By

Ankush Roy (13068)

Dipankar Patir (13074)
Evangeline K. Jyrwa (13076)
Saurabh Agarwal (13102)
Soupa Soundararajan ( 13109)
Gaurav Arora (13118)

The Indian Tyre

Industry
The origin of the Indian Tyre Industry dates back

to 1926 when Dunlop Rubber Limited set up the

first tyre company in West Bengal.
MRF followed suit in 1946. Since then, the

Indian tyre industry has grown rapidly.

Indian Tyre Industry now provides direct and

indirect employment to nearly 1 million persons,

including dealers, retraders, growers of Natural
Rubber, employment in raw material sector etc.

Contd.
While the tyre industry is largely dominated by the

organized sector, the unorganized sector is

predominant with respect to bicycle tyres.
The total number of tyre dealers, geographically

spread all over the country is over 5,000 - serviced

through over 500 depots of tyre companies.
A vast majority of dealers handle multi-brands of

tyres. Tyre companies also have exclusive retail

distribution outlets.

Contd.
Indian tyres are meant, and expected to perform, under

different and extreme road conditions, from kutcha

village roads to newly constructed national highways,
from extreme cold to hot and wet conditions prevailing
in different geographical parts of the country.
Indian Tyre companies also follow a unique warranty

system whereby pro-rata adjustment is given for

manufacturing defects through the dealers
There is a vast population and production of two-

wheelers in India for which different sizes of tyres are

required and produced.

Nature of the industry

Tyre Industry is highly raw-material intensive. Raw materials cost

accounts for approx. 63% of tyre industry turnover and 72% of

production cost.
The industry is a major consumer of the domestic rubber market.

Natural rubber constitutes 80% while synthetic rubber constitutes

only 20% of the material content in Indian tyres.
62% of total Natural Rubber consumption is by the Tyre Sector,

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

Rs. 3000 crores

36

Industry Concentration 10 Large tyre companies account

for over 95% of total tyre production.

Recent Observable trends in the

Indian Tyre Industry
Robust growth rate in all vehicular segments over last 5

years.
Improved capacity utilization by all major manufacturers

(>80%)
Decrease in custom and excise duties to nullify increase

in raw material costs and increases OPM

Low labour cost : partially offset by low productivity.
Improved credit profile and loan serviceability.

TYRE EXPORTS BY INDIAN TYRE

INDUSTRY
Indian tyres have good acceptance in global markets.

Compounded Average Growth Rate (CAGR) of tyre

exports in the last one decade has been 8%.
Exports to over 65 countries worldwide. 17% export to

highly quality conscious US market. Other major export

markets are - (countries in) Latin America; UAE,
Bangladesh, Iran, Philippines, Vietnam, etc.
Over 20% of truck and bus tyres (bias) produced

domestically are exported. Emphasis now is on export

of radial tyres, including Passenger Car radial tyres.
All large tyre companies are exporting as a long term

commitment

Pricing Strategy in Tyre

industry
Pricing a product is a function of many factors.
The tyre market is not very price sensitive.
Consumers are more concerned about the tyres

functionality, than its price.

Besides, being a homogenous product, most

tyre companies price their tyres at more or less

the same levels. International players such as
Bridgestone price their tyres slightly higher than
the rest of the market. This is partially to
demonstrate its superior quality and pedigree.

Demand drivers of the

industry
1) Industrial and freight activity
The truck and bus tyre segment accounted for

19% of tyres produced in India in FY2008.

Every truck/bus manufactured generates a

demand for seven tyres. In addition, the price of a

truck tyre is significantly higher than that of a
passenger car tyre (roughly 10 times).
Thus the demand multiple emanating from the

commercial vehicle segment is highest in value

terms.

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

the recession, most India tyre manufacturers have taken to

exports to reduce inventory build-ups. Indian companies have
currently entered into sourcing agreements (for tyres) with
neighbouring countries like Sri Lanka and China.
There is a trend of increasing exports of bus and truck tyres

(crossply variety) from India to developing countries. This is

because of the fact that developing countries are unable to
source them from developed countries as these are no more
produced there.
The product focus of tyre exports from India has been Traditional

Truck Tyres. Globally this segment of tyre export is shrinking due

to greater acceptance of radial tyres. Moving towards
radialization will be vital if tyre producers want to protect their
share in international markets.

MAJOR CONCERNS OF INDIAN TYRE

INDUSTRY
RADIALIZATION:
Indian Tyre Industry hitherto is predominantly a cross

ply/bias tyre manufacturing industry, particularly in the

commercial vehicle segment (truck, bus, LCV) whereas
in the developed countries radialization level is much
higher.
In comparison to normal (Bias) tyres, Radial tyres offer

higher life/mileage, lower fuel consumption, improved

safety and ride quality and several other benefits.
However, the initial cost of a radial tyre is approx. 25%

higher though on a cost per kilometer (CPK) basis,

radial tyre gives higher benefits.

Radialization (contd..)
Though radial tyres offer multiple benefits, low level

of radialization in the truck and bus segment is

mainly due to higher initial cost (with limited
demand pull), low level of fitment by OEs on
commercial vehicles and poor road conditions.
With an improvement in road infrastructure,

radialization in the commercial vehicle (CV) segment

needs an added thrust by way of:
i) increase in fitment by the OEs (as in the case
of passenger car tyres)
ii) increased demand for fitment of commercial
vehicle radials in the replacement markets.

Road and support

infrastructure
While poor road conditions have a positive

impact on replacement demand, by reducing

the life of the tyre, improved roads can act as
a catalyst to increased purchase and use of
personal vehicles, thus driving up the demand
for tyres.
Also, poor road and support infrastructure act

as a barrier to radialisation in the commercial

vehicle segment.

TUBELESS TYRES IN INDIA

Good puncture resistance and much better safety
Account for only 10% of passenger car tyre sales
Primarily affected by:

a) Poor roads leading to rim damage

b) Lack of automatic machines for mounting and
un-mounting
c) Poor quality service leading to leakages and
poor life

OVER DEPENDENCE ON THE

COMMERCIAL VEHICLE SEGMENT
Globally-Passenger transport accounts for

33% of product mix

India- 81% of tyre market is for commercial
vehicles

EXPORT ISSUES
Low radial tyre production capability hampers

export potential

COMPETITION
Indian tyre industry is facing intense competition from

China and other South East Asian countries in tyre

exports to other countries.
Though the quality of Indian tyres is better and has

wider acceptance, due to cheaper pricing, higher

volumes and aided by Government support and
subsidies, Chinese tyres are cutting into the share of
Indian tyre exports.
There is a need to promote India Brand for tyres as one

which spells quality and higher standards.

USED TYRES
Developed and industrialized countries are facing a

monumental problem in disposal of used tyres. Hence,

developing and high tyre consumption countries like India
are being looked upon as a dumping ground for used tyres.
Several countries have banned or imposed severe

restriction on import of used tyres. In India, Government

introduced floor price (for assessment of Customs Duty) in
1997. Till recently, floor price mechanism was effective in
restricting imports.
However, of late, the volume of used tyre imports (in

circumvention) of the floor price has increased

significantly.

Non-Tariff Barriers (NTBs)

on Indian Tyres
Several countries have imposed Non-tariff barriers, by way of

standards, specifications and quality markings, which Indian

tyres have to comply with when exported to those countries.
These stipulations are by way of Non-tariff barriers and are

coming in the way of improved export performance.

Since the conditions imposed are in a WTO compatible

manner, there is a need to initiate simplification and curb

duplication at Government-to-Government level.

BANGKOK AGREEMENT/RTAINCLUSION OF RAW-MATERIALS

OF TYRE INDUSTRY
Under the Bangkok Agreement, tyres can be imported at 5% concession

in import duty (i.e. 15% customs duty vs. 20% normal duty rate).
South Korea and China are signatories of the Bangkok Agreement. Tyre

imports from these two countries at concessional rate of customs duty

are a matter a serious concern for Indian tyre industry.
Preferential tariff treatment has resulted in import of large volume of

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

Bangkok Agreement (eligible for concessional rate of customs tariff from

signatory countries) tyre industry is at a disadvantage and is faced with
inverted duty structure.

Government policies
TAXATION RELATED:
Incidence of excise duty on tyres continues to be high @ 24%, the

same as on luxury products like air-conditioners etc.

In addition there are several local taxes and levies imposed on tyres.

Ultimate burden of high taxes falls on the consumer.

Apart from high Excise Duty, various embedded taxes (viz. Sales Tax,

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

man and goods.

Embossing of Maximum
Price (MRP) on
Truck/Bus Tyres
In February, 1988, as per a directive of the Ministry of Industry,

Embossing of MRP on truck and bus tyres was started.

This was based on the recommendations of the Committee on Tyre

Industry (1984, known as Satyapal Committee). In the last over 15

years, the economic scenario has undergone a sea change with
liberalization, removal of controls and free global trade in most items.
Tyre Industry is also delicensed. Major raw-materials of tyre industry

(Natural Rubber and petroleum based materials) undergo wide

fluctuations in prices.
In such a dynamic scenario, it is a not practical to emboss the price on

tyres due to market dynamics. Submission - Tyre industry feels that

there is no need to continue with embossing MRP on truck/ bus tyres.

Automotive Industry Standards

All large tyre companies had voluntarily taken BIS

(Bureau of Indian Standards) certification.

