Apollo tyres ...aj

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Apollo tyres ...aj

  1. 1. INTRODUCTION Apollo Tyres Ltd is the world's 17th biggest tyre manufacturer, with annual consolidated revenues of Rs 121.5 billion (US$ 2.5 billion) in 2011. It was founded in 1976. Its first plant was commissioned in Perambra, Kerala. The company now has four manufacturing units in India, one in South Africa, two in Zimbabwe and 1 in Netherlands.[14] It has a network of over 4,000 dealerships in India, of which over 2,500 are exclusive outlets. It gets 59% of its revenues from India, 28% from Europe and 13% from Africa.[4] Apollo tyres was awarded the FICCI award among large industries category for the best Quality systems. It is planning to become the 10th biggest tyre manufacturer in the world with annual revenues of $6 billion by 2016.[5] On 12 June 2013, it is reported that Apollo Tyres Ltd would buy US-based Cooper Tire & Rubber Company for about $2.5 billion in a deal that would make it the world's seventh-largest tyre maker. Apollo's cash offer of $35 per share represents a premium of about 43 percent to Cooper's share price on the New York Stock Exchange. Apollo Tyres, which does not currently operate in the United States, gets two-thirds of its revenue from India. The acquisition of Cooper, the world's 11th biggest tyre company by sales, will give Apollo access to the US market for replacement tyres for cars and light and medium trucks. The two companies had combined sales of $6.6 billion in 2012. COMPANY PROFILE Apollo Tyres Ltd is the leading tyre manufacturing company in India. They are 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. The company was incorporated on September 28, 1972. They started their production in the year 1977 at Perambra in Kerala. In the year 1991, the company commissioned their second plant at Limda in Gujarat. In the year 1995, they acquired Premier Tyres at Kalamassery in Kerala. In the year 1996, exclusive tubes plant commissioned in Ranjangoan in Maharashtra and in the year 2000, they established exclusive radial capacity in Limda. On Novermber 17, 2003, the company entered into an strategic alliance Michelin, France for setting up a joint venture company namely Michelin Apollo Tyres Pvt Ltd for producing dual branded truck & bus radial tyres in India. In the year 2004, they produced India's first H-speed rated tubeless passenger car radial tyres. Also they increased the production capacity of Automobile Tyres and Automobiles Tubes by 1283560 Nos and 414000 Nos respectively and in the next year, they further
  2. 2. increased the production capacity by 1466432 Nos and 1567200 Nos respectively. During the year 2005- 06, the company incorporated a wholly owned subsidiary company, Apollo (Mauritius) Holdings Pvt Ltd in Mauritius and they also formed Apollo Automotive Tyres Ltd and Apollo Radial Tyres Ltd as wholly owned subsidiaries of the company. In the same year, PTL Enterprises Ltd ceased to be a subsidiary company. Also, the company realigned their relationaship with Michelin and exited from the joint venture company Michelin Apollo Tyres (P) Ltd. The company increased the production capacity of Automobiles Tyres and Automobile Tubes by 1045632 Nos and 1379360 Nos respectively during the year 2005-06 and they further increased the production capaity by 888340 Nos and 218440 Nos during the next year. During the year 2007-08, they increased the production capacity of Automobile Tyres by 836620 Nos. Thus the total capacity for Automobile Tyres and Automobile Tubes increased to 9659232 Nos and 6741000 Nos. On April 21, 2006, the company acquired Dunlop Tyres International (Pty) Ltd, South Africa. During the year 2006-07, they increased the manyfacturing capacity of Camel Back/Pre Cured Tread Rubber by 217000 Nos to 220000 Nos and in the next year they further inceased to 248040 Nos. The company incorporated Apollo Tyres AG, Switzerland as a wholly owned subsidiary with effect for July 4, 2007. Also, two subsidiaries namely Apollo Automotive Tyres Ltd and Apollo Radical Tyres Ltd have been desubsidiarized with effect from December 21 2007. The company is in the process of setting up of a greenfield plant for the manufacture of radial tyres in Hungary with the estimated cost of Rs 12000 million. They are also in the process of setting up a manufacturinig facility for production of bias OTR tyres at Limda plant with the production capacity of 10 MT/day. The company has commenced the project activities of setting up a manufacturing base for production of 3.5 million passenger car tyres per year at Oragadam in Tamilnadu. In May 2008, the company opened their first full-services branded commercial vehicle tyre outlet called Apollo Trust in Salem, Tamilnadu. In Spetember 2008, Apollo Tyres launches XT-100K which is a cross-ply tyres designed for unmatched performances. COMPANY HISTORY 1976 Apollo Tyres was registered. 