Apollo Tyres

Apollo Tyres Ltd. (Apollo Tyres) manufactures and markets tires, tubes, and flaps. The company provides
tires for passenger car, sports utility vehicle, multi utility vehicle, light truck, truck-bus, agriculture,
industrial, two wheeler, specialty, bicycle, and off highway tires; retreading materials and tires; and alloy
wheels.. It also offers retreading material and retreaded tires. It markets its products under our two global
brands- Apollo and Vredestein. These products are available in countries across the globe through a
large network of exclusive and multi-product outlets. Apollo Tyres operates multiple manufacturing units
in India, the Netherlands and Hungary It is headquartered in Gurgaon, India.

BUSINESS DESCRIPTION
Apollo Tyres Ltd. (Apollo Tyres) is one of the largest tire manufacturers in India. The company produces
the entire range of automotive tires for passenger car, sports utility vehicle, multi utility vehicle, light truck,
truck-bus, agriculture, industrial, specialty, bicycle and off highway tyres, retreading material and tyres,
alloy wheels, and two wheeler tyres. It produces tires under Apollo; Kaizen; Regal; and Vredestein
brands. The company operates under one business segment: tyres, tubes, and flaps. It operates its
manufacturing facilities in Asia, Europe, and Africa.
Apollo Tyres largest operations are in India and comprise of four tire manufacturing plants - two located in
Cochin and one each at Vadodara and Chennai. A new modern state-of-the-art plant has been
established in Hungary in the beginning of FY2018. The company's European subsidiary, Apollo
Vredestein BV (AVBV) has a manufacturing plant in the Netherlands. Apollo operates sales and
marketing subsidiaries in Middle East, Africa, and ASEAN region.
The company operates its R&D Locations in Asia and Europe. In FY2017 the company generated
revenue of INR150,954.1 million.
Geographically, the company classifies its operations into three regions: APMEA, Eurpoe and others that
accounted for 69.46%, 30.1% and 0.47% of the company’s total revenue respectively in FY2017.