In addition, Government has proposed Automotive

Industry Standards (AIS) which are essentially

safety standards and applicable to tyre industry
also.
Tyre Industry is of the view that there should be a

unified national standard which can be achieved

with a merger of AIS standards with BIS.

New Policy Initiatives

The tyre industry in India has had to grapple with raw

material price volatility, rupee appreciation and cheap

Chinese imports.
In this connection, some of the recent initiatives by

the government to facilitate the growth of the sector

include:
No WTO bound rates for Tyres and Tubes
No restrictions on the import of all raw materials

required for tyre manufacture except carbon black,

which has been placed in the restricted list
Increasing thrust on development of road infrastructure

Segments of Tyre industry

Markets
Original Equipment

Manufacturers (OEMs)
Replacement Demand
Exports

Design
Flatless Tyres- Drill holes

through the tyre and still ride

the vehicle
Tubeless Tyres- Airtight seal

between the tyre and rim

Radial Tyres- Dual steel belt

with stiff treads

Cross Ply- The reinforcement

runs criss cross on the sidewall

Segments according to vehicle

categories
Tyre
Industry

Commercial
vehicles

MHCV

HCV

Passenge
r vehicles

Farm
vehicles

LCV

Cars

Others

Motor
Cycles

Scooter
s

OTR

Industrial
vehicles

Demand for tyres

Type: Bus and Truck; Scooter;
Motorcycle; Passenger Car; Tractor

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

correlation with the prices of key raw materials such as

rubber and crude oil, as they account for more than 70%
of the total costs
Pricing Pressures The huge raw material costs have

resulted in pressure on the realisations and hence, the

players have been vouching to increase the prices,
although, due to competitive pressures, they have not
been able to pass on the entire increase to the customer
Highly capital intensive - It requires about Rs 4 billion to

set up a radial tyre plant with a capacity of 1.5 million

tyres and around Rs 1.5-2 billion, for a cross-ply tyre
plant of a 1.5 million tyre-manufacturing capacity

Opportunities
Growing Economy, Growing Automobile Industry, Increasing OEM

demand, Subsequent rise in replacement demand

With continued emphasis being placed by the Central Government

on development of infrastructure, particularly roads, agricultural and

manufacturing sectors, the Indian economy and the automobile
sector/ tyre industry are poised for an impressive growth.
Creation of road infrastructure has given, and would increasingly

give, a tremendous fillip to road transportation, in the coming years.

The Tyre industry would play an important role in this changing road
transportation dynamics
Access to global sources for raw materials at competitive prices, due

to economies of scale
Steady increase in radial Tyres for MHCV, LCV

Threats
Continuous increase in prices of natural rubber, which

accounts for nearly one third of total raw material costs

Cheaper imports of Tyres, especially from China, selling at

very low prices, have been posing a challenge. The landed

price is approximately 25% lower than that of the
corresponding Indian Truck/ LCV tyres. Imports from China
now constitute around 5% of market share
With crude prices scaling upwards, added pressure on raw

material prices is expected

Ban on Overloading, leading to lesser wear and tear of

tyres and subsequent slowdown in demand. However, this

would only be a short-term negative.

Basis of competiton
Being a homogenous product, there is not much

difference in products offered by competing tyre

manufacturers. However, companies do try to
differentiate themselves by outdoing one another in
some Points of Parity, such as quality, safety, tread
design, economy, etc.
1) High performance tyres that are meant for sports

and other high endurance activities.

2) Comfort tyres (touring) : Touring tyres offer the

twin advantage of endurance with superior ride

comfort. These class of tyres are a favorite amongst
long distance car drivers such as business travelers.

3) Mileage : One of the biggest value

propositions of radial tyres is the improved

mileage that it brings with it. Mileage is the top
priority for the Indian middle class buyer.
4) Price : Tyre prices play a much smaller role

in the passenger car tyre industry, compared to

tyre features. Consumers are more concerned
about the attributes of the tyre (quality,
durability, etc) than its price.
5) Wear life : The wear life of a tyre determines

the life if the tyre. The more durable a tyre, the

higher will be its wear life.

6) Grip : Given the high seasonal differences in

India, consumers typically look for tyres that suit

their local climate. Thus, while consumers in
Rajasthan look for tyres that can endure high
temperatures; consumers down south prefer tyres
that can grip the road even in the worst of
monsoon seasons.
7) Cornering and braking : Cornering and braking

refers to the way a tyre handles the extreme

shear and frictional forces it experiences when the
vehicle cuts corners or brakes at high speeds.
Superior braking and cornering performance is
always desired by sports and highway drivers.

Critical success
factors
1. Quality: If the quality of tyres is at any point

doubted by the consumer it can be devastating

for profits as tyres carry such a huge safety
element.
2. Pricing: Introduction of cheaper brand tyres has

placed greater pressure on prices. There have

been continued rises in imports of cheaper
tyres from China. If tyres are over the price
range, most customers will turn away from
leading tyre brands.

Porters 5 forces
with respect to tyre
industry

Key players in the

industry
Major players are MRF, JK Tyres, and Apollo tyres &

CEAT, which account for 63 per cent of the

organized tyre market.
The other key players include Modi Rubbre,

Kesoram Industries and Goodyear India, with 11 per

cent, 7 per cent and 6 per cent share respectively.
Dunlop, Falcon, Tyre Corporation of India Limited

(TCIL), TVS-Srichakra, Metro Tyres and Balkrishna

Tyres are some of the other significant players in
the industry.

Apollo Tyres
Apollo Tyres Ltd is engaged in manufacturing

automobile tyres and tubes.

They are having their manufacturing facilities

at Trichur in Kerala and Vadodara in Gujarat.

They are the first Indian tyre company to

launch exclusive branded outlets for truck

tyres and also the first Indian company to
introduce radial tyres for the farm category.

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

India, South Africa & The Netherlands

Apollo tyres share

holding

Performance of Apollo Tyres

Stock in the period 09-10

Apollo Tyres
BSE Sensex

Financial Performance (ATL)

Mar
'06

Mar '07

Mar '08

Mar '09

Mar '10

Net Sales (cr

Rs.)

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.

Topline Growth: CAGR

of 32%
Turnover (Rs. Billion)
90
80
70
60
Turnover (Rs. Billion)

50
40

80

30
20
10
0

43

47

50

FY 07

FY 08

FY 09

26
FY 06

FY 10

Apollo tyres in the

year 2006
Expansion of passenger car radial capacity to

10,000 tyres/day.
Expansion of passenger car range to include 4x4

and all-terrain tyres.

Acquired Dunlop Tyres International in South Africa

and Zimbabwe.
Launch of DuraTread, treading material and

solutions.
Launch of India's first range of ultra-high

performance V and W-speed rated tyres.

Financial year 2007

In 2007 the net sales rose from 2619.79 crores
to 3290.94 crores and profit from 78.17 to
113.42 crores. This increase in profit can be
attributed to the following factors:
Launch of Regal truck and bus radial tyres
Launch of DuraTyre, retreaded tyres from Apollo.
The Company split its face value from Rs10/- to

Rs1/-.
Apollo diversified into transport and logistics.

Financial year 2008

During the financial year ended March 31, 2008,

sales from operations amounted to Rs.42,469.83

million as against Rs.37,743.43 million during the
previous year, recording a growth of 12.52%.
Operating profit, before interest and depreciation,

amounted to Rs.4,732.98 million, as against

Rs.3,122.93 million during the previous year.
Net profit, after providing for interest,

depreciation and tax amounted to Rs.2,193.03

million as against Rs.1,134.22 million during the
previous year, registering an increase of 93.35%.

Financial year
2008(contd.)
It has achieved all time high profit and

robust growth in its operations supported by

a motivated management team, aggressive
marketing initiatives, better working capital
management and overall cost reduction
measures adopted by the Company.
The cost management and production

efficiencies helped in maintaining a good

profitable track record despite increase in
input costs.

Financial year 2009

During the financial year ended March 31, 2009,

sales from operations amounted to Rs.40,704.41

million as against Rs.36,939.27 million during the
previous year, registering a growth of 10.19%.
The growth in revenue was impacted by the

slowdown in industry, particularly in the OEM

demand.
Operating profit, before interest and depreciation,

amounted to Rs.3,360.15 million, as against

Rs.4,732.98 million during the previous year.

Financial year
2009(contd.)
Net profit, after providing for interest,

depreciation and tax amounted to Rs.1,081.18

million as against Rs.2,193.03 million during
the previous year, recording a decline of
50.70%.
The decline in profitability is due to overall

slow down in economy which impacted the

demand in the automotive sector, coupled
with soaring raw material prices for major part
of the financial year.

Growth in the FY 2010

ATL registered a top-line growth of 62 % in FY10 over

FY 09 with top-line growing from Rs 50 bn in FY09 to

81 bn in FY 10. The top-line growth was mainly on
account of improving demand in commercial vehicle
and passenger vehicle segment.
Revenue from South Africa and Europe contributed

14% and 24% respectively to total revenue and the

rest was from India.
The operating margin improved from 9 % in FY 09 to

14.6% in FY 10. This was due to lower increase in raw

material prices as compared to final product prices.

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

Competitor Analysis along with

Market Share figures
Sales
21%

22%
13%

18%

26%

MRF
Apollo
JK Tyre
Ceat
Others

Ratio Analysis
Investment Valuation on Shares

Dividend per share

Company

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

Net operating profit per share

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

other hand pays a much lower DPS.

