The document provides an overview of the Indian tyre industry. It discusses the origins and growth of the industry since 1926. It notes that the industry now employs nearly 1 million people directly and indirectly. The industry is dominated by large organized players but the unorganized sector remains significant for bicycle tires. The document also outlines some key trends, segments, demand drivers, exports, concerns and opportunities for the Indian tire industry.

1. By
Ankush Roy (13068)
Dipankar Patir (13074)
Evangeline K. Jyrwa (13076)
Saurabh Agarwal (13102)
Soupa Soundararajan ( 13109)
Gaurav Arora (13118)

2. 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.

3. 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.

4. 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.

5. 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, world-wide, 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

6. 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.) 971 Lacs
 Tyre Export from India (Value) : Rs. 3000 crores
 Number of tyre companies: 36
 Industry Concentration 10 Large tyre companies account for over
95% of total tyre production.

8. 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.

9. 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

10. 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.

11. 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.

12. 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

13. 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.

14. 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.

15. 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.

16. 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.

17. 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

18. 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

19. 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.

20. 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.

21. 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.

22. BANGKOK AGREEMENT/RTA- INCLUSION 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.

23. 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.

24. 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.

25. 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.

26. 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

27. Segments of Tyre industry
Markets
Design
 Original Equipment
Manufacturers (OEMs)
 Replacement Demand
 Exports
 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

28. Tyre Industry
Passenger
vehicles
Commercial
vehicles
Others
MHCV HCV LCV Farm
vehicles
OTR
Industrial
vehicles
Cars
Motor
Cycles
Scooters
Segments according to vehicle categories

29. Demand for tyres
Type: Bus and Truck; Scooter;
Motorcycle; Passenger Car; Tractor
Market: OEM;
Replacement; Export
62%
24%
14%
Sales Segments
Replacement OEM's Exports
65%
21%
2%
7%
5%
Category Wise
Truck/Bus Passenger Car
Jeep LCV
Tractor

31. 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

32. 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

33. 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

34. 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.
 Cyclical nature of automobile industry

35. 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.

36.  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.

37.  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.

38. 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.

39. Porter’s 5 forces with
respect to tyre industry

40. 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.

41. 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.

42. Apollo Tyres was established in 1976 in the
natural rubber growing state of Kerala in
southern India.
The 1st manufacturing facility in Perambra
began with a capacity of 40 tonnes a day.
Since its early days, Apollo has been driving
growth in the Indian and global tyre
industry.
A leader across all key tyre segments
with eight tyre manufacturing facilities
spread across three continents.
Largest CV tyre manufacturer in India.

43. 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

44. Apollo tyres share holding

45. Apollo Tyres
BSE Sensex

46. 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
Earning Per
Share (Rs)
20.39 24.44 4.49 2.15 8.23
Equity Dividend
(%)
45.00 45.00 50.00 45.00 75.00
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.

48. Topline Growth: CAGR of 32%
26
43 47 50
80
0
10
20
30
40
50
60
70
80
90
FY 06 FY 07 FY 08 FY 09 FY 10
Turnover (Rs. Billion)
Turnover (Rs. Billion)

49. 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.

50. 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.

51. 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%.

52. 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.

53. 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.

54. 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.

55. 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.

56. 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

57. Competitor Analysis along with
Market Share figures
Sales
MRF
Apollo
JK Tyre
Ceat
Others
22% 21%
18%
13%
26%

58. 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
MRF 20.00 20.00 20.00 25.00
CEAT -- 1.80 4.00 -- 4.00
JK Tyres 2.50 2.70 2.70 3.50
Goodyear 5.00 6.00 6.00
Net operating profit per share
Company Mar '06 Mar ‘07 Mar '08 Mar '09 Mar ‘10
Apollo Tyres 683.33 709.22 75.87 81.16 100.11
MRF 8,834.15 10,398.66 11,932.66 13,391.60
CEAT 384.07 468.65 682.20 738.67 822.49
JK Tyres 840.98 907.65 1,201.70 895.56
Goodyear 369.05 386.66 399.93