SWOT ANALYSIS

Apollo Tyres Ltd. (Apollo Tyres) manufactures and markets tires, tubes and flaps. Strong brand image
and research and development capabilities are its major strengths, but increase in trade receivables
could be a cause for concern. However, positive outlook for global tires and rubber market, medium and
heavy commercial vehicle segment outlook, and strategic expansion could provide growth opportunities.
Intense competition and foreign currency prices could impact the company’s profitability.
Strength
Research and Development Capabilities
Strong Brand Image
Weakness
Increase in Trade Receivables
Opportunity
Medium and Heavy Commercial Vehicle Segment
Outlook
Positive Outlook for Global Tires and Rubber Market
Strategic Expansions
Threat
Intense Competition
Foreign currency risks
Strength
Research and Development Capabilities
Apollo Tyres has a strong focus on research and development (R&D) activities. The company’s R&D is
primarily focused on improvement in key tire performance parameters such as mileage, durability, grip,
wet grip and lower rolling resistance along with economical and sustainable manufacturing.The
company’s research efforts have resulted in making Apollo the first manufacturer to produce an all
season tire using European natural rubber or Russian Dandelion & Guayule, as a part of the EU-PEARLS
project. This project was undertaken to reduce the dependence of tire manufacturers on Natural rubber
(Hevea) trees which are mostly grown in Asia. Moreover, the company's strong commitment to R&D has
enabled it to launch a number of new and innovative products. Earlier, ApolloTyres introduced twowheeler
tyre space by Apollo Acti series for motorcycles and scooters. In FY2017, the company’s R&D
investment was INR1,933 million, which stood at 1.3% of its total revenue.
Strong Brand Image
Apollo Tyres has a strong brand image that allows the company to enter new markets with ease and also
enables it to launch new products. It sells a range of tires under various brand names in India, Africa, and
Europe. The company's product portfolio covers diverse range of passenger car and 4×4 (summer and
winter tires), sports utility vehicles (SUVs), multi utility vehicles, light truck, truck-bus, off-highway,
agriculture, industrial, specialty, and bicycle tires. It also offers retreading material, retreaded tires and
alloy wheels. In addition, the company’s flagship brands include Apollo and Vredestein. Other brands of
the company include Regal and Kaizen. Recently,it entered into the two-wheeler tyre segment with the
launch of Apollo Acti series of brands for motorcycles and scooters.
Weakness
Increase in Trade Receivables
The company’s increasing accounts receivables affects its competitive and profitability position. Apollo
Tyres trade receivables increased to INR5,501.5 million in FY2018 from INR3,864.9 million in FY2017, an
increase of 42.3% over that of previous year. The company under its operational process entered into
several factoring agreements with trade debtors as per the trade settlements. The increasing trade
accounts receivable reflect the inefficient credit management by the company. In the backdrop of reviving
economy, the probability of defaults by any of creditors increased, which may impact the overall financial
position as well as profitability of the company.
Opportunity
Medium and Heavy Commercial Vehicle Segment Outlook
Growing Medium and Heavy Commercial Vehicle (M&HCV) in India could help the company to expand its
business. According to the Society of Indian Automobile Manufacturers (SIAM) sales of M&HCVs are
expected to remain unchanged during FY2018. However, LCV sales are projected to grow by 6-9%. The
sales of passenger cars and utility vehicles are also forecasted to grow at 9 to 10%. The improvement is
expected to be driven by stable diesel prices. The encouraging forecasts of another normal monsoon
could further drive the sales of tractors and farm equipment.
Positive Outlook for Global Tires and Rubber Market
The global tire and rubber market witnessed consistent growth over the past few years and is expected to
witness similar growth in the coming years. According to in-house research, the global tires and rubber
market is forecasted to remain strong, and is expected to drive the market to a value of US$320.2 billion
by the end of 2020. The company is primarily engaged in the tires market. Hence, a positive outlook for
the global tires and rubber market would provide an opportunity to TBC to further enhance its revenues.
Strategic Expansions
Strategic expansions provide significant growth opportunity for the company to enhance its business
operations and expand geographical reach. In January 2018, Apollo Tyreslaunched a new ultra-modern
global scale manufacturing facility at Chinnapanduru village, Chittoor district in Andhra Pradesh with an
estimated investment of around INR18,000 million in the first phase. It plans to manufacture passenger
vehicle tyres in new facility and expand to produce other product categories.In September 2017, the
company expands its operations in passenger car tyre segment with supplies to the European Original
Equipment Manufacturers (OEMs). It supplies premiere brand Vredestein as a fitment on the Volkswagen
Polo, SEAT Ibiza and Ford EcoSport. In April 2017, the company launched global tyremanufacturing unit
in Hungary, a first overseas greenfieldfacility outside Indiaby any tyre company that is located
approximately 100 km from the capital Budapest. The new facility strengthens its presence and market
share in Europe.Earlier, Apollo signed a MoU with Government of Andhra Pradesh, India, to set up a
manufacturing unit. The company is looking at investing approximately INR5,250 million ($79.3 million)
towards setting up this facility in the state of Andhra Pradesh bordering the south-eastern coast of India.
Also, Apollo opened its first branded retail outlet, Apollo Zone, in the Beqaa Governorate of Lebanon. In
the past, the company inaugurated two new Apollo Zones in Amman, Jordan, in order to increase its
presence in the Middle East market.
Threat
Intense Competition
The company is a global player in the tire market, and it competes with several domestic and international
companies based on some major competitive factors such as product quality, price, consumer advertising
and promotional activities, trade promotion, brand recognition and loyalty, convenience, customer service,
and other activities and the ability to identify and satisfy emerging consumer preferences. The company
faces stiff competition from its major competitors: MRF, JK Tire & Industries, Goodyear, Bridgestone,
Cooper Tire & Rubber, Michelin, Continental, CEAT, Pirelli, and Toyo. Some of the company’s
competitors may have substantially greater resources, and they may be able to use their resources to
adapt more quickly to new or emerging technologies. Sometimes those competitors have entered into
expansion programs to match the growth rate, the market registered consolidation involving mergers and
acquisitions. Aggressive initiatives from such competitors could cause a reduction in the company’s
revenue and margin. If the company fails to maintain quality of service or long term contracts, competitors
could be ready to explore such opportunities.
Foreign currency risks
Apollo’s operations are subject to risk arising from fluctuations in exchange rates with reference to
countries in which it operates. The company operates in India, South Africa, and Europe. Foreign
currency risks primarily arise from the relative movements of several currencies, including the US Dollar,
the Euro, the South African Rand, and the Indian Rupee. Foreign currency transactions of the company
are recorded at rates of exchange prevailing on the date of transaction. Monetary assets and liabilities
denominated in foreign currencies as at the balance sheet date are translated at the rate of exchange
prevailing at the year-end. Although the company engages in currency hedging in order to decrease its
foreign exchange risks, a weakening of the Indian Rupee against the US Dollar or other major foreign
currencies may have an adverse influence on the company's cost of borrowing. This may consequently
increase its financing costs, which could have a significant adverse impact on its results of operations.

TOP COMPETITORS
The following companies are the major competitors of Apollo Tyres Ltd
Bridgestone Corporation
CEAT Ltd
Compagnie Generale des Etablissements Michelin
Continental AG
Cooper Tire & Rubber Company
Goodyear Tyre & Rubber Company
JK Tyre & Industries Ltd
MRF Limited
Pirelli & C. S.p.A.
Toyo Tire & Rubber Co., Ltd.

Recent Developments:

HISTORY
Patent Grant
Year: 2018
In September, the company planned to invest US$1 billion in its Indian operations.
Commercial Operation
Year: 2018
In September, the company, started the production of Apollo brand of truck tyres from its Hungarian
facility.
Corporate Awards
Year: 2018
In September, the company tops JD Power survey with Ranks 1 in small car segment and Rank 2 in
midsize cars.
Research and Development
Year: 2017
In November, the company invented a special grade of Epoxide Natural Rubber. which was patented with
no. 287630.
New Products/Services
Year: 2016
Apollo introduced Apollo Apterra HT2 for the growing 4x4 and SUV segment, where as the actiZip F2 and
actiZip R3 tubeless tyres was launched for the motorcycles.
Contracts/Agreements
Year: 2016
Apollo signed a MoU with Government of Andhra Pradesh, India, to set up a manufacturing unit.

Corporate Changes/Expansions
Year: 2016
The company opened second global research and development centre, in Chennai, India.

Corporate Changes/Expansions
Year: 2016
Apollo forayed into the two-wheeler tyre market with the launch of Apollo Acti series for motorcycles and
scooters.