13,391.60
6
384.07 468.65
682.20
738.67
840.98
907.65
1,201.70
Mar 10
100.11
822.49
895.56
Analysis of Ratios
DPS-MRF pays the highest DPS. Apollo on the
Profitability Ratio
Net Profit Margin
Company
Mar 06
Mar 07
Mar 08
Mar 09
Apollo
TYRES
2.97
3.42
5.89
2.63
MRF
2.13
3.89
2.80
4.50
CEAT
0.02
1.82
6.32
-0.62
JK TYRES
0.65
2.37
0.38
4.42
Good
YEAR
5.24
4.48
3.47
Mar 10
8.19
5.66
Mar 06
Mar 07
Mar 08
Mar 09
Mar 10
12.19
17.44
24.60
13.02
MRF
8.50
18.97
13.11
27.88
CEAT
9.52
17.09
22.20
4.29
30.06
JK TYRES
6.68
13.26
14.94
24.84
36.96
47.01
Good year
30.69
24.99
Analysis of
Profitability Ratios
As per the data in the previous slide, Net
Mar 06
Mar 07
Mar 08
Mar 09
Mar 10
Apollo
tyres
0.96
0.83
0.99
1.15
MRF
1.09
1.05
0.90
1.16
CEAT
0.54
0.63
0.78
0.80
0.84
JK TYRES
0.69
0.67
0.60
0.79
Good
YEAR
1.28
1.12
1.15
Debt Equity
Ratio
Compan
y
Mar 06
Mar 07
Mar 08
Mar09
0.95
Mar 10
Apollo
Tyres
1.19
0.64
0.38
0.51
MRF
0.66
0.62
0.86
0.22
CEAT
1.20
1.00
0.66
0.95
0.68
JK TYRES
1.60
1.71
1.91
1.24
0.66
Analysis of Liquidity
Ratios
Apollo tyres has maintained a steady 1:1
Mar 06
Mar 07
Mar 08
Mar 09
Mar 10
Apollo
TYRE
3.20
4.04
7.51
3.67
MRF
2.36
6.14
4.12
6.69
CEAT
1.15
2.14
3.24
0.62
5.60
JK TYRES
1.30
2.11
1.55
4.17
Good
YEAR
7.01
14.83
8.80
19.58
Compan
y
Mar 06
Mar 07
Mar 08
Mar 09
Mar 10
Apollo
TYRE
6.26
7.33
8.72
11.77
MRF
6.63
6.37
6.09
10.17
CEAT
9.62
9.73
8.06
13.74
7.93
JK TYRES
7.07
5.58
14.03
9.11
18.18
18.23
Good
YEAR
Compan
y
Apollo
TYRE
10.47
16.47
Mar 07
Mar 08
Mar 09
Mar 10
15.80
17.40
20.69
33.75
MRF
7.48
8.08
8.71
9.54
CEAT
7.16
8.29
8.18
8.07
8.10
JK TYRES
4.83
5.82
6.12
11.24
7.91
Good
44.89
Mar 06
Mar 07
Mar
08
Mar 09
Mar 10
Apollo
TYRE
2.02
2.22
2.38
2.24
MRF
1.99
2.16
2.10
2.09
CEAT
1.58
1.92
1.93
2.06
2.25
JK TYRES
1.24
1.30
2.18
1.44
Good
YEAR
3.51
3.73
3.60
2.10
Analysis Of Management
Efficiency Ratios
Inventory Turnover Ratio- Though Apollo Tyres
Mar 06
Mar 07
Mar 08
Mar 09
Mar 10
Apollo
Tyre
86.57
87.55
90.48
86.60
91.84
MRF
94.98
96.88
96.77
97.52
CEAT
100.00
85.93
84.31
--
91.67
JK TYRES
90.81
93.38
90.54
93.41
Good
YEAR
64.80
55.89Payout
35.16Ratio
Dividend
Company
Net Profit
Mar 06
Mar 07
Mar 08
Mar 09
Mar 10
Apollo
Tyre
25.16
20.99
13.44
24.54
10.62
MRF
12.10
5.77
6.98
4.83
CEAT
--
24.49
10.78
--
9.95
51.49
14.58
68.08
10.25
JK TYRES
Good
Operations:
Manufacturing Facilities
India
Global Business
Partners For Raw
Materials
Silica: Degussa A G,
Germany
Carbon Black:
HiTech Carbon, India
Global Business
Partners For Product
Testing
IDIADA, Spain
Nardo, Italy
for
4x4 tyres
Papenburg, Germany
for Ultra High
Performance tyres
VRDE,
Ahmednaga
India
Automotive
manufactures as
business partners
HOME MARKETS
Headquarters in Gurgaon, India
Markets in India, Asia, the
Middle East & Turkey, Asian
CIS countries, Australia, New
Zealand and the Oceania
countries
Headquarters in Enschede,
The Netherlands
The Zone caters to the
markets of Europe,
European CIS countries,
Russia and North America
Headquarters in Durban, South
Africa
The Zone caters to the
markets of Africa and South
America
OPERATIONAL SPREAD
ZONE I
Zonal Headquarters in Gurgaon, India
Manufacturing base in India with 4
manufacturing facilities in Chennai, Kalamassery,