59. 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

60. Return on capital employed
Company Mar ‘06 Mar ‘07 Mar ‘08 Mar ‘09 Mar ‘10
Apollo
TYRES
2.97 3.42 5.89 2.63 8.19
MRF 2.13 3.89 2.80 4.50
CEAT 0.02 1.82 6.32 -0.62 5.66
JK TYRES 0.65 2.37 0.38 4.42
Good YEAR 5.24 4.48 3.47
Profitability Ratio
Net Profit Margin
Company Mar ‘06 Mar ‘07 Mar ‘08 Mar ‘09 Mar ‘10
Apollo
TYRES
12.19 17.44 24.60 13.02 24.99
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
Good year 36.96 47.01 30.69

61. 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

62. Debt Equity Ratio
Company Mar ‘06 Mar ‘07 Mar ‘08 Mar ‘09 Mar ‘10
Apollo tyres 0.96 0.83 0.99 1.15 0.95
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
Liquidity and Solvency ratio
Current Ratio
Company Mar ’06 Mar ’07 Mar ’08 Mar’09 Mar ‘10
Apollo
Tyres
1.19 0.64 0.38 0.51 0.66
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
Good Year 0.48 -- --

63. 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.

64. Debt Coverage Ratio
Interest Coverage
Company Mar ’06 Mar ’07 Mar ’08 Mar ’09 Mar ‘10
Apollo
TYRE
3.20 4.04 7.51 3.67 8.80
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 19.58
Interest Coverage – Good Year has witnessed the
highest increase in Interest Cover over the years,
whereas Apollo has maintained a steady increase.

65. Debtors Turnover Ratio
Company Mar ’06 Mar ’07 Mar ’08 Mar ’09 Mar ‘10
Apollo
TYRE
15.80 17.40 20.69 33.75 44.89
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 YEAR 8.27 7.53 8.04
I
Management Efficiency Ratio
Inventory Turnover Ratio
I
Company Mar ’06 Mar ’07 Mar ’08 Mar ’09 Mar ‘10
Apollo
TYRE
6.26 7.33 8.72 11.77 10.47
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
Good YEAR 18.18 18.23 16.47

66. Asset Turnover Ratio
Company Mar ’06 Mar ’07 Mar ’08 Mar ’09 Mar ‘10
Apollo
TYRE
2.02 2.22 2.38 2.24 2.10
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

67. 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 it’s assets.

68. Dividend Payout Ratio
Net Profit
Company 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 55.89 35.16
Cash Flow Indicators Ratios
Cash Earning retention Ratio
Company 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
JK TYRES 51.49 14.58 68.08 10.25
Good YEAR

69. Operations:
Manufacturing Facilities
India
• Apollo’s largest unit is in
Limda, in the western
Indian state of Gujarat.
• Two other units are
located in the southern
Indian rubber-
producing state of
Kerala. These 3 together
have a combined
production of around
850 tonnes a day.
• A greenfield
manufacturing unit in
Chennai, Tamil Nadu,
with an initial capacity
of 213 tonnes is under
construction.
South Africa
• The Ladysmith and
Durban plants account
for a combined capacity
of around 180 tonnes.
Netherlands
• The Enschede plant in
the Netherlands adds
another 150 tonnes a
day. Taking current
production capacity to
around 1350 metric
tonnes a day

70. Global Business Partners For
Raw Materials
Steel wire: Bekaert,
Belgium
Silica: Degussa A G,
Germany
Process Aids: Flexsys,
The Netherlands
Carbon Black:
Hi‐Tech Carbon, India
Polyester & Rayon:
Performance Fibres,
USA

71. Global Business Partners For
Product Testing
IDIADA, Spain
Nardo, Italy
for
4x4 tyres
NATC, USA for
Kinematics Studies
Papenburg, Germany
for Ultra High
Performance tyres
VRDE,
Ahmednagar
India

72. Automotive manufactures as
business partners

73. HOME MARKETS
Zone
I
Zone
E
Zone
A
•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

74. 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

75. 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

76. 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

77. 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 North
America
Sales & Marketing offices in 17 European countries

78. 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

79. 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
•Sales Offices spread across southern Africa

80. HIGHLIGHTS FY10
ZONE A
 Launched the next generation of truck‐bus 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

81. 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%

82. Apollo tyres sales segment wise

83. Revenue segmentation

84. Passenger Car
Apollo
Dunlop*
Vredestein
4x4
Apollo
Dunlop*
Vredestein
Light Truck
Apollo
Dunlop*
Truck/Bus
Apollo
Dunlop
*
Bicycle Agriculture
Off The Road
&Earthmover Specialty
Vredestein Apollo
Dunlop*
Vredestein
Apollo
Dunlop*
Apollo
Vredestein
PRODUCT PORTFOLIO
* The Dunlop marks are licensed to Apollo Tyres South Africa which is the
wholly‐owned subsidiary of Apollo Tyres Ltd in 32 African countries.