Net Operating Profit/ Share Again, MRF

has the highest Net Operating Profit / share.

Apollo comes third in the list of NOP/share

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

Return on capital employed

Company
Apollo
TYRES

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

profit Margin has seen the highest growth in

Apollo Tyres, followed by JK Tyres.
ROCE (Return On Capital Employed)- Apollo

Tyres has seen steady growth in ROCE and

almost a 200% growth from March 09 to
March 10

Liquidity and Solvency ratio

Current Ratio
Compan
y

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

Current ratio throughout the past 5 years

which means that it has current assets just
enough to meet its current liabilities.
Apollo tyres has a comparatively low Debt-

Equity ratio which indicates that it is less

leveraged and thus less risky.

Debt Coverage Ratio

Interest Coverage
Compan
y

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

Interest Coverage Good Year has witnessed

the highest increase in Interest Cover over
the years, whereas Apollo has maintained a
steady increase.

Management Efficiency Ratio

Inventory Turnover Ratio
I

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

Debtors Turnover Ratio

Mar 06

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

Asset Turnover Ratio

Compan
y

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

has shown a steady increase in its inventory

turnover ratio its Goodyear again which has
maintained the maximum inventory turnover.
Debt Turnover Ratio- Apollo Tyres has shown the

highest increase in debtor turnover indicating

rapid conversion of debtors into cash.
Asset Turnover Ratio- Apollo has a high asset

turnover indicating that it is efficient in utilising

its assets.

Cash Flow Indicators Ratios

Cash Earning retention Ratio
Compan
y

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

Steel wire: Bekaert,

Belgium

Carbon Black:
HiTech Carbon, India

Process Aids: Flexsys,

The Netherlands

Polyester & Rayon:

Performance Fibres
USA

Global Business
Partners For Product
Testing

IDIADA, Spain

Nardo, Italy
for
4x4 tyres

Papenburg, Germany
for Ultra High
Performance tyres

NATC, USA for

Kinematics Studies

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

Apollo is the leading brand, supported by Regal and Kaizen

India is the largest market in the Zone
In India, Apollo is a clear leader in the commercial vehicle segment
2nd position in the passenger car segment in India
A chain of branded outlets called Apollo Zones & Apollo Points for

passenger cars and

Apollo Trust for commercial vehicles
An OEM partner to all the major commercial and passenger vehicle

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

2009, for the 2nd year in a row

Compliance with tyre safety and environment

regulation for 2012

Plans to increase plant capacity by 20% of present

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

Segment wise break up (ATL)

On a consolidated level, in terms of revenues across

customer segments the break up is as follows:

Replacement 83% and Original Equipment
Manufacturers 17%
On a consolidated level, in terms of revenue from product

segments the break up is as follows: passenger car 33%,

truck-bus 47%, light truck 9%, farm & off-the-road 9%,
with other segments contributing 2%
In India, the sharpest growth has been in the passenger

car segment of 36% over the previous year. This is

expected to grow even faster in the current year with the
Chennai plant going into full production
While in South Africa, which is climbing out of a very difficult

period, Apollo Tyres South Africa (Pty) Ltd grew 18% by

volume in the domestic South African market,
registering an overall growth of 13%

Apollo tyres sales segment wise

Revenue
segmentation

PRODUCT PORTFOLIO

Passenger Car

4x4

Light Truck

Apollo
Dunlop*
Vredestei
n

Apollo
Dunlop*
Vredestei
n

Apollo
Dunlop*

Bicycle

Agriculture

Off The Road

&Earthmove
r

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

Apollo Tyres-Product Launches

Passenger cars : Aspire; Acelere sportz;

Acelere; Amazer 3G; Amazer 3G Maxx; Amazer

XL
Alloy wheels : S 928; S929
Sports utility : HAWKZ-H/L; HAWKZ-A/T;

HAWKZ-H/T ; HAWKZ-R/T
Vans : Quatum; Quantum plus; Amazer XL
Passenger winter vehicles : Acelere winter;

Hawkz winter

Heavy commercial radial: Endurace-MA326; Endurace-MD;

Endurace-LD; Endurace-CD; Endurace-RA; Transport-RS

Heavy commercial cross ply : Amar gold; Amar; Amar DLX;

Amar AT-RIB: Cargo plus; Cargo Miler

Light commercial radial : Duramile; Rancer
Light commercial cross ply : Loadstar super; XT-9 Plus;

Cargo RIB; Champion; amar DLX; Amar gold.

Small commercial radial : Amazer XL LT
Small commercial cross ply : Loadstar; Amar DLX; Cargo SL

Agriculture radial : Farm king

Agriculture cross ply : Krishak premium;

Powerhaul; Y-LON; Dhruv

Of the road : XTRAX
Speciality : Mine lug; Y-LON
Retreading dura treads : SR01-RIB; SR02-

RIB; SS01-SEMI-LUG; SS02-SEMI-LUG; SL01LUG; SL02-LUG

Each of these products have different utility;

are suitable for different kinds of terrain; have

different life spans and different load carrying
ability.
Certain types have better fuel efficiency and

premium mileage. And certain tyres are meant

for specific seasons like the Acelere winter.

ATL is the first Indian Comp. to

have an ISO 9001 accreditation

for entire product range.

Apollo brand across segments it

launched XTRAX, Alloy Wheels
and Loadstar Super XP.
XTRAX
Cross ply tyre in sizes 10.00-20-XT- 100K, &
24.00-49 XTRAX
S lug design which provides for superior
traction and excellent mileage
Loadstar Super XP
Cross ply tyre in size 10.00-20
Perfect tyre for heavy load applications
Special casing design with dual beads
Optimised shoulder mass ensures cooler
running and improved performance

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..

1972 - Apollo Tyres Ltd. (ATL) was incorporated

28th September, 1972 as a Public Limited

Company and obtained certificate of
Commencement of Business on October 24, 1972.
The Company was promoted by Bharat Steel Tubes,

Ltd. Raunaq International Pvt. Ltd., Raunaq & Co.

Pvt. Ltd., Raunaq Singh, Mathew T. Marattukalam
and Jacob Thomas.

1981 - After the expiry of the original agreement

the Company negotiated with General Tire

International Co., U.S.A., for the renewal of the
technical collaboration agreement for a further
period of 5 years. This agreement expired on
January 1987.

Contd.
1986 - `General Tire International

Corporation', U.S.A. was taken over by

`Continental Gummi werke GmbH', West
Germany.
1987 - During the year, the Company

acquired interest in Gujarat Tyres Ltd., for

implementing an industrial licence to
manufacture automobile tyres and tubes in
Gujarat State.

Contd.
1988 - The Company set up a plant with a capacity of

6.75 lakh tyres per annum at Limda, Baroda, Gujarat at

an estimated cost of Rs 168.96 crores.
The Company promoted a new Company under the name

of Raunaq Aker Drilling, Ltd. in technical collaboration

with Aker Drilling A/s, Norway.
The company was to undertake multifarious onshore and

offshore drilling services/related activities in India.

The Company entered into an agreement with Persterp

AB, Sweden for promotion of joint venture company in

the name of Gujarat Perstorp Elektronics Ltd. It undertook
manufacture of electronic grade copper clad laminates.

Contd.
1989 - Radial tyres for Maruti cars and premium

tyre for trucks were launched during the year.

1991 - The Company proposed to undertake

exports of LVC and farm tyres in addition to truck

tyres.
1993 - The Company undertook modernisation,

upgradation of technology installation of line

balancing equipments, setting up a state of are
R&D centre, and to be financed by way of a
Rights issue of non convertible debentures with
detachable warrants.

Contd.

1994 - A number of high technology radial products

were developed and introduced.

The Company created distribution network of more

than 2500 dealers in the country.

1995 - A new plant for manufacturing tubes and flaps

at Ranjangaon near Pune was commissioned during

the year.
The Company entered into an agreement with

continental AG, Germany, for setting up a

passenger car radial tyre factory with and initial
production capacity of 4.7 million car radial tyres
per annum and with a capital outlay of Rs 400
crores at Pune.

Contd.
1997- Apollo Tyres Limited set up shop in

the city opening its Apollo Tyre World

(ATW) through Vora Tyres.
Apollo has been setting up ATW's all over the

country equipped with state-of-the-art testing

equipment.
ATL signed a letter of intent with the global

major Continental AG for a 50:50 joint venture

for setting up a 4.7 million passenger car radial
facility.

Contd.
1998- Apollo International recently set up a

subsidiary firm, Infonet Worldwide, for providing IT

solutions to corporate clients.
The company is setting up a greenfield project at Ropar

in Punjab to manufacture 100 tonnes a year of

agriculture and off-the-road tyres, that is, mainly tyres
for tractors, earthmovers, etc.
The company has a total installed capacity of 1.5 lakh

truck tyres per month. The two plants in Kerala have a

capacity of 70,000 tyres per month, the Baroda plant
has a installed capacity of 55,000 tyres per month and
the conversion arrangement with TCIL contributes
another 25,000 tyres per month. Premier Tyres Ltd.

Contd.
2000 - The Company is planning to set up

a Rs 300-crore radial tyre manufacturing

unit either in Tamil Nadu or Andhra Pradesh
with a capacity of 100 tonnes per day for
radial tyres for trucks and off-the-road
vehicles.
In a bid to attract the Net-savvy

customers, Apollo Tyres has tied up with

indiatimes.com to accentuate brand
association with safe and pleasant
journeys.