Limda and Perambra
Produces 950 metric tonnes of tyres every day
Exports to 31 countries in the Zone, with the
Middle East & South East Asia being the largest
markets
India is the largest market with 150 Sales Offices
OVERVIEW
ZONE I
manufacturers
HIGHLIGHTS FY10
ZONE I
First OTR tyre produced in brownfield facility in Limda
Greenfield manufacturing facility at Chennai
commenced production
Launch of Amazer 3G and Amazer 3G Maxx for
passenger cars
Increasing footprint of the Apollo Zone concept stores
Launch of the environmental initiative HabitAt Apollo
OPERATIONAL SPREAD
ZONE E
Zonal Headquarters in Enschede, The
Netherlands
Manufacturing facility in Enschede
Producing 150 tonnes of tyres every day
The largest share in the product basket are high
performance summer and winter passenger car
tyres
Distribution across the European Union and
HIGHLIGHTS FY10
ZONE E
1st manufacturer to offer 25 series winter tyres
Launch of Traxion XXL for high end tractors
Snowtrac 3 wins ADAC magazine winter tyre test
capacity
OPERATIONAL SPREAD
ZONE A
Zonal Headquarters in Durban, South Africa
Manufacturing base in South Africa & Zimbabwe
with 4 facilities in Durban, Ladysmith, Bulawayo
and Harare
Producing 180 tonnes of tyres every day
Exports to 32 African countries and to South
America,
with South Africa being the largest market
HIGHLIGHTS FY10
ZONE A
Launched the next generation of truckbus radials
Improved cycle time and energy consumption across
manufacturing cycles
Operations made REACH & PAH norm compliant
Opening of an office in Nigeria to cater to larger
market needs
Increases exports to the rest of Africa
Revenue
segmentation
PRODUCT PORTFOLIO
Passenger Car
4x4
Light Truck
Apollo
Dunlop*
Vredestei
n
Apollo
Dunlop*
Vredestei
n
Apollo
Dunlop*
Bicycle
Agriculture
Truck/Bus
Apollo
Dunlo
p*
Specialty
Apollo
Apollo
Apollo
Dunlop*
Dunlop
Vredestei
Vredestei
*
n
n
* The Dunlop marks are licensed to Apollo Tyres South Africa which is the
whollyowned subsidiary of Apollo Tyres Ltd in 32 African countries.
Vredestein
HAWKZ-H/T ; HAWKZ-R/T
Vans : Quatum; Quantum plus; Amazer XL
Passenger winter vehicles : Acelere winter;
Hawkz winter
Contd.
Acelere Wheelz
Range of designer alloy wheels
Ultra Large Size OTR segment
Size: 24.00-49
Designed for haulage application
Catering to the present and future needs of
the mining industry
Apollo
Tyres
Apollo
Tyres
The Journey so
The Journey so Far..
Far..
Contd.
1986 - `General Tire International
Contd.
1988 - The Company set up a plant with a capacity of
Contd.
1989 - Radial tyres for Maruti cars and premium
Contd.
Contd.
1997- Apollo Tyres Limited set up shop in
Contd.
1998- Apollo International recently set up a
Contd.
2000 - The Company is planning to set up
Contd.
2001 - Apollo Tyres Ltd. has zeroed in on
Contd.
2004 - Michelin Apollo Tyres Pvt Ltd (MATL), a
Contd.
2006 -Apollo Tyres rolls out DuraTreads -Apollo Tyres
Passenger radials
In 2000 the firm branched into passenger radials, spending as
Contd.
To serve the European market properly Apollo
TECHNOLOGY
ABSORPTION
R&D has made remarkable contributions which include
Benefits derived as a
result of R&D
R&D efforts had helped to improve the
Contd.