1977 1st plant established at Perambra, Kerala, India. 1991 2nd plant at Limda, Gujarat, India. 1994 Started selling tyres for 2-wheelers. 1995 3rd plant at Kalamassery, Kerala, India. 2006 Expanded operations outside India by acquiring Dunlop's Africa operations.[11] 2008 new plant at Chennai, Tamil Nadu, India. In 2009, Apollo Tyres acquired the Netherlands-based tyre maker Vredestein Banden B.V. (VBBV) for an undisclosed sum from Russia's bankrupt largest tyre manufacturer Amtel-Vredestein NV. 2013 Disposed of the Dunlop brand in Africa along with most of the South African operation in a sale to
  3. 3. Sumitomo Rubber Industries of Japan. 2013, Apollo is set to acquire the US based Cooper Tire & Rubber Co. which is expected to be completed at the end of the year. VISION To become a significant player in the global tyre indusrty. Become a brand of choice, providing customer delight and continuously enhancing stakeholder value. To be amongst the most admired companies in India, committed to excellence MISSION Be a Customer Obsessed Company - Customer First 24x7 No.1 Tyre Brand in India Most profitable Tyre Company in India Motivated and Committed team for excellence in performance Be a Green Company Deliver Enhanced Value to all stakeholders Enhance global presence through Acquisition / JV / Strategic Partnerships acquisition of Cooper, the world's 11th biggest tyre company by sales, will give Apollo access to the US market for replacement tyres for cars and light and medium trucks. The two companies had combined sale.
  4. 4. Apollo Tyres Ltd, with its corporate headquarters in Gurgaon, India, is in the business of manufacture and sale of tyres since its inception in 1972. Over the years, the company has grown manifold, establishing its footprint across the globe. The company has manufacturing presence in Asia, Europe and Africa, with 9 modern tyre facilities and exports to over 118 countries. Powered by its key brands — Apollo, Dunlop (brand rights for 32 African countries) and Vredestein, the company offers a comprehensive product portfolio spread across passenger car, light truck, truck-bus, off highway and bicycle tyres, retreading material and retreaded tyres. At the end of its financial year on March 31, 2012, Apollo Tyres had clocked a turnover of US$ 2.5 billion, backed by a global workforce of approximately 16000 employees. Apollo Tyres Ltd is traded in India on the Bombay, National and Kochi Stock Exchanges, with 53.06% of shares held by the public, government entities, banks and financial institutions as on June 30, 2012 Apollo Tyres Ltd is the world's 17th biggest tyre manufacturer, with annual consolidated revenues of Rs 121.5 billion (US$ 2.5 billion) in 2011. It was founded in 1976. Its first plant was commissioned in Perambra, Kerala. The company now has four manufacturing units in India, one in South Africa, two in Zimbabwe and 1 in Netherlands. It has a network of over 4,000 dealerships in India, of which over 2,500 are exclusive outlets. It gets 59% of its revenues from India, 28% from Europe and 13% from Africa.[4] Apollo tyres was awarded the FICCI award among large industries category for the best Quality systems. It is planning to become the 10th biggest tyre manufacturer in the world with annual revenues of $6 billion by 2016.[5] On 12 June 2013, it is reported that Apollo Tyres Ltd would buy US-based Cooper Tire & Rubber Company for about $2.5 billion in a deal that would make it the world's seventh-largest tyre maker. Apollo's cash offer of $35 per share represents a premium of about 43 percent to Cooper's share price on the New York Stock Exchange. Apollo Tyres, which does not currently operate in the United States, gets two-thirds of its revenue from India. The a s of $6.6 billion in 2012. Location Location Details - Apollo Tyres
  5. 5. Location Type Address Registered Office 6th Floor, Cherupushpam Building, Shanmugham Road Kochi - 682031 Kerala - India Phone : 2381902, 2381903, 2381808, 2372767 Fax : 2370351 Email : investors@apollotyres.com Internet : N.A. Factory/plant Perambra, P.O. Chalakudy Thrisoor - 680689 Kerala - India Phone : Fax : Email : N.A. Internet : N.A. Factory/plant Limda, Taluka Waghodia Vadodra District - 391760 Gujarat - India Phone : Fax : Email : N.A. Internet : N.A. Corporate Office Apollo House, 7, Institutional Area, Sector - 32 Gurgaon - 122001 Haryana - India Phone : 2383002-10 Fax : 2383351 Email : investors@apollotyres.com Internet : N.A. Factory/plant SIPCOT Industrial Growth Centre Oragadam - Tamil Nadu - India Phone : Fax :