Contd.
2001 - Apollo Tyres Ltd. has zeroed in on

Tamil Nadu for setting up its Rs 450-crore

greenfield truck radial tyre manufacturing
plant.
Apollo Tyres Ltd has posted a 48.48 per

cent decline in net profit at Rs 3.22 crore

for the quarter ended September 30,
2001.
2003 -Technical & Financial Collaboration

with Michelin Group.

Contd.
2004 - Michelin Apollo Tyres Pvt Ltd (MATL), a

51:49 joint venture between Michelin Group and

Apollo Tyres Ltd (ATL), has announced the
launch of a range of truck and bus radials for
the Indian market.
Apollo Tyres Ltd on August 9, 2004, announced

the opening of Apollo Pragati Kendras , exclusive

outlets for selling the entire range of its farm
tyres to the agricultural community
Apollo Tyres introduces new range of tubeless car

radials on October 27, 2004.

Contd.
2006 -Apollo Tyres rolls out DuraTreads -Apollo Tyres

executes MOU with Tamilnadu Government for

setting up Tyre Manufacturing Facility -Apollo Tyres to
acquire Dunlop South Africa for Rs 290cr.
2007- Apollo diversifies into transport and logistics.
2008 -Apollo Tyres establishing plant in Hungary

2009 -Apollo Tyres - Acquisition of 100% shareholding

control of Vredestein Banden B.V., Netherlands.
2009 -Apollo Tyres - Acquisition of 100%

shareholding control of Vredestein Banden B.V.,

Netherlands

Strategies followed by Apollo

Tyres
After a series of tie-ins with General Tire,

Continental A.G. and Michelin- a radial truck tire

joint venture that didn't pan out-Apollo
management came to a conclusion.
Apollo decided internally that technology was our

greatest need, and we had to rely on ourselves.

Starting in 2003 they put a lot of investment and
resources into technology, especially in radials.
Their strategy was to grow via organic growth

and further acquisitions.

Truck tyres lead the

way
Apollo's great leap forward in the truck tire business

came in 1981, after the company came out of

receivership and Onkar Kanwar was given the job of
turning around the business. His vision was they
needed to be No. 1 in truck, and then they will look at
the other avenues.
Apollo, which had made tires under a technology

agreement with General Tire, then began to engineer

tires specifically for Indian roads.
That meant tires designed to handle overloading

common in northern India, and different products for

the south where mileage and retreadability were the
main issues.

Failure of the planned

joint venture
The plan of the joint venture with Michelin to build a radial

truck and bus tire plant in Ranjanguaon, with an annual

capacity of as much as 350,000 units failed.
Michelin especially liked Apollo's huge network of

exclusive dealers in India, besides its presence in

multibrand distributorships.
Ultimately, though, the pace of radialization of the market

proceeded slower than originally expected. Michelin

bought full control of the venture and the companies went
their separate ways.
Apollo still has a very good relationship with them. And

Michelin has a minority holding of around 12 percent in

Apollo.

Passenger radials
In 2000 the firm branched into passenger radials, spending as

much as $60 million to install high-tech equipment at its

Baroda, India, plant.
Radials today account for 97 percent of the Indian automobile

market, and Apollo has about 15 percent of that market.

Passenger radial expansion is in the works at a greenfield plant

in the state of Tamil Nadu, a two-phase project with a price tag

totaling $112 million.
The facility, which also will make light and medium truck tires,

already is producing a small amount of tires, about 5,000 a

month.
The passenger radials from the plant are aimed at the European

market. Originally it is export driven, but as the Indian market

matures, we will shift more to the domestic market.

Contd.
To serve the European market properly Apollo

established tie-ins with universities and professors in

Europe so the firm's personnel could get exposure
and training to develop the high-tech tires it wanted
to sell in that region.
About eight months ago Apollo launched two new-

generation high performance tires for the European

market-a V-rated asymmetric radial, and a W-rated
directional model.
The success of those technologies gave Apollo the

confidence that they do not need a technical partner.

TECHNOLOGY
ABSORPTION
R&D has made remarkable contributions which include

the introduction of higher sizes of OTR tyres, one lakh

kilometre bias tyre for normal load application,
concussion resistant tyres for super load application,
truck radial tyres tailor made for over load Indian
markets, reduced dependence on natural rubber by
developing suitable compounds, and enhanced
productivity by optimizing cure cycles based on inhouse developed new technology.
Several new designed and products in passenger

category of tyres were developed specially winter tyre

& run flat tyre, ultra high performance tyre which can
give comparable performance in most demanding
European markets.

Benefits derived as a
result of R&D
R&D efforts had helped to improve the

reputation of the company, reduce material

cost, minimize the dependence on natural
rubber, improve the performance of the
existing products, enter into the most
demanding European markets.
It also helped them to enhance the ranges of

our products such as OTR and TBR for high

load application for Indian markets.

Contd.
Method developed for understanding the

vehicle tyre interaction as a single entity.

Usage of this advanced multi-body dynamics

tools is helpful to predict the behaviour of tyre

in combination of vehicles.
It has plans to develop OTR radial tyres,

additional sizes in OTR bias tyres, low cost TBR

tyres, improvement in ageing resistance of TBR
& PCR tyres, wear and failure prediction of tyres
through simulation techniques.

Apollo diversified into transport

and logistics
Apollo International a sister company of the tyre major,

set up a cargo container freight station near Mumbai.

In the first phase of this diversification plan, Apollo

International invested Rs 150 crore to set up a

Container Freight Station (CFS) spread over 60 acres at
Panvel near Mumbai.
The company also offers inventory management,

distribution centres, cold storage and other logistics

related activities from that location.
The diversification helped Apollo Tyres cut

transportation costs by leveraging on the strength of

its logistics affiliate.

Other strategies
In 2006 Apollo Tyres, the number one

Indian manufacturer of automotive tyres

was facing heavy competition, rising costs
& high employee Turnover.
While its aim was to be one among the

worlds five best tyre companies, they

coined the strategy termed Passion in
Motion which rested on the three pillars of
people, technology & Quality.

Contd.
According to the strategic plan, by 2015,

Apollo Tyres aims to be among top five tyre

manufacturers globally.
It implied placing a high level of focus on:
Employee Performance
Growth through establishing green field

plants
International Acquisitions

IT Drive at Apollo Tyres

Apollo Tyres evolved into a systems-driven

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

and every plant was an isolated system.

Today, Apollo has over 140 offices across the

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

besides a network of 4,000 exclusive dealers and

2,000 others who stock their tyres, making Apollo
Tyres the largest network in India.
In the process of getting to this position, they realized

that they needed key decision-makers, across all our

offices, to collaborate more.
And so it was important to implement a software

package across Apollo.

Contd.
At that time they looked around the market for

someone who could fulfil this function and SAP

came the closest to it.
Apollo also formalized on IBM as their

implementation partner of choice.

Within the tyre industry here, Apollo is the second

to run on a certified ERP, the first being Goodyear.

It was a big move and now they can boast of it as

a hard decision and an achievement.

Goals the implementation was to

achieve:
The first, most tangible, requirement from the

system was to generate MIS reports.

Second, to capture data on a real-time basis.

This information would greatly aid the decision

making process for marketing, technical
support and sales.
Last, they wanted to bring transparency

across the company.

MySAP.com serves only as a takeoff platform

on Apollos journey to use IT to drive business.

Contd.
With unconnected, obsolete data flowing in from

140 offices and 4,000 dealers, they were getting a

skewed picture.
This prevented them from performing many critical

functions they do today, like demand forecasting

and advance planning.
From there, they moved into business intelligence.
It has not only enabled them, as users, to take

better decisions but has also helped customers and

dealers outside Apollo, to stay in sync with them.

IT enabled Apollo to
reduce its time-tomarket
What MySAP.com allowed ATL to do primarily

is to get data right-on.

ATL was then able to take that information to

their stores, into their supply chain and

production planning.
It helped forecast seasonal trends, like the

April-June and November-December farm

seasons.

Contd.
MySAP.com allows it to tell what's gone into

the market and, more importantly, what else

needs to be introduced.
Armed with this knowledge, they have been

able to enhance the way we track products.

As a result, they know when and where to

stock products in order to achieve the shortest

delivery time.

Contd.
To shorten that cycle further, they also started bar-

coding products.
Additionally, we put up a dealer portal to give

exclusive Apollo dealers the option of linking up with

our systems and locating information
instantaneously.
More dealers will figure that the portal offers them

the ability to place orders, create invoices, manage

stock and do whole bunch of other functions.
The portal also acts as marketing tool and that helps

us reach the market faster

Other benefits and impact on

SCM
Alignment with their OEM (Original Equipment

Manufacturer) partners.
SCM (supply chain management) : ATLs

Advance Planning and Optimization (APO) tool,

does both demand and production planning.
Before adopting it, ATL could forecast about 20-

30 percent of what was being sold. This led to

large amounts of hidden costs.

Contd.
With APO they can now forecast 75 percent,

which is incredible. SCM now helps sell the

right product, at the right time, to the right
person.
There's no dearth of suppliers and getting to

know you customer is crucial.

The supply chain has also helped us improve

after-sales service.

Contd.
They've put some of Apollo's suppliers on the SCM

and they are trying to expand that number.