Method developed for understanding the
Other strategies
In 2006 Apollo Tyres, the number one
Contd.
According to the strategic plan, by 2015,
plants
International Acquisitions
company.
Apollo, as an IT organization, was scattered over
different locations with numerous departments,
each of which was an island of excellence.
Each office owned disparate software packages
country.
These include sales, commercial and technical
services departments.
Contd.
They own four plants and source from three others.
A 9,000-strong community works for the company
Contd.
At that time they looked around the market for
Contd.
With unconnected, obsolete data flowing in from
IT enabled Apollo to
reduce its time-tomarket
What MySAP.com allowed ATL to do primarily
Contd.
MySAP.com allows it to tell what's gone into
Contd.
To shorten that cycle further, they also started bar-
coding products.
Additionally, we put up a dealer portal to give
Manufacturer) partners.
SCM (supply chain management) : ATLs
Contd.
With APO they can now forecast 75 percent,
after-sales service.
Contd.
They've put some of Apollo's suppliers on the SCM
Brand Portfolio
Gl
o
for bal
pa truc bran
ss
en kbu d
ge
s
rc &
ar
t yr
e
co
un
tr
ie
s
ac
ro
ss
Gl
br ob
ca an al c
r t d f ha
yr or lle
es p n
as ge
se r
ng
er
r
e
l
s
g
a
e
r
b n
ty
lo ll e
G h a d ck
c ran ru
b rt
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Br
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s n
Marketing and
Branding
Apollo will be the group's primary car tyre brand.
Contd.
Vredestein brand will continue along similar
Contd.
The most likely options here would be only on
Contd.
Apollo's main focus is on Europe, at least initially.
Contd.
The aim is to present the brand as a global
Contd.
During those three to four years, Apollo will work
Contd.
In the short term, Apollo has begun selling Apollo-brand
Contd.
In the OE segment the company is currently
Contd.
Apollo will display its range of tyre brands-
Contd.
Integrating different
cultures
The main USP in Apollo has been of integrating
Contd.
It seems to have been one of the most
Extensive distribution
network
Apollo tyres operates through a network of
Mergers &
Acquisitions
In May 2009, Apollo acquired Apollo
Apollo-Dunlop Merger
Apollo purchased Dunlop Tyres International.
The company operates plants in Durban and
Contd.
The acquisition target should provide one or
Contd.
The firm was a good fit for a couple of other
reasons, too:
Apollo tyres could sell tires across Africa,
Contd.
The acquisition was the first foreign purchase
European customers.
The fit between the two companies spans the entire
Contd.
Vredestein's sole plant in Enschede has annual
Contd.
Vredestein Banden was bought by Amtel Vredestein in
years.
Prior to the acquisition, Apollo was primarily a supplier
Contd.
There are a series of steps on the way:
First is to establish Apollo group as a multi-brand
Contd.
Second, the growth of radial truck tyres in
Contd.
A progressive leadership has given direction to all the different
Weakness
Apollo Tyres has no presence in the two and
Opportunities
The national thrust in road infrastructure and
Contd.
Apollo's leadership position in the commercial vehicle
Threats
There is a need to prepare for imports from
Competitors
Strategies
MRF Limted.
MRF Limited (MRF) was incorporated on 5th November 1960.
The Company manufactures the largest range of tyres in India
MRF had become the market leader with 50% share of the
tread-rubber market in India.
In 1961, MRF entered into tyre manufacturing in
Contd.
It has a huge distribution network of 2,500 outlets
within India and exports to over 65 countries worldwide.
Today, MRF is the market leader among tyre
MRF Products
MRF is the leading manufacturer of tyres for almost all
Contd.
Incorporating the latest manufacturing techniques,
Analysis of MRFs
strategies
MRF has been immensely successful in
Contd.
This is reflected in the very low margins it offers
overseas suppliers.
It is estimated that the company invested
Contd.
Funskool Indis, a Joint venture between Hasbro
Fluence Z.E.
Goodyear Launches UltraGrip Ice+: Best Tire for
Past Strategies
Goodyear rolls out premium tyres(2006)-
2006
Goodyear expands retail network:
Tyre maker Goodyear will add more branded
2007
Goodyear India embarks on new
Marketing campaign:
Goodyear India has embarked on a new marketing
2007 contd.
All these initiatives are part of the Take the
2008
Goodyear expanding retail presence in
India
2010
Goodyear India accepts delisting proposal
of parent
Goodyear India Ltd (GIL) announced on
Tuesday that its board has approved the
proposal received from the parent company,
Goodyear Tire & Rubber Company (GTRC) to
buy out the remaining stake in the company
and delist it from the stock market.
