COMPANY RESEARCH

ON

PREPARED BY:
Diksha Chachan
PGDM-Finance
Institute of Management Technology, Ghaziabad
Pgp19dikshachachan@imt.ac.in
+91-7042040521
 APOLLO TYRES LTD.

ABOUT THE COMPANY

Apollo Tyres has always been one of the market leaders in the tyre industry in India. Apollo
Tyres, established in 1976, is on the largest Indian automobile tyres, tubes & flaps
manufacturing company. The company has its presence in India (Apollo), Africa (Dunlop) and
Europe (Vredestein), offering products to all major automobile categories like Truck-Bus, Light
Truck, Passenger Vehicle, and Off-Highway. They have manufacturing plants in the states of
Tamil Nadu, Kerala and Andhra Pradesh. Also, they have manufacturing plants outside India
as well. In 2012, Apollo’s overall capacity was ~ 1595 MT per day.
Apollo tyres’ significant revenue comes from the replacement market (63%) followed by OEM
(27%) and exports (10%). The truck/bus segment contributes 48% to the top line; passenger
vehicles contribute 33%, off-highway and light trucks contribute 9% and 8% respectively. The
company is one of the top players in the commercial vehicle segment in India and is well-
positioned to gain sizeable market share and maintain its position in the truck-bus segment.
Indian operations have the highest contribution to the company’s revenue, approx.—67 %,
followed by Europe – 23% and Africa – 10%. The company focuses on service and delivery to
ensure robust growth in the markets. Initiatives like Apollo Direct and Apollo Super Zone were
launched to improve the customer experience and brand image.
In the Indian market, 56% of revenue was from the replacement segment, OEM segment
constitutes 34%, and the rest was exports. In the European market, the replacement segment
contributed 78%, and OEM accounted for the remaining 16%. In South Africa, it operates the
Dunlop brand and holds the position as the market leader with 18% share. 67% of the
revenues come from the Hey replacement market segment and 31% from exports.

1) The Indian Tyre industry is growing at a rate of 12.4 per cent CAGR over the past 10 years.
In a developing economy like India, the tire industry was seen to be growing
2) Apollo has grown alongside its competitors with a CAGR of 23.4% over the past 5 years
and it has established itself as a trusted brand.
3) The company is catering to three different geographies, i.e., India, Europe and Africa.
Apollo Tyres has a strong brand image in these markets. Due to such diversification, the
company is able to reduce its dependence on the Indian market.
4) Over the last ten years, Apollo Tyres is able to reduce its dependence on the replacement
segment. And it is also able to increase the share of passenger vehicles in the top line.
 MANAGEMENT OF THE COMPANY

ONKAR S KANWAR
{Chairman & Managing Director)

He is the chief architect of the company’s vision and value-

driven business strategy. As a visionary entrepreneur, he
plays a critical role in the articulation of company’s business
philosophy. He is the Past President of the Federation of
Indian Chambers of Commerce and Industry (FICCI), former
Chairman of the Automotive Tyre Manufacturers’ Association
and was a Member of the Board of Governors for the Indian
Institute of Management (Kozhikode). Currently, he is the
Chairman of the BRICS Business Council, India.

NEERAJ KANWAR
(Vice Chairman & Managing Director)

He plays a pivotal role in Apollo’s journey towards

becoming one of the most admired automotive tyre
brands. He began his career with Apollo Tyres as
Manager, Product & Strategic Planning, where he played
a crucial role in creating a bridge between the two key
functions of manufacturing and marketing. In 1998, he
joined the Board of Directors and was promoted to
Chief, Manufacturing and Strategic Planning.

GAURAV KUMAR
(Chief Financial Officer)

He is responsible for the organisation’s overall financial

health and stability, ensuring compliance with statutory
guidelines and corporate governance policies. Gaurav began
his career as a Management Trainee with UB Group in 1993
and since then has donned many hats -- from being an
Executive Assistant to the Managing Director of a
manufacturing setup to being part of Acquisition & Alliances
team for an IT Giant. In March 2004, Kumar joined Apollo
Tyres Ltd as Head, Corporate Strategy.
BOARD OF DIRECTORS
ANALYSIS OF THE INDIAN TYRE INDUSTRY

PORTER’S FIVE FORCE FRAMEWORK

Bargaining
Power of
Buyers

Threat of
New
Industry Bargaining
Power of
Entrants
Rivalry Sellers

Threat of
Substitites

1. Bargaining Power of Buyers: The Indian Tyre Industry has demand by two types of
segments, i.e., the Original Equipment Manufacturers (OEMs) and Replacement
Market.
OEMs
 They demand in bulk from the tyre companies.
 In the usual case, they have one manufacturer which supplies to them under a
predefined contract in which the price is already fixed, which can differ from
the price prevailing in the market.
 This leads them to have high bargaining power (5).
Replacement market
 It enjoys an average level (3) of bargaining power
 Their demand remains on an upper side but in smaller quantities (they
constitute a significant portion of the total demand).
 This is because of the prevailing adverse environmental conditions in India. So,
the sellers can charge higher prices from them, unlike in the OEM segment.
So, the overall score for this comes out to be 4.
2. Bargaining Power of Suppliers:
 The suppliers have low bargaining power (2).
 The companies which provide tyre companies with rubber (one of the primary
raw materials) have fierce competitors existing abroad who offer rubber at
cheaper rates.
 The domestic rubber companies face difficulties on this front.
3. Threat of Substitutes:
 The Retreading sector is the only substitute posing a threat to the Tyre
industry.
 In this sector, the tires are available at a cost, which is almost one-fourth of
that of new tires but work nearly as efficiently as them.
 They have been gaining a hold in India as people are becoming more aware.
So, as awareness grows, the threat would increase.
 Currently, as of 2012, it is moderately high (4).
4. Threat of New Entrants:
  There is a high threat (5) of new entrants coming into the Indian Tyre Industry.
 The cost of production of tires is quite low, which acts as a significant benefit
for the companies.