Today, ATL buys 60 percent of raw material from the

domestic market and the rest is imported.

International sellers are not yet talking to ATLs

systems, but the momentum among the domestic

players is picking up. Getting them all will add value.
ATL plans to improve SCM to the extent that it gives

the ability to track every single product, whether it's

in a warehouse, in production or in transition.

Brand Portfolio

Gl
o
for bal
pa truc bran
ss
en kbu d
ge
s
rc &
ar
t yr
e

Global brand catering

to vehicles
across categories

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
fo

Br
ve an
hi d
cl fo
e r
ca 32
te A
go fr
r ie ic a
s n

Global niche brand for passenger car

& specialty tyres

Marketing strategy of apollo

tyres
Product Leadership- a 360 degree product and

service offering for the Indian market.

Customer intimacy Consumer promotions in the

truck tyres category helped it establish the

companys proposition in the mileage and radial
segments, while in PCR category the aim was to
boost sales of tubeless tyres.
Operations excellence Tiered network with an

addition of 47 business partners in the elite Diamond

Boys Club significantly enriched the Value edge club.

Market leader in commercial

vehicle segment
ATLs strong position in the domestic tyre

industry is based on its leadership in the truck

and bus segment (which accounts for 55 per cent
of Indias tyre industry) with a market share of
27% and 28% respectively, in volume terms.
The companys leadership position, coupled with

strong operating efficiencies and a wide

distribution network, enable it to counter
pressures from Chinese imports as well as
increasing domestic competition.

Replacement segment accounts for

a major portion of its revenues
The replacement market contributed around

71% of Apollo Tyres revenue from Indian

operations, thereby providing a cushion in the
event of a slowdown in the original equipment
manufacturer (OEM) segment which
contributes 21% and exports 8%.

Marketing and
Branding
Apollo will be the group's primary car tyre brand.

The company aims to make it a global premium

brand. Part of that is to be on OE vehicles.
A presence in original equipment is one of the

five key drivers for a brand in the market Apollo

tyres wants to do that.
Apollo will continue to make and sell Apollo-brand

truck tyres in India and South Africa, but truck

tyres will be a lower priority in the rest of the
world, at least for the next two to three years.

Contd.
Vredestein brand will continue along similar

lines to the existing market profile as a

replacement brand driven primarily by
profitability, rather than volume.
In Europe, the market position will be

unchanged, with the brand available across

most of the range of the replacement sector
but the group will position Vredestein in
developing markets as a ultra-highperformance tyre, available only for V-rated
fitments and higher speed ratings.
It is possible that Vredestein will appear as OE

Contd.
The most likely options here would be only on

specialised vehicles, produced by the vehicle

tuners or on other low-volume, highly specialised
vehicles.
Vredestein is unlikely to appear as a truck brand

either now or in the future.

Regal will develop as a secondary brand for

passenger car tyres around the world, but Apollo

group is placing a lower priority on this midrange brand than either of its two main brands.
Nevertheless, it will also become a global brand.

Contd.
Apollo's main focus is on Europe, at least initially.

However currently has a project, due to report

early in 2011 to identify the most attractive
niches in the top 20 or so countries around the
world, to see whether Apollo-branded tyres;
Vredestein branded tyres or other Apollo group
brands can compete successfully, given the
market volumes, market growth and brand
structure of those countries.
The mid-term strategy is to promote the Apollo

brand strongly in Europe, with a target of

achieving 65 to 70 percent spontaneous brand
recognition within three to four years.

Contd.
The aim is to present the brand as a global

brand, manufactured in Enschede, and South

Africa as well as in India.
The company does not want Apollo to be seen

as an Indian brand, with the connotations of

low-technology and cheap labour which are
sometimes associated with Indian-made
products.
Apollo tyres is a family of 15 000 people

spread over three continents, India, S Africa

and Europe as well.

Contd.
During those three to four years, Apollo will work

with OE customers to develop tyres suited to

European roads and driving conditions.
The aim is that with an OE development cycle

lasting around three to four years, brand recognition

among the public in Europe will not be a barrier to
an OE fitment over the same time scale.
They plan to achieve this by a combination of

marketing efforts, including but not limited to

sports sponsorship, TV slots, and promotion across
the tyre trade.

Contd.
In the short term, Apollo has begun selling Apollo-brand

tyres into the replacement market from April 2010,

using the existing Vredestein distribution chains.
To begin with, the company's efforts will be focussed on

replacement sales in Germany, Netherlands, Italy and

the UK.
Then from 2011, sales will go European-wide. The

company said Europe offers the highest margins of any

market in the world.
The next step will be further expansions in Asia,

notably in Eastern Asia, though the company is still

working on how to address the China market with its
different brands.

Contd.
In the OE segment the company is currently

supplying BMW with Apollo-brand tyres in India

and is in talks to supply the company with Apollobranded tyres in Europe.
The company is also recognised as a global brand

by Volkswagen and is likely to win a European VW

fitment in the near future.
The company used the opening of the Reifen show

in Essen, Germany to launch its latest winter tyres

the Y-rated Sportrac Nextreme. Rob Oudshoorn,
CEO of Vredestein Banden said this is the only Yrated winter tyre available in the European market.

Contd.
Apollo will display its range of tyre brands-

Apollo, Vredestein and Maloya-at its booth in

Hall 3 at the Messe Essen.
The company intends to show the passenger

car range Apollo is introducing into Europe.

At the same time, Apollo has started shipping

radial truck tyres to customers in India,

Southeast Asia and the Middle East from its
new factory in Chennai, India.

Global structures and

brands
Apollo group has re-organised itself into three

main regions. Zone I (for India) covers India

and the Asia-Pacific region.
Zone A covers Africa and Latin America.
Zone EU covers the European union, Russia
and the CIS and North America.
Within those structures, Apollo offers car, van
and 4x4 tyres in five different brands: Apollo,
Dunlop (in 22 countries in Africa), Vredestein,
Regal and Maloya.

Contd.

In truck, the company offers Apollo, Regal and

Kaizen brands. In farm tyres, the company has

the Apollo and Vredestein brands.
In off-road, the company offers Apollo and Regal.
The company has Vredestein brand in industrial

tyre, fork lift trucks and golf carts.

Vredestein bicycle tyres are also used

extensively by enthusiasts and the group is likely

to take these tyres to other countries as well.

Integrating different
cultures
The main USP in Apollo has been of integrating

ourselves with new cultures and values.

This happened first with the Dunlop operations in

South Africa, and more recently also with the

Netherlands-based Vredestein as well.
The integration process was a success and is a

success. This view was echoed by everyone to

whom ERJ spoke at Essen, which included many
people from India, Germany, Netherlands and other
countries.

Contd.
It seems to have been one of the most

successful international integration's of any

tyre industry merger in recent years.
Apollo wants to grow to $5000 million (3850

million) from around $2000 million today-in

sales by 2015 and that Apollo group can only
do that if its people work together to
contribute and at the same time, give
something back to society.

Extensive distribution
network
Apollo tyres operates through a network of

branded, exclusive or multi-product outlets

within and outside India.
In South Africa the branded outlets are called

Dunlop Zones; while in India they are named

as Apollo Tyre World (for commercial
vehicles) and Apollo Radial World (for
passenger cars).
Exports out of these three key manufacturing

locations reach over 70 destinations across

the world, especially in Europe, Africa, the
Middle East and South-East Asia.
In each of the domestic markets the company

operates through a vast network of branded,

exclusive and multi-product outlets.

Mergers &
Acquisitions
In May 2009, Apollo acquired Apollo

Apollo-Dunlop Merger
Apollo purchased Dunlop Tyres International.
The company operates plants in Durban and

Ladysmith, South Africa, and another in

Bulawayo, Zimbabwe.
Dunlop Tyres International shares a lot of
similarities with Apollo. For example, the firm is
a big player in the truck tire market in South
Africa, holding a 23-percent share of truck and
bus and 20-percent share of light truck tires in
the nation.
The company has reasonably good distribution
in Europe, Germany, the United Kingdom and
Holland.

Contd.
The acquisition target should provide one or

more of the following attributes: market,

production facility, distribution network and
technology.
Dunlop SA provided each of the above.
It gave Apollo three production units (total

capacity 180 tonnes a day), technology (tyres

for specialised vehicles for mining and off-theroad segment), a strong brand name (Apollo
can use the Dunlop brand name in 33 Englishspeaking African nations) and a distribution
network.

Contd.
The firm was a good fit for a couple of other
reasons, too:
Apollo tyres could sell tires across Africa,

where the operating conditions are not that

different from ours.
Additionally, the manufacturer was privately

owned by financial investors and management,

and amenable to sale.
About 75 percent of Dunlop Tyres' sales are in

South Africa and neighbouring countries.

Contd.
The acquisition was the first foreign purchase

by any Indian tire maker.

The company, which has the best margins of

all the Indian tire makers, expects to meet its

ambitious goals via organic growth and
further acquisitions with sights set on China,
Eastern Europe and Southeast Asia.
We really drive home the total savings for the

life of the tire.