  6. 6. Email : N.A. Internet : N.A. Product Portfolio Apollo Tyres Ltd. is engaged in manufacture of automobile tires, tubes and tire re-treading compound. The product portfolio of the Company consists of passenger car, sport utility vehicle (SUV), multi utility vehicle (MUV), light truck, truck-bus, agriculture, industrial, bicycle and off highway tires, retreading material and tires, and alloy wheels. Its brands in its domestic markets include Apollo in India, Dunlop in 32 African countries and Vredestein in Europe. The Company has four tire manufacturing plants, which include two in Cochin, one in Vadodara and one in Chennai. It has two main overseas subsidiaries: Apollo Tyres South Africa (Pty) Ltd., which has two tire manufacturing plants in South Africa and its products are sold in Africa and Europe, and Apollo Vredestein B.V., which has one manufacturing plant in Netherlands. During the fiscal year ended March 31, 2012, the Company launched Apollo Aspire 4G, Vredestein Ultrac Vorti & Sportrac 5 and XT-7 Gold+ tires Available for our customers is a range of tyres, which combines performance, safety and design. Tested and fine-tuned to meet varying vehicle and customer requirements, for different seasons. The Apollo experience is not just about buying quality tyres – it is best-in-class service, learning more about how to maximise your product’s performance and always finding a ready ear to hear your feedback. Brand Umbrella In 2009, Apollo acquired Dutch tyre maker Vredestein BV, which makes tyres for high-end cars at its facility in the Netherlands. While the buyout is officially complete, you may have to wait a few months before you can fit Dutch rubber on your car in India. Apollo has also set up an R&D facility in the Netherlands, to work on new tread patterns and rubber compounds to improve tyre performance and longevity. The centre will cater to all three brands under the umbrella – Apollo, Vredestein and Dunlop (Apollo acquired distribution rights for Dunlop in Africa in 2006
  7. 7. Apollo manufactures 70,000 car tyres and 15,000 truck tyres every day in its plants in India. Now, with three new additional brands, that number will only go north. Add the Vredestein name to the mix and it creates a company that will have tyres for everything from the Maruti Alto to the Audi R8. Going Dutch has probably never been this fruitful. Apollo, traditionally a truck tyre supplier, had recently entered the small car tyre market and is now expanding into tyres for luxury cars like the Audi A4, BMW 5 series and VW Passat, among others Apollo’s fourth generation of car tyres is repres-ented by three new brands – Aspire 4G, Alnac 4G and Amazer 4G, which should fit pretty much every size requirement you have. The Amazer 4G will fit small hatchbacks like the Maruti Alto, Tata Indica and VW Polo as well as compact sedans like the Maruti DZire, and will be available in sizes from 12 to 14 inches. It is T speed rated, meaning it should be safe up to 190kph. Apollo Tyres (NSE:APOLLOTYRE), one of India’s largest tire companies, sealed a deal on Wednesday to purchase North American Cooper Tire and Rubber Company (NYSE:CTB), The deal is for $2.5 billion in cash. The company currently produces the entire range of automotive tyres for ultra and high speed passenger cars, truck and bus, farm, Off-The-Road, industrial and specialty applications like mining, retreaded tyres and retreading material. These are produced across Apollo’s eight manufacturing locations in India, Netherlands and Southern Africa. A ninth facility is currently under construction in southern India, and is expected to commence production towards the end of 2009. The major brands produced across these locations are: Apollo, Dunlop, Kaizen, Maloya, Regal and Vredestein. Business markets In the three domestic markets of India, Southern Africa and Europe, Apollo operates through a network of branded, exclusive or multi-product outlets. In South Africa the branded outlets are called Dunlop Zones, while in India they are variously named 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. APLO.NS on National Stock Exchange of India
  8. 8. APLO.NS Apollo Tyres Ltd. is engaged in manufacture of automobile tires, tubes and tire re-treading compound. The product portfolio of the Company consists of passenger car, sport utility vehicle (SUV), multi utility vehicle (MUV), light truck, truck-bus, agriculture, industrial, bicycle and off highway tires, retreading material . OVERALL Beta: 1.36
  9. 9. Market Cap (Mil.): Rs32,333.19 Shares Outstanding (Mil.): 504.02 Dividend: 0.50 Yield (%): 0.78 FINANCIALS APLO.NS Industry Sector P/E (TTM): 5.05 8.41 15.32 EPS (TTM): 12.71 -- -- ROI: -- 10.60 15.27 ROE: -- 19.86 18.68 ROHIT PATHAK 12609004