JK Tyres
The company was incorporated as a private
Strategies adopted By
JK Tyres
Strategic thinking is key to the evolution of
successful marketing strategies of JK tyres
This involves the following:
Understanding markets:
Strategic perspective of the market requires
skillful analysis of the trend and how they affect
the market size and demand for the firms product
Finding market niches:
Contd.
Product and service planning:
Contd.
JK Tyres, the flagship division of JK Industries
Contd.
The advertising strategy comes in the wake of the
Contd.
In 2008, JK Tyre had acquired Mexican tyre major Tornel
two-wheeler market after stopping manufacturing 2wheeler tyres more than 20 years ago.
As part of companys growth strategy, JK Tyre will
SWOT analysis of JK
Tyres
STRENGTHS
Very large distribution channel
Reasonable price
Being quality oriented rather than quantity
oriented
Effective employee in JK
Economies of scale due to optimum capacity
utilization
Collaboration with Vikrant, know for their
technological superiority bringing together
performance, economy, durability and comfort.
Strong financial positions
Contd.
WEAKNESSES
Less Brand Awareness
Less concern about small car segment
OPPORTUNITIES
A burgeoning work force and growing middle class population
High growth potential for its exports as demand for JK tyre in
Europe increasing.
Strong brand image
Indian customers are mainly value buyers demanding a better
overall package. JK is poised in a better position than other
players in the market to capitalise on this opportunity
THREATS
Entry of new players with newer and better technologies in
the small car tyre segment
So many close competitors like Appolo, Birla, Ceat, Modi,
Kaizen etc
JK Tyres(recent developments)
Raghupati Singhania Centre of Excellence for
Contd.
JK Tyre & Industries is doubling its radial tyre
Contd.
Out of this, 5 lakh tyres will be produced at the companys
radial tyres in the coming years. The market for radial tyres
within the commercial vehicles segment is around 18-20%
and is expected to reach to 35-40% within a couple of
years. The demand in the passenger car segment is already
robust.
The expansion is a part of companys already announced
erosion/breaking problem
Ceat Ltd.
Ceat Ltd. is a part of the RPG conglomerate.
The company offers the widest range of tyres to leading
2007
Ceat Tyres is set to outsource tyres from China
Contd.
The Chinese tyres will be branded as the `Economy'
2008
Ceat Ltd shut down its Bhandup, Mumbai,
Contd.
The proceeds of the sale were utilised to
2009
CEAT Ltd, in partnership with Total Lubricants, organised an
Contd.
The company plans to add radial capacity by setting
2010
Ceat Ltd plans to enter into off-the-road (OTR) tyre
Holding Company Pvt Ltd (ACHL) has become a fullyowned subsidiary of the company. Ceat, which used to
hold 54.84 per cent stake in ACHL, acquired the
remaining stake.
Ceat is ramping up production at its newly set up radial
Contd.
The company has invested about Rs 600 crore in the
Analysis of ATL
strategies
Contd.
We feel that the company has timed its foray into
Contd.
The passenger car segment has been the growth driver
passenger car segment & Truck & Bus segment, will help
Apollo to further increase its offering in the export
markets.
ATLs continued focus on exports has enabled certain
April 2006.
Aligned with the goal of being a USD 2 Bn Company by
FY 2010, based on expansion through the organic and
inorganic route, ATL acquired Dunlop tyres, South Africa
in April 2006 in an all cash deal amounting to Rs 2.90
Bn.
The acquisition yielded several synergies, which
include, product rationalization, joint sourcing of raw
material for better bargaining power, joint research and
development for product upgrades and introduction of
new products and most important of all is sharing of
technical know-how and best practices.
Retreading
ATL is the only player in the organized sector
Contd.
ATL plans to set up three new retreading
years.
To put that in perspective, the company would have to
Contd.
By the end of 2011, Dunlop SA's revenues would
Contd.
Thrust on exports would be another focus area, since
Contd.
On offer for the domestic markets are tyres for
Contd.
Another new source of revenue would be from
Contd.
Apollo Tyres wants to focus on strengthening its
Contd.
This investment will make it possible for the
Contd.
As per reports, Apollo Tyres (South Africa) is planning
2011.
The company has revealed its plans for expansions,
Contd.
Under its future expansion plans, 200 tonnes
Contd.
Apollos success owes largely to the fact that through