Acquisition of Vredestein Banden

B.V.
India's Apollo Tyres Ltd.'s acquisition of Dutch tire maker

Vredestein Banden B.V. added about $450 million to

Apollo's annual sales and give the Gujarat, India-based tire
maker a key entry to the European marketplace, where it
up until now has distributed through independent
distributors.
This is a strategic alliance bolstered Apollo's plans for its

European customers.
The fit between the two companies spans the entire

spectrum of R&D, products and people to manufacturing

and markets

Contd.
Vredestein's sole plant in Enschede has annual

capacity for 5.5 million tyres, roughly 70 percent of

which are high-performance car tyres.
The majority of Vredestein's business is in Europe with

the Vredestein and Maloya brands.

Vredestein will bring to Apollo edge in passenger car

tyre technology alongside an understanding of the

European market.
At the same time, Apollo can offers Vredestein access

to the non-European markets, valuable manufacturing

expertise and assistance with bringing down costs by
leveraging the purchasing power of a larger entity.

Contd.
Vredestein Banden was bought by Amtel Vredestein in

April 2005. It was able to keep itself afloat through

Amtel-Vredestein's bankruptcy by obtaining separate
financing.
This is Apollo's second major acquisition in the past four

years.
Prior to the acquisition, Apollo was primarily a supplier

of truck tyres and earthmover tyres to the Indian and

South African markets, with a small export volume.
Today, it is a company in transition. In five years time, it

aims to be a global supplier driven primarily by market

pull in all regions of the world with a range of brands
across most product categories.

Contd.
There are a series of steps on the way:
First is to establish Apollo group as a multi-brand

supplier of car tyres in Europe, with Apollo as the

OE brand and other brands in specific niches.
Second is to implement a global product strategy

in car tyres around the world, including key

markets and appropriate production capacity.
Meanwhile, a number of equally significant

projects will be going forward. First in agricultural

and implement tyres in India, South Africa and
other regions.

Contd.
Second, the growth of radial truck tyres in

India and the neighbouring regions and third,

developing strategies for two-wheelers,
earthmover tyres and other products in
strategically important regions.
Longer term, Apollo group will develop its

truck tyre activities beyond its base in India.

The transformation can be summed up in one

sentence: "We are moving from a productiondriven company to a market-driven company.

SWOT analysis of Apollo Tyres

Strengths

While taking fresh strides, Apollo Tyres has continued to

maintain its lead in the market within the dominant segment

of truck and bus tyres within the Indian tyre industry.
The Company has established a state-of-the-art plant in

Baroda. Quick response to changes in market conditions and

product profiles has resulted in superior product innovation
and technical expertise.
The Company's marketing initiatives have resulted in a

strong brand recall, even in the price sensitive tyre market.

Aiding these efforts is an extensive distribution network.

Contd.
A progressive leadership has given direction to all the different

aspects of the establishment, from the sourcing of raw materials

to a global presence through the acquisition of Dunlop Tyres
International (Pty) Ltd in South Africa.
Economies of transportation cost are a constant benefit to the

company on account of proximity to the natural rubber growing

belt. With a move into the international arena, Apollo Tyres not
only has access to global sources of raw materials, but can also
follow and maintain global quality standards and international
process and system certifications.
Within its physical boundaries, the Company propagates

extensive use of information technology systems, so as to hasten

the flow of information and leverage opportunities across its
multiple locations in India and South Africa.

Weakness
Apollo Tyres has no presence in the two and

three wheeler segments. The capital intensive

nature of the business in this segment, also
has its drawbacks.

Opportunities
The national thrust in road infrastructure and

construction of expressways and national

highways presents a range of opportunities for
the tyre industry and Apollo Tyres aims to make
the most of these.
Creation of road infrastructure has given, and

will increasingly give, a tremendous fillip to

surface transportation in the coming years.
The tyre industry will continue to play an

important role in this dynamic and evolving

situation.

Contd.
Apollo's leadership position in the commercial vehicle

segment will enable the company to leverage new

and related business opportunities.
We have already started leveraging these

opportunities to our benefit with our new product

segments like Truck/Bus Radial (TBR), Off-The-Road
(OTR) tyres, retreading and allied automotive
services.
Growth within India also supports the Company's aim

to be a leader in the global industry and partake in

overseas markets like Europe.

Threats
There is a need to prepare for imports from

neighbouring countries at competitive prices,

which have been rising in the recent past.
As well the ever present challenge of raw

material price volatility.

Competitors
Strategies

MRF Limted.
MRF Limited (MRF) was incorporated on 5th November 1960.
The Company manufactures the largest range of tyres in India

and is the market leader with the largest market share in

almost every segment of the tyre industry, product portfolio of
the company includes Tyres, Pretreads and Conveyor Belts.
MRF has six manufacturing plants in India. It has a distribution

network of over 2,500 outlets in India and also has overseas

offices in United Arab Emirates, Bangladesh and Vietnam.
Apart from the domestic, the company exports its products to

over 75 countries worldwide.

Brand Strategy Analysis of MRF

Established in 1946 as a small toy balloon manufacturing

unit in a shed at Tiruvottiyur, Madras (now Chennai), MRF

ventured into the manufacture of tread rubber in the year
1952.
The quality of the product was so high that by close 1956

MRF had become the market leader with 50% share of the
tread-rubber market in India.
In 1961, MRF entered into tyre manufacturing in

collaboration with the Mansfield Tire & Rubber Company of

USA. Since then MRF has come a long way towards
achieving greater heights in the automotive tyre industry,
with 6 manufacturing units in India.

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

manufacturers in India, with a 24% share terms of

revenues.
Its leadership position, coupled with its strong brand
recall and high quality, MRF commands the pricemaker status.
MRF has a strong presence in the T&B segment, the

largest segment of the tyre industry, and commands

around 19% market share in the segment. It is the
leader in the two/ three-wheeler segment (including
motorcycles) and tractor front tyres, and holds second
place in the passenger cars and tractor - rear tyres.
Exports account for around 12% of the gross sales in

MRF Products
MRF is the leading manufacturer of tyres for almost all

segments. Being driven by technology and product

innovation, every tyre that comes out is of the highest
standards and tested to weather the toughest
conditions on any road.
With more than 85 tyre variants, MRF holds the highest

market share of 22% in terms of sales volume in the

tyre industry.
Apart from tyre manufacturing tyres, MRF also

manufactures its MUSCLEFLEX brand of Conveyor

Belting at one of the most advanced, 'State of the Art',
Facilities in India.

Contd.
Incorporating the latest manufacturing techniques,

MUSCLEFLEX-Conveyor Belting has gained rapid

acceptance in markets worldwide.
MRF PRETREADS is yet another innovation from

MRF Industries which is the most advanced

precured retreading system in India. MRF forayed
into retreading as far back as 1970.
Today, MRF has perfected the art of recured

retreading with its extensive knowledge in tyres

and rubber. MRFs diverse business interests also
include Paint and Coats, and Toys.

Analysis of MRFs
strategies
MRF has been immensely successful in

creating a brand that has become a household

name today.
Its marketing campaign has been one of the

most innovative ever in the history of Indian

advertising, thus wooing the customer
completely.
However, MRF Achilles heel seems to be its

dealer relations. MRF so heavily concentrates

on its customer promotion activities, that it
hardly pays any attention to incentivizing the

Contd.
This is reflected in the very low margins it offers

its dealers and the almost complete absence of

promotional activates such as: discounts, gifts,
compliments, etc for the dealers (called Sell in
schemes).
Dealers stock MRF tyres simply because

customers demand them. They do not seem to

be very keen on promoting the product, since
the company does not incentivize them to do so.
A better incentive scheme for the dealers could

change this situation in MRFs favor.

Complete market coverage by

MRF
Over the years, MRF has created a formidable

product line, length and breadth to serve every

segment of the industry. Its complete market
coverage is one of the reasons why it is the
undisputed market leader today.
ATL offers tyres for the following vehicle
segments in the tyre industry:
1) Passenger Cars
2) Two wheelers
3) Heavy Commercial Vehicles (HCV)
4) Light Commercial Vehicles (LCV)
5) Of the Road Vehicles (OTR)
6) Farm Vehicles (FV)

Recent Forays of MRF

Became the first domestic company to

venture into the niche area of developing and

manufacturing of aviation tyres branded ''Aero
Muscle'' for helicopters and aircrafts which
targeted the defence sector.
The critical raw materials were sourced from

overseas suppliers.
It is estimated that the company invested

more than Rs 150 crore to set up the new

production facility at its existing plant in
Medak district of Andhra Pradesh.

Contd.
Funskool Indis, a Joint venture between Hasbro

and MRF, is a major toymanufacturing company

in the country. MRF Pretreads offers world class
precured tyre retreading service, and MRF
Muscleflex is involved in making conveyor belts.
MRF has been involved in the development of

cricketthrough its sponsorship of many cricketers

and MRF Pace Foundation. At one point of time,
MRF was the bat sponsor of world-class batsmen
including Brian Lara, Sachin Tendulkar, and former
Australian captain Steve Waugh.

The Goodyear Tire & Rubber

Company
Founded in 1898 by Frank Seilberling.
Goodyear manufactures tires for automobiles,

commercial trucks, light trucks, SUVs, race cars,

airplanes, and heavy earth-mover machinery.
Goodyear showcases innovative Space Tire at

Geneva Motor Show

Goodyear concept tire with BioIsoprene

technology wins Environmental Achievement of

the Year award.
Renault chooses EfficientGrip for electric sedan

Fluence Z.E.
Goodyear Launches UltraGrip Ice+: Best Tire for

Nordic Winter Conditions

Past Strategies
Goodyear rolls out premium tyres(2006)-

Goodyear India launched its `Excellence series'

of tyres in India targeting the high-end car
segment.
These tyres sport the unique `3-Zone

Technology', which provides higher security,

performance and comfort.
Goodyear plans to import these tyres from China

and will manufacture them in India depending on

commercial viability.