  10. 10. Environmental Analysis STEEP Analysis This STEEP analysis provides concentrated information about Social, Technological, Economical, Ecological and Political aspects that effect Apollo tires directly or indirectly. Social Explosion in the number of nuclear families: As the joint-family system crumbles and the number of nuclear families explode, more small families seem to be demanding a two/four wheeler for themselves. This directly resulted in higher sales of tires in the past decade. Higher car density per family: The number of upper-class and upper-middle class families is more than one car per family, seems to be increasing exponentially. This is especially true in cities where Brand Strategy Analysis working couple find it difficult to survive without more than one car for transportation. With higher disposable incomes, these families are finally able to afford this need. Shifting Savings to EMI culture: Another notable trend that seems to be fuelling car sales (and therefore tire sales) is the shift in the middle-class consumer saving habits. The Indian middle-class family has long been known for its saving frenzy. But with a younger workforce, higher disposable incomes, lower unemployment and the influence of globalization, the average Indian middle-class family is slowly warming up the idea of EMI and buying on credit. This has helped in furthering the sales of passenger cars significantly. Rubber has helped the farmers to get a steady income, and they are able to get good money for their produce almost throughout the year. Rubber has certainly helped in giving the people a sustainable income, the best part about rubber is that it can yield almost throughout the year, only except for a brief gap in summer and here in winter. So, that gives a steady
  11. 11. income to the farmer and prices now are good. If the economic growth improves, then consumption of rubber will also go up. Products and services embossed with ISO certification give confidence to consumers, the manufacturers and exporters to comply fully with the prescribed standards. National standards play a vital role in the present era of World Trade Organization (WTO). India, Which is a signatory to the WTO Agreement on Technical Barriers to Trade, should harmonize Indian standards, wherever feasible, with global standards. The international standards gives manufacturers, confidence to reach out to the global markets with the knowledge that their products will compete globally and users can be confident and assured of the uniformity in the quality. Bureau of Indian Standards (BIS), the national standards body, has so far formulated over 18,600 Indian standards in accordance with the needs and priorities of the country. Technological The Indian tyre market has attracted global manufacturers on account of encouraging growth figures. These manufacturers are expected to invest huge amounts into the industry over the next few years, with a major proportion of this investment directed towards the Truck & Bus (T&B) radial tire capacity expansion. As per the study, several “Greenfield” plants are in pipeline to include new capacities. The implementation of brown-field projects is executed to cater to the growing demand. Greenfield units are expected to go on-stream in the coming years, just by the time when there will be an urgent need to bridge an increasing demand- supply gap in T&B radial tyre segment. India is known to be an appetizer of invention and implements new technologies and products, and tire industry is no exception to this. The concept of „green tires is becoming a‟ paradigm of the country’s competitive edge. This new category of tires is now being widely
  12. 12. accepted in India, and it is expected that in the coming years, the demand for green tyres will outperform the overall passenger tyre demand in the country. India’s market for radial tires in commercial vehicles section is still an infant. The passenger car segment switched to radial tires in a short period of time, with radial tire penetration level for the category reaching 98%. Besides, the penetration level of radial tire has also started to increase rapidly in the light commercial vehicles and truck & bus segment. This segment will be the largest growth area over the next few years. Economical The Demand Cycle of the Tire Industry There is a hike in the tire prices due to the devaluation in rupee. Around 15 % decline in rupee in the month of May and June has put pressure on the margins of tire companies as the raw material costs have gone up. Growth in M&HCV replacement demand is affected by a slower economic growth. Since there is a slowdown in demand the tyre giants are evaluating how much of the increase in cost can be passed on to the customers.