 A rising trend of Mergers &Acquisitions in the Tyre Industry has been

happening around the globe, which would give a further impetus to the more
prominent companies to come to India and acquire the smaller ones posing a
threat to the remaining domestic players.

5. Industry Rivalry:
 The existing competition in this industry is high (5).
 The strengthening tiff between the unorganized and the organized sector with
the unorganized companies stealing away some of the business of the
organized ones is a major factor leading to this.
 Volatile raw material costs are another factor behind this rivalry.
 Lastly, more foreign manufacturers entering India with the aim of a permanent
establishment is also a contributor.

The overall score for the Indian Tyre Industry sums ups to 20 out of 25, which is
reasonably on the higher side. This makes the industry attractive for the investors
seeking an opportunity to put their money into a venture which gives a high growth
rate in the future and thus also making Apollo Tyres a profitable investment.

Revenue Segmentation by Products

Product Segment India Europe South Africa Total

Truck/Bus 65 - 40 48
Light Truck 9 - 23 8
Passenger Vehicles 16 83 30 33
Off-Highway 8 14 6 9
Others 2 3 1 2
 SWOT ANALYSIS OF THE COMPANY

Strengths

Strong Brand Image: Apollo’s Brand diversity is one of its strengths. The company gets a
competitive advantage with the presence of strong names in its portfolio which give the brand
a credible status and increases the company’s value.
Strong Financial Performance: Apollo’s net sales grew at a CAGR of 2% in the last 5 years and
its profit grew at a CAGR of 34% in the same period. This strong financial growth improves
shareholder’s value and provides room for further expansion plans and hence increasing the
market share.

Market share: Apollo has a significant market share in India, as seen in the graph above. It is
the 2nd highest market share holder in LCV’s and the highest market share holder in Medium
and heavy commercial vehicles.
Weakness
Heavy dependence on Indian market: The companies dependency on the Indian markets for
the larger part of its revenues (62.5% for FY 2015) makes it vulnerable to the unstable political
and economic environment of the country. To curb this weakness the company needs to
mitigate its risks and expand more aggressively in its foreign markets.

Opportunities
Growing Four-Wheeler Industry in India: A growth rate of nearly 4% CAGR in the time span
of 2015-2018 in the Four-wheeler industry in India ensures massive opportunity for the
company for the company in this industry and the commercial market too with the Indian
truck industry growing at a rate of 7% CAGR.
Expansion in Two-Wheeler segment: With its wide product range and the growth of the 2-
wheeler market, Apollo aims at capturing 85% of the market.
Global Expansion: From the past 3 years, the company is in an expansion mode while
spreading in countries like Lebanon, Qatar and Jordan. The company should continue the
same and expand into newer markets.

Threats
Strong competition: With the presence of companies like MRF Tyres, JK Tire and Goodyear,
the competition in tire industry is seeing fierce competition in the market, which can affect
revenues, growth and expansion plans of the company.
Cheaper Tyres in China: Chinese products imported at cheap prices present in front of the
company stiff competition and adversely hamper the company’s profitability.
Volatility in rubber production: Dynamics of the rubber industry in the country is volatile and
unstable. The demand created in the market is more than the supply thereby leading to
significant price fluctuations and the pricing strategy of the company gets influenced badly.
 COMPETITIVE ANALYSIS

Apollo Tyres top competitors are:

MRF Tyres

MRF Tyres is perceived as one of Apollo Tyres's biggest rivals. MRF Tyres was founded
in 1946, and is headquartered in Chennai, Tamil Nadu. Like Apollo Tyres, MRF Tyres also
competes in the Automobile Parts space. MRF Tyres generates $15.6M more revenue
vs. Apollo Tyres.

JK Tyres

JK Tyre is a top competitor of Apollo Tyres. JK Tyre is a Public company that was
founded in 1974 in New Delhi, Delhi. It is an India based manufacturer and supplier of
automotive tires. Compared to Apollo Tyres, JK Tyre has 5,526 fewer employees.

GoodYear

Goodyear is Apollo Tyres's #3 rival. Goodyear is headquartered in Akron, Ohio, and was
founded in 1898. Goodyear operates in the Automobile Parts industry. Goodyear
generates 64.2% the revenue of Apollo Tyres.
 WAY FORWARD

Global Automotive OE Tyres and Wheels Market is expected to grow with a healthy CAGR in
the forecast period of 2019-2026.
To fight this pandemic, Apollo Tyres is scaling back production in its European plants in
Hungary and the Netherlands, in addition to taking measures to protect its workforce in line
with government health advisory and measures. The company also suspended production at
its four manufacturing facilities in India.
This pandemic has largely impacted their production and distribution across the tire
industry. As there is strong need for agricultural tires across Europe, the production of
certain critical tire sizes will continue to support the demand, but under strict measures.