2006
Goodyear expands retail network:
Tyre maker Goodyear will add more branded

outlets and exclusive shops this year to

improve its share in the country's growing tyre
market.
The branded outlets are planned as `shops

within a shop' an area earmarked for

Goodyear tyres within a large shop while the
exclusive shops will sell the company's tyres.

Goodyears rationale behind the

new retail format
Goodyear India was convinced that

consumers were moving away from the

concept of exclusive stores and hence came
up with the concept of shop-in-shops.
The management felt that through this

strategy the company would be able to

provide customers with a wider range of value
added services and brand themselves more
prominently.

2007
Goodyear India embarks on new
Marketing campaign:
Goodyear India has embarked on a new marketing

campaign that will focus primarily on the customer. To

start with, the company plans to set up 250
international format shop-in-shop outlets by the end of
2008 across the country.
The company is also ready to set up a Goodyear

online club named Goodyear My Turf that will cater to

the elite Goodyear customers. There will be blogs and
interactive content that will build the Goodyear brand.

2007 contd.
All these initiatives are part of the Take the

winning turn marketing campaign that was

initiated by the company.
Goodyear outlets in Kerala
Goodyear India Ltd has launched two branded

retail outlets in Kerala as part of expanding the

company's presence in South India.
This is part of the company's strategic initiative in

organised tyre retailing aimed at strengthening its

presence in the large tyre replacement market in
the country.

2008
Goodyear expanding retail presence in
India

Goodyear would be expanding its retail

presence in India by setting up 4,000 retail

outlets in 2008, up from the current 3,100.
This would be mainly driven by the robust

sales in the passenger car segment and

the replacement market 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.

Overall Analysis of Goodyears

Strategies
As we track the companys progress for the

last 5 years we find that Goodyear has

followed a strategy of continuously expanding
its resource capabilities and pre-empting
customer requirements and needs.
Through introduction of new products and

successful marketing campaigns the company

has been able to compete effectively in the
highly competitive Indian tyre industry.

JK Tyres
The company was incorporated as a private

limited company in West Bengal in 14th

February, 1951.
Until 31st March 1970, the company was

engaged in the managing agency business.

Thereafter, the company decided to

undertake manufacturing activities and

obtained a letter of intent in February 1972 for
the manufacture of automobile tyres and
tubes.

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:

Price, service, convenience and technology are

some of the niches in Indian market.

Contd.
Product and service planning:

Analysis of the customers perception of the brand,

both of the firm and competitors, besides an analysis of
the situation in which the customer uses the product.
Distribution:

Structural changes in inventory management, mobile

distribution are some of the key factors that are going
to affect the distribution process in the Indian market.

Managing for result:

With pressure on costs, prices, and margins,

marketers will have to make effective utilization of
every rupee spent in marketing.

Contd.
JK Tyres, the flagship division of JK Industries

Ltd, is opting for an all-new ``360 degree

communication strategy'' based on the
objective of achieving customer delight.
The `customer delight' proposition will also take

forward JK Tyre's concept of exclusive `Steel

Wheels' retail outlets and its dial-a-tyre service.
The number of Steel Wheels, for example, will

be increased from the current 75 to 130.

Contd.
The advertising strategy comes in the wake of the

company terminating its association with its ad agency

of five years, Interact Vision, and signing up Ogilvy &
Mather (O&M) instead.
Though the advertising campaign created by O&M is

yet to break, officials at JK Tyres have said the

switchover will result in a `marked change' in the
overall advertising strategy.
An increasingly competitive market, the need to

heighten the brand's presence and personality and

stay ahead in the race were among the reasons the
that necessitated the shift.

Contd.
In 2008, JK Tyre had acquired Mexican tyre major Tornel

for Rs 270 crore. Currently, about 75 percent of Tornel's

annual production of 66 lakh units is sold in the
Mexican domestic market.
JK Tyres is also planning to re-enter the fast-growing

two-wheeler market after stopping manufacturing 2wheeler tyres more than 20 years ago.
As part of companys growth strategy, JK Tyre will

invest in Karnataka to manufacture truck, bus and car

radials to cater to both domestic and international
markets and has earmarked an investment of Rs 800
crore

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

Tyre and Vehicle Mechanics is a joint venture

between JK Tyres with IIT Madras and is a
true example of Academia Industry
Collaboration.
It is equipped with advanced computational

facilities for carrying out research in the area

of Tyre/Vehicle Dynamics, Tyre/Road Noise,
Foot Print Mechanics and Non-Destructive
Test Development using Simulation &
Predictive Techniques.

Contd.
JK Tyre & Industries is doubling its radial tyre

manufacturing capacity for both commercial

vehicles and passenger cars by 2012 in order to
meet the growing domestic demand.
The company currently manufactures 8 lakh

commercial vehicle radial tyres, which will be

doubled to 16 lakh tyres. Out of the total production
post expansion, 4 lakh commercial vehicle radial
tyres will be manufactured at its Mysore plant, while
remaining will be made at a new plant in Chennai.
The company has similar plans for increasing the

production of passenger car radial tyres. It currently

produces 45 lakh radial tyres in the passenger car

Contd.
Out of this, 5 lakh tyres will be produced at the companys

Gwalior plant and 50 lakh tyres at the Chennai plant.

This is a good strategy considering the huge demand for

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

Rs1,500 crores investment plan till 2012 and majority of it

will be made in setting up a new plant in Chennai, which
would be its ninth.
JK Tyre currently produces 16.3 million tyres per annum, 9.7

million units in India and the remaining in Mexico.

Overall Analysis of Strategies

followed by JK Tyres
The growth of JK Tyres can be attributed to the

companys constant endeavor towards

differentiating itself from the rest of the competition.
Through the tie up with IIT Madras, JK Tyres has

displayed its constant efforts towards investing in

Research and Development.
Customer Focus and building a strong brand image

is also reflected in the different initiatives taken up

by JK Tyres.

JK can improve upon:

JK Tyre is doing well in rib segment but they are

based in only on one brand Vikrant. So JK should

try to aware to increase the awareness of other
brands.
Price-Quality relationship needs to improve in

premium rib and lug tyre segment.

Keep eye to reduce the cost of manufacturing. So

price will further reduced and competition will

increased.
The company should look after its tread

erosion/breaking problem

Ceat Ltd.
Ceat Ltd. is a part of the RPG conglomerate.
The company offers the widest range of tyres to leading

Original Equipment Manufacturers across the world.

They manufacture a range of tyres catering to various

segments. The company operates two plants in

Maharashtra.
The company has a robust national network consisting

of 34 regional offices and over 3,500 dealers.

The company has their presence in 110 countries.

CEAT to exploit 3-Wheeler

Segment
To increase its presence in this segment.
India is among the largest manufacturers of

three-wheeled vehicles and there is a heavy

demand for the same.
The Southern States are the major markets as
they account for about 60 per cent of the
three-wheeler demand.

2007
Ceat Tyres is set to outsource tyres from China

and Vietnam for sales in India. Ceat has tied up

with two companies in China to outsource truck
and bus radials.
The company has been importing truck and bus

radials from Pirelli's facilities in Egypt and Turkey.

With import of tyres from China, the company

created two distinct brands in the commercial

vehicle tyre segment to avoid cannibalisation of
the brands.

Contd.
The Chinese tyres will be branded as the `Economy'

range while the Pirelli tyres would be branded as

`Premium' range.
The company has started importing OTR tyres (specific

range) from Vietnam.

Ceat successfully ramped up the OTR capacity at both

the Bhandup and Nasik factories from 30 tonnes to 45

tonnes.
The company announced that it would be setting up a

greenfield project for manufacturing truck and bus

radials.

2008
Ceat Ltd shut down its Bhandup, Mumbai,

plant from December 26 to December 28 and

Satpur, Nashik, plant from December 25 to
December 31 due to excess inventory.
Ceat Ltd decided to set up its proposed Rs

500-600 crore greenfield radial facility in

Gujarat.
Ceat sold seven acres of its vacant land in
Bhandup area in Mumbai for Rs 130 crore to
Ashford InfoTech Ltd.

Contd.
The proceeds of the sale were utilised to

partly finance its Rs 800-crore expansion plan

that involves setting up of a Rs 500-crore
greenfield radial tyre manufacturing facility
and a Rs 300-crore tyre making unit either at
Patalganga or Ambernath area near Mumbai.

2009
CEAT Ltd, in partnership with Total Lubricants, organised an

interactive platform CEAT PRO for the fleet owners of

Chennai.
A company release said the objective of conducting the

programme was to give fleet owners access to best

practices and ideas across diverse fields enabling them to
improve their businesses and reduce operation costs.
It posted record net profits of Rs 61.5 crore for the three

months ended September 30, against a net loss of Rs 28.8

crore last year making this its best-ever quarter.
The good showing was a result of low raw material costs,

better sales mix with higher demand vis--vis last year,

better working capital management and lower interest
payments

Contd.
The company plans to add radial capacity by setting

up a Rs 500-crore plant in Vadadora to meet

increasing demand from domestic markets.
The facility is scheduled to kick off production in

September 2010 and will have a capacity of 92

tonnes of radial tyres daily.
The project will produce both tyre and car radials on

a 50:50 basis and will be funded by Rs 300 crore in

loans and Rs 200 crore in internal accruals.
The first phase of the greenfield plant at Halol in the

Panchmahals district, near Vadodara, would involve

an investment of Rs 700 crore.