  13. 13. Raw materials comprise almost 85 % of the cost of the tire and with the devaluation of rupee, the import cost has gone up. The tire makers are still importing rubber, a key raw material, as It is cheaper. The OE tire market is sluggish while the replacement tire market is stable. The car sales are expected to pick up in the second half of the year provided the interest rates come down. In the current situation exports have become viable for the tire companies. The economic turmoil in Europe has not affected exports as the region is not a big buyer. Indian exports are made to South America and Africa for exports in a big way, The number of steel wheel outlets of JK Tires, which provide total car solutions to the customer, in the country will be raised from 131 to 200 by next year. A drop in passenger car sales is forcing tire makers to trim production or step up export to keep the inventory in check. Automobile companies have reported poor sales in the current quarter and there is speculation that demand will remain flat in the coming months with a soaring fuel bill and a rise in interest rates. There is a strong possibility of a cut in tire production if vehicle sales continue to be negative. Several car companies have already cut output due to a weak demand. Tire production went up by 5% in 2011-12 with passenger car tires showing a 4% growth. Sales in April were okay but have declined in May and June. While OEMs have scaled down their operations, the replacement tire market hasn't shown significant buoyancy. To avoid a cut in production, companies will consider raising the exports as the rupee-dollar rate favors shipments. Apollo Tires, which is not trimming production, is planning to export more. "Our units will continue to produce at near 100% capacity and we would utilize the extra capacity to service the demands of the replacement and export markets where we are unable to meet the
  14. 14. requirements due to capacity constraints," said Satish Sharma, chief of India Operations, Apollo Tires. The company, having a focused export strategy, clocked a 60% growth in exports in the last fiscal. Vikram Malhotra, vice president, marketing and sales of JK Tyres, said: "We think exports will provide us a window of opportunity to deal with excess production due to a sluggish demand in the domestic market." Rajiv Budhraja says the export strategy may work as tire companies are not dependent on Europe, which is facing a debt crisis. The tire industry is on a brink of a major structural change. T&B which is a dominant segment in terms of tonnage is witnessing a gradual rise in the proportion of radial tires. Going by the global trend it seems that the radial tire demand in India is at inflection point and with almost 98 per cent of the passenger car tire production has been radicalized, T&B tire category is the next major category to witness spurt in the demand for radial tires. And with improvement in road infrastructure and better cost economics the proportion of radial tires in T&B category is expected to expand by around seven times from the current levels. Sighting this opportunity, almost all the expansion plans for T&B category tires are for radial category tires. The sovereign debt crisis in Europe and lower off take by China have kept the global rubber prices depressed. In Indian market, the future contracts are showing a bearish phase. A weaker rupee may provide some relief as it will help boost tire exports. Total rubber exports Have risen around 180% to 12,219 tons for the five-month period ended August 2011. With international price remaining Rs 7 higher at Rs 225 per kg, rupee depreciation is expected to accelerate the trend. 2.1.4 Ecological In any type of rubber product manufacturing (including tires), the primary
  15. 15. environmental concerns are fugitive air emissions, solid wastes, wastewater, and hazardous2-6 wastes. Fugitive air emissions can be released from the compounding areas, where dry chemicals are weighed and put into containers prior to mixing. Most facilities have eliminated this problem, however, by purchasing their chemicals in small, pre-weighed, sealed polyethylene bags. Emissions are also generated from the rubber compounds themselves and from solvents that are added for cement, inks, and lubrication. Several other environmental concerns are also associated with rubber product manufacturing facilities. Solid waste is generated from the mixing, milling, calendaring, and extruding processes. Most of this solid waste is recycled or sold to companies who use the rubber for some other type of product. Waste water is generated from the cooling, heating, vulcanizing, and cleaning operations. Political While the Customs Duty rate on tires and the peak rate of Customs Duty on all non agricultural products were progressively reduced in the Union Budgets during the last few years, in the case of Natural Rubber the rate of 20% Customs Duty has remained unchanged for over a decade. This has resulted in a serious anomaly of Customs Duty on raw-material (Natural Rubber@20%) being higher than the Customs Duty on finished product (Tires @10%). FICCI in its pre-budget memorandum has said that it is imperative that customs duty of principal raw material of tire industry i.e. Natural Rubber is revisited and reduced from 20% to a suggested level of 7.5% to make duty paid imports viable. Or else, increase in Customs Duty on tires - from current 10% to suggested 20% to provide a level playing field to the domestic tire industry vies-a-vies cheaper tire imports.
  16. 16. FICCI has also given the following recommendations for the tire industry  FICCI would request for waiver of Customs Duty on all raw materials not manufactured domestically.  Appropriate clarification be issued to the effect that tubes and flaps are "inputs" being "accessories" for tires and thereby Rule 3(5) of the CENVAT Rules 2004 and Rule 16 of the Central Excise Rules 2002 are not applicable being revenue neutral.  To overcome problem with respect to exports of tubes / flaps, it is suggested to include  'Tire Manufacturer' as a class of Exporters under Rule 20 of Central Excise Rules to allow them procure tubes and flaps without payment of duty for exports. The tire industry has asked for duty free import of one lakh tones of natural rubber to bridge the gap between domestic production and consumption, in the pre-budget memorandum. Automotive Tire Manufacturers Association (ATMA) has also asked for waiver of customs duty on those raw materials that have no domestic production. These include butyle rubber, SBR (tire grade), EPDM and polyester tire cord. ATMA chairman Neeraj Kanwar said the tyre industry has passed through an extremely difficult phase of continuous increase in prices of rubber and other key raw materials. Since raw materials account for 70 % of industry turnover, the input cost pressure has resulted in severe erosion of net margins of tire industry. According to Kanwar, the tyre industry has pumped in an investment of over Rs 12,000 crore. All large tire companies have made substantial investments for new projects and expansion primarily in radial truck and passenger car tires. Tire companies are yet to buy a large chunk of 40,000 tons of rubber, the import of which has been sanctioned by the government. But imports look difficult now as international price trends are not favorable. According to Budhraja, it would have been viable if the companies
  17. 17. had shipped the material in March. Porter’s Five Forces Model
  18. 18. Issue Priority Matrix
  19. 19. Probable impact on cooperation HIGH MEDIUM LOW HIGH High priority  Price hikes  Customer demographics High priority  Competitive attributes  New entrants Medium priority  Product’s knowledge  Rubber ratio norms MEDIUM High priority  Copyright restrictions  Patent security Medium priority  Taxation norms  Environmental laws Low priority  Increase in total number of vehicles produced in a period LOW Medium priority  Authority stableness  Government issues Low priority  Skilled manpower  Educational levels Low priority  Change in standard of living  Societal changes
  20. 20. Industry matrix Key Success Factors Weight Apollo Tires Rating Apollo Tires Weighted Score MRF Ratin g MRF Weighted Score Ceat Ratin g Ceat Weighted Score Product quality 0.30 3.5 1.05 4.5 1.35 4 1.20 Marketin g 0.15 4 0.60 5 0.75 3 0.45 Wide product portfolio 0.10 3 0.30 4 0.40 2.5 0.25 Technolog y used 0.10 3.5 0.35 4 0.40 3 0.30 Product availabili ty 0.15 5 0.75 4 0.60 5 0.75 Strong supply chain partnersh ips 0.10 5 0.50 4 0.40 4.5 0.45 High returns for the suppliers 0.10 4 0.40 3 0.30 4 0.40
  21. 21. Total 1.0 3.95 4.20 3.80 The key success factors of Apollo Tires in the industry affect industry riva’s ability to expand in the competition, raw material availability, packaging, cost, marketing, product design, reputation & credibility, quality and others. These factors are very critical and all players like have to control over them. They change from time to time and affect the finances and the competition. The current industry matrix puts MRF at the top among others. Although the matrix is not exhaustive and does not include all market leading companies, it still shows where the gaps are and the critical success factors. MRF takes the lead because of high quality products and aggressive marketing, also the standards and technology used by MRF is superior than Apollo Tires or Ceat. Products availability is important factor, since even one miss pushes the customer to seek a different competitor. Apollo Tires, however is not far behind and can catch up in areas of technology and marketing. Factor Analysis
  22. 22.  Internal Factor Analysis Summary (IFAS) Internal Factors Weight Rating Weighted Score Comments Strengths 1. Wide product variety 0.15 3.5 0.525 Room to expand 2. Excellent geographical coverage 0.10 4.0 0.40 Market exploitation 3. Good financial position 0.10 4.0 0.40 Backing through funds 4. Good brand awareness 0.10 5.0 0.50 Effective brand building 5. Plenty number of dealerships 0.15 4.5 0.675 Strong network Weaknesses 1. Low presence in latest car models 0.15 3.0 0.45 Adaptation required 2. Low presence in two/three wheeler segment 0.10 3.5 0.35 Infrastructural boost needed; Integration 3. Brand yet to establish itself like the market leaders 0.15 2.5 0.375 Trust building should be the focus Total 1.00 3.675