2010
Ceat Ltd plans to enter into off-the-road (OTR) tyre

maintenance business in the next fiscal. While the project

details are yet to be finalised, company officials indicate
that it could be a separate business vertical offering endto-end maintenance solutions for a wide variety of tyres.
Ceat's Sri Lankan investment arm Associated Ceat

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

tyre plant at Halol, Gujarat, and expects to achieve full

capacity realisation by mid-2011.

Contd.
The company has invested about Rs 600 crore in the

new facility, which has the capacity to make 300,000

passenger car radial tyres (PCRs) and 40,000 truck
and bus radial tyres (TBRs) a month. This is keeping in
line with the rapid shift to these tyres in the twowheeler segments.
Ceat is betting big on the Halol plant for growth.

Currently, it has limited capacity for PCRs and

practically none for TBRs. The plants at Bhandup (near
Mumbai) and Nashik largely cater to cross-ply tyres for
buses and trucks.
Tyre maker Ceat targets export revenue of Rs 1,000

crores by financial year 2013.

Overall Analysis Of CEATs

Strategy
CEAT has focused on building a strong sales and

distribution network and this has formed the crux of the

company becoming profitable over the years.
The company has also entered into strategic alliances with

international tyre manufactures in order to expand its

businesses.
CEATs growth can also be attributed to its constant

endeavor to lower operational costs and achieve efficiency.

Investments in Greenfield projects and continuous capacity

expansion has also been a cornerstone in CEATs success

over the years.

Analysis of ATL
strategies

Early entrant in the

T&B radials segment
ATL is one of the few players to set up a

dedicated facility for Truck & bus radials with

an installed capacity of 100 TPD (Tones per
day). The total cost of the project is Rs 2.5 Bn.
At present, there are very few players who

have the technical know-how to manufacture

T&B radials. ATL with the expertise of Dunlop
Tyres (DTL), South Africa would be one of the
early entrants in the T&B radials space.

Contd.
We feel that the company has timed its foray into

T&B radials perfectly considering on our

estimated sales from T&B radial sales to reach Rs
17.91 bn which is an increase of 55% CAGR.
Apollo having a dominant market share in T&B

tyres segment, we expect the company to

leverage the same to capture a sizable share
from the T&B radial segment.
Fast paced improvement in road infrastructure,

coupled with institutionalization of fleet

operators could drive faster than expected radial
penetration.

Focus on the high growing

exports segment
ATL would continue to leverage on well established

exports markets. Thrust on exports over the last five

years has resulted in an increase of 37% CAGR for
the period.
Apollos share of exports stands at 18% of the total

industry exports, which is driven by the passenger

car tyre exports(53% share based on volume) and
the Truck & Bus tyre exports(19% share based on
volume).
Apollo currently exports to Asia-Pacific, Middle-East,

South America & European countries & is constantly

focusing on new markets.

Contd.
The passenger car segment has been the growth driver

for Apollo tyres in the export market with a volume based

share of 53%.
To cater to the higher end exports market, ATL has

launched the W-speed rated high performance tubeless

tyre aimed at enhancing the share in the passenger car
tyre segment.
Hence, new product launches in the high growing

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

amount of de-risking against domestic demand slowdown.

Dunlop Tyres Ltd (DTL) South

Africa acquisition:
ATL acquired Dunlop Tyres Ltd (DTL), South Africa, in

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.

Entry OTR segment

Apollo tyres have entered in the high growth OTR

(Off the road) tyre segment through a tri-party

agreement with Bharat Earth Movers Ltd. & J K
tyres.
The OTR segment yields a higher margins as

greater level of customization is required to be

done. As per the agreement BEML would source its
requirement of earthmoving tyres from Apollo.
The OTR facility would entail an outlay of Rs 100

Mn with an installed capacity of 10 TPD. The

massive infrastructure investment to be made in
the next 3-4 years would call for increased demand
for OTR tyres.

Retreading
ATL is the only player in the organized sector

to set up a dedicated facility for Retreading of

tyres. The facility operates with an installed
capacity of 10TPD.
ATL plans to set up three new Retreading facilities,

which will be located near transport hubs to

capture the Retreading opportunities.
Apollo Tyres is the only player in the organized

market to set up a dedicated facility for re-treading

of tyres. Apollo has a re-treading facility with an
installed capacity of 10 TPD located at Haryana.

Contd.
ATL plans to set up three new retreading

facilities, located close to the transport hubs

so as to cater to the fleet owners requirement.
Re-treading market consists of just four

players in the organized sector who supply

retreading material, while the unorganized
sector consists of approx. 10,000 players.
The organized sector players supply the tread

material to the unorganized sector players,

who in turn re-tread the tyres.

Superior margins and capital

efficiency ratios
From 2005 onwards, ATL has shown a

consistent rise in its operating margins despite

an unfavorable raw material pricing scenario.
The premium pricing on some of its

established products coupled with tight control

on operating expenses, has enabled the
company to steadily increase its margins.
ROCE for 2007 at 17.1% is one of the best in

the industry despite continious expansions

undertaken.

The Road Ahead

Achieving a target of $2 billion sales in the next four

years.
To put that in perspective, the company would have to

treble its revenues over the next five years, meaning a

compounded annual growth rate of 25%.
The Rs 3,000-crore company can't achieve that kind of

topline from simple domestic operations, only through

tyres, or only through organic growth.
So, on the cards are ambitious plans involving exploring

newer export markets, acquisitions, penetrating the

passenger car tyres and venturing beyond tyres.

Contd.
By the end of 2011, Dunlop SA's revenues would

fully accrue to Apollo, which would take the

parent company past the billion dollar mark,
making it the largest Indian tyre company
At present the company is evaluating "more than

one" acquisition proposals across boundaries.

Contd.
Thrust on exports would be another focus area, since

in spite of the booming domestic auto market, it

would still not provide the required topline growth.
The company is developing passenger car radial

products - it has over 120 people at its R&D centre in

Baroda for the highly competitive European
market.
This move is significant, since most tyre exports out

of India, including Apollo's, are bias tyres, which

bring lower realisation. Developed markets have
moved entirely to new generation radials, which offer
better margins

Contd.
On offer for the domestic markets are tyres for

OTR (off-the-road) vehicles, technology for which

will come from Dunlop SA. The OTR market is
still small, about Rs 200 crore annually.
That covers inorganic, export growth, and

product expansion. But these still can't take the

company past the magic $2-billion mark.
Apollo has entered the tyre re-treading business

by launching re-treading material for commercial

vehicles (CV).

Contd.
Another new source of revenue would be from

tyre-plus' sources. The company is exploring a

retail strategy where it can claim a larger share
of the customer's wallet.
It has already launched alloy wheels for

passenger cars. Some more product launches

are expected in the near future.
Entering into the booming two- or three-

wheeler tyre segment, which is low-value, but

high-volume is also an area which the
company is intensely looking at.

Contd.
Apollo Tyres wants to focus on strengthening its

presence in the commercial vehicles segment. It

also expects to improve market share through
strategic alliances.
Apollo Tyres SA (previously Dunlop Tyres International),

today announced an investment of R300m in new

equipment and technology for the companys Durban
and Ladysmith manufacturing facilities over the next
three years.
Apollo Tyres SA (ATSA) is the local subsidiary of the

Apollo Tyres Group, based in India.

Contd.
This investment will make it possible for the

company to remain globally competitive and

reduce production costs.
Further the company has an aggressive future

growth plan for the African and Latin American

markets, and this investment will ensure that
there is additional capacity available ahead of
demand.

Contd.
As per reports, Apollo Tyres (South Africa) is planning

to create more than 100 new jobs, and is

aggressively implementing a Learnership Strategy to
up-skill Apollo Tyres South African workforce for the
future.
Apollo Tyres plans to reach 1450 tonne capacity in

2011.
The company has revealed its plans for expansions,

under which it will make net investments worth

Rs.1100 crore in the current fiscal.

Contd.
Under its future expansion plans, 200 tonnes

each would be added to the South African and

European plants, while Rs.900 crores would be
invested for the companys five domestic
plants.
The company will invest Rs.300 crore in its

Green field Chennai plant this year to make it

the most efficient, modern and productive tyre
plant across Asia.
The company would be investing 30 million

dollars at its South Africa plant and 6 million

euros for Europe plant.

Overall Analysis of Apollo Tyres

To become what it has today, Apollo tyres

followed an organic growth strategy that was

cautious yet aggressive.
Through timely acquisitions and expansion

Apollo tyres has been able to establish itself

as the No. 1 company in the Indian Tyre
industry.

Contd.
Apollos success owes largely to the fact that through

constant innovation it has pre empted the customer s

needs thereby creating a strong brand image for itself.
Apollos strategy is a wonderful example of how to

function in an industry heading towards maturity and

where competition is high.
Inspite of the constantly changing dynamics in the

industry Apollo has succeeded in not only maintaining

but constantly improving its market share. ATL has
also shown steady increase in its profitability whish
shows the success of its strategies.