  23. 23. External Factor Analysis Summary (EFAS) External Factors Weight Rating Weighted score Comments Opportunities 1. More tie-ups with Automobile cos. 0.15 4.5 0.675 Network building 2. Improved Infrastructure can enhance transportation 0.15 4.0 0.60 Greater and faster reach 3. Emergence of India as a hub for small car production 0.10 4.0 0.40 Market Potential 4. Emerging markets and improved lifestyle 0.05 3.5 0.175 Consumer tastes Threats 1. Price wars 0.20 3.0 0.60 Costs driven or benefit driven strategies 2. Stiff competition from national and international brands 0.15 2.5 0.375 Local producers should be competent 3. Cheaper technologies 0.10 3.5 0.35 Adaptation 4. Volatility in prices and Inventory
  24. 24. availability of raw material as India’s rubber production is less than its demand 0.05 3.0 0.15 issues shall be considered seriously 5. Government Policies w.r.t. export duties, import duties, tax levied 0.05 2.0 0.1 Lobbying and agency keeping costs and responsibilities Total 1.00 3.425  Strategic Factor Analysis Summary (SFAS) Strategic Factors Weights Ratings Weighted Score Short Interme-- diate o n g Comment S5. Plenty number of dealerships 0.15 5.0 0.75  Market reach is good S1. Wide product variety 0.10 4.0 0.40  More choices W1. Low presence in Technological enhancement
  25. 25. latest car models 0.10 3.0 0.30  W3. Brand yet to establish itself like the market leaders 0.10 3.5 0.35  Economies of scale not achieved O1. More tie- ups with Automobile cos. 0.15 4.5 0.675  Joint Ventures O2. Improved Infrastructur e can enhance transportatio n 0.10 4.0 0.40  Opportunity for growth T1. Price wars 0.20 3.5 0.70  Competition T2. Stiff competition from national and international brands 0.10 3.0 0.30  Domestic producers protection Total 1.00 3.875 Short Term The strategic factors that the company needs to satisfy in the short run are ‘Low presence in latest car models’ and ‘Price wars’ as it can change by manufacturing technologically
  26. 26. competent tires which suit the new models of cars at their new projects. This will also benefit in global expansion of the company. As short term defines a period of a year or so, the solution should be found within a year for a proper success. Intermediate Term The strategic factors that the company needs to consider during this term are ‘Brand yet to establish itself like the market leaders’ and ‘Improved Infrastructure’. These are classified into intermediate duration because the company must be able to overcome its weaknesses, make use of the opportunities and defeat the threats. All this must be done at the right time to ensure efficient results. In this case the factors are such that the earliest (short term) might not be the best decision to make, as the duration might not be sufficient to overcome all the issues with a clear outlay. Long Term The strategic factors that the company needs to satisfy during this period are the strength of having a ‘Wide range of products’, ‘Plenty number of dealerships’, ‘More tie-ups with Automobile cos.’, ‘Stiff competition from national and international brands’. They must be able to continue to maintain many products varieties and build on them efficiently. Using R & D (Research and Development) to overcome the problem of pasteurization as well as satisfying growing global demand is not an easy task and hence requires time and efficiency to meet the needs globally. Last but not least is overcoming the threat of competitors in the long run. SWOT ANALYSIS :- 1. Strength :-  Wide product variety .  Excellent Geographical coverage across Asian, European and African markets.  Good financial position.  Good Brand awareness about the product.  Has manufacturing plants at India, SA, Zimbabwe and Netherlands.  Over 4000 dealerships in India, and over 900 in South Africa.
  27. 27. 2. Weakness:-  Low presence in latest car models.  Low presence in two/three wheeler segment.  Brand yet to establish itself like the market leaders. 3. Opportunities:-  More tie-ups with Automobile companies as it’s mainly into B2B market.  Improved Infrastructure has fuelled more and more transportation.  Emergence of India as a hub for small car production.  Emerging markets and improved lifestyle. 4. Threats:-  Price wars.  Stiff competition from national and international brands.  Cheaper technologies.  Volatility in prices and availability of raw material as india’s rubber production is less than its demand.
  28. 28.  Government Policies w.r.t export duties, import duties, tax levied on automobile industries and economic condition of nation as it determines the sale of automobiles. CORPORATE STRATEGY :-  The strategic factor that the company satisfies is the strength of having a wide range of products. They must be able to continue to maintain many products varieties and build on them efficiently. Using R & D to overcome the problem of pasteurization as well as satisfying growing global demand is not an easy task and hence requires time and efficiency to meet the needs globally. Last but not least is overcoming the threat of competitors in the long run.  Apollo Tyres Ltd, with its corporate headquarters in Gurgaon, India, is in the business of manufacture and sale of tyres since its inception in 1972. Over the years, the company has grown manifold, establishing its footprint across the globe.  The company has manufacturing presence in Asia, Europe and Africa, with 9 modern tyre facilities and exports to over 118 countries. Powered by its key brands — Apollo, Dunlop (brand rights for 32 African countries) and Vredestein, the company offers a comprehensive product portfolio spread across passenger car, light truck, truck-bus, off highway and bicycle tyres, retreading material and retreaded tyres.  At the end of its financial year on March 31, 2012, Apollo Tyres had clocked a turnover of US$ 2.5 billion, backed by a global workforce of approximately 16000 employees.Apollo Tyres Ltd is traded in India on the Bombay, National and Kochi Stock Exchanges, with 53.06% of shares held by the public, government entities, banks and financial institutions as on June 30, 2012.  Neeraj clarified that the acquisition was a de-risking strategy by which Apollo would get access to the world's biggest auto market today, the US, as well as what was likely to be the biggest in the future - China. Explaining the contours of the all cash deal, Neeraj said Apollo India, the parent company, would take on a debt burden of only $450 million. The rest, $2.1 billion, will be taken by the new holding company. OPERATIONAL STRATEGY :-
  29. 29. Marketing strategy-  Apollo Tyres has plans on increasing their market share significantly in the passenger vehicle segment in India with the launch of the 4G range of tyres. The company also has ambitious plans to be a strong contender in the global markets as well. Reiterating their focus on the passenger vehicle tyre segment, Apollo has introduced the 4G range of tyres for the market. The range includes the Aspire 4G, Alnac 4G and Amazer 4G, and according to Apollo these tyres boast of being derived from the highest technology and designed for the new age Indian motorist.  Apollo Tyres is the largest producer of passenger vehicle tyres in India with a capacity of 35000 tyres per day. In the last one year, the company has managed to increase their market share in the replacement tyre market from 13.5 per cent to 16 per cent. With the addition of these three new tyres aimed at a wider market ranging all the way from the Maruti Suzuki Alto to the Audi A4, Apollo is definitely looking at a larger share of the passenger tyre pie. FINANCE STRATEGY:- The company recorded revenues of INR88,677.2- million ($1,933.2 million) in the financial year ended March 2011 (FY2011), an increase of 9.2% over FY2010. The operating profit of the company was INR2,323.4- - million ($50.6 million) in FY2011, a decrease of 74.8% compared to FY2010. The net profit was INR4,401.6 million ($96 million) in FY2011, a decrease of 32.6% compared to FY2010. - Revenues excludes other non operating incomes. - - Operating income is calculated by subtracting only the operating expenses including manufacturing and other expenses and depreciation. Reasons to Purchase:  Gain understanding of Apollo Tyres, Ltd. and the factors that influence its strategies.  Track strategic initiatives of the company and latest corporate news and actions.  Assess Apollo Tyres, Ltd. as a prospective partner, vendor or supplier.  Support sales activities by understanding your customers' businesses better.  Stay up to date on Apollo Tyres, Ltd.’s business structure, strategy and prospects.
  30. 30. HUMAN RESOURCE STRATEGY :-  Human Resources ,the responsibility of developing robust ,human resource management systems and on Tapan Mitra's able shoulders. He has been instrumental in establishing a best‐in‐class performance management system, leadership Development programmes, market‐driven compensation structures and a host of employee welfare and engagement activities at Apollo. People integration, especially in cases of mergers &acquisitions, is his area of excellence.  A member of the Company’s Management Board, his guidance has empowered Apollo to move to the next level of performance. Tapan joined Apollo in 2005 and is credited with introducing initiatives which led to Apollo Tyres being ranked among the Top 20 Employers in India in a recent survey. A Gold Medalist from the University of Delhi, India, and a National Scholarship holder, Mitra has a post graduate degree in Sociology From Delhi School of Economics. He is actively associated with various Human Resources platforms at the National and International levels.
  31. 31. TOWS ANALYSIS Internal factors External Factors Strengths Wide product variety. Excellent Geographical coverage across Asian, European and African markets. Good financial position. Good Brand awareness about the product. weaknesses Low presence in latest car models. Low presence in two/three wheeler segment. Brand yet to establish itself like the market leaders.
  32. 32. Opportunities More tie‐ups with automobile companies as it’s mainly into B2B market. Improved Infrastructure has fuelled more and more transportation. Emergence of India as a hub for small car production. Emerging markets and improved lifestyle. SO strategy Because of having wide range of product line they have more market share. Growing financial position helps in improving networks and transportation. WO strategies Many automobile company’s introduced latest models as they lack in this part they can enhance their technologies by networks channels. Still this brand has to compete with market leaders of automobiles, so that they will be able to capture new markets. Threats Price wars. Stiff competition from national and international brands. Cheaper technologies. Volatility in prices and availability of raw material as india’s rubber production is less than its demand. Government Policies w.r.t export duties, import duties, tax levied on automobile ST strategies Good financial position but they have to compete with national and international brands. They have big product variety but there is heavy competition of price and per capita income. WT strategies Government policies plays crucial role as it more depends on their policies what would be the sales in future.
  33. 33. industries and economic condition of nation as it determines the sale of automobiles.

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