86. 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

87.  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

88.  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; SL01-LUG; SL02-
LUG

89.  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.

90. As a strategy to re-enforce the 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

91. 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

92. Apollo Tyres
The Journey so Far..
Apollo Tyres
The Journey so Far..

93.  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.

94. 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.

95.  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.

96.  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.

97.  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.
 This is a 50:50 joint venture between Apollo and Continental.
Contd.

98.  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.

99.  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. became a subsidiary of the
company.
Contd.

100.  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.

101.  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.

102.  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.

103.  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
Contd.

104. 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.

105. 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.

106. 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.

107. 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.

108. 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.

109. 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 in-house 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.

110. 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.

111. 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.

112. 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.

113. 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 world’s five
best tyre companies, they coined the strategy
termed ‘Passion in Motion’ which rested on the
three pillars of people, technology & Quality.

114. 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

115. 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.

116. 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.

117.  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.
Contd.

118. 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
Apollo’s journey to use IT to drive business.

119.  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.
Contd.

120. IT enabled Apollo to reduce its
time-to-market
 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.

121.  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.

122.  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
Contd.

123. Other benefits and impact on SCM
 Alignment with their OEM (Original Equipment
Manufacturer) partners.
 SCM (supply chain management) : ATL’s
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.

124.  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.

125.  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 ATL’s
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.
Contd.

126. Brand Portfolio
Global brand catering to
vehicles
across categories
Global niche brand for passenger car
& specialty tyres

127. 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 company’s
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.

128. Market leader in commercial
vehicle segment
 ATL’s 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 India’s tyre
industry) with a market share of 27% and 28%
respectively, in volume terms.
 The company’s 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.

129. 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%.

130. 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.

131.  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-high-
performance tyre, available only for V-rated fitments
and higher speed ratings.
 It is possible that Vredestein will appear as OE but not
on mass-production vehicles.
Contd.

132.  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 mid-range brand than either of
its two main brands. Nevertheless, it will also become
a global brand.
Contd.

133.  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.

134.  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.

135.  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.

136.  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.

137.  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 Apollo-branded 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 Y-rated winter
tyre available in the European market.
Contd.

138.  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.
Contd.

139. 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.

140.  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.
Contd.

141. 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.

142.  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.
Contd.

143. 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.

144. Mergers & Acquisitions
In May 2009, Apollo acquired Apollo
Vredestein BV (originally Vredestein
Banden BV) in the Netherlands, producer
of niche high end passenger car and
specialty tyres with an extensive network
across Europe.
In April 2006, Apollo Tyres acquired Apollo
Tyres South Africa (Pty) Ltd (originally
Dunlop Tyres International (Pty) Ltd),
manufacturer of tyres across automotive
segments, brand rights to 32 African
countries, 3 tyre manufacturing units and a
retreading unit in South Africa and
Zimbabwe

145. 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.

146.  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-the-road segment), a
strong brand name (Apollo can use the Dunlop brand
name in 33 English-speaking African nations) and a
distribution network.
Contd.

147. 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.

148.  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.
Contd.

149. 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

150.  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.

151.  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.

152. 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.

153.  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 production-driven
company to a market-driven company.”
Contd.

154. 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.

155.  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.
Contd.

156. 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.

157. 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.

158. 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.

159. 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.

161. 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.

162. 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.

163.  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 price-maker 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.
Contd.

164. 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.

165. 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.
MRF’s diverse business interests also include Paint and
Coats, and Toys.

166. Analysis of MRF’s 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 dealers.

167. 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 MRF’s favor.

168. 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)

169. 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.

170. Contd.
 Funskool Indis, a Joint venture between Hasbro and
MRF, is a major toy manufacturing 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
cricket through 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.

171. 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”

172. 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.

173. 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.

174. Goodyear’s 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.

175. 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.

176. 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.

177. 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.

178. 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.

179. Overall Analysis of Goodyear’s
Strategies
 As we track the company’s 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.

180. 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.

181. 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 firm’s product
 Finding market niches:
Price, service, convenience and technology are some
of the niches in Indian market.

182. Contd.
 Product and service planning:
Analysis of the customer’s 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.

183. 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.

184. 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.

185. 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 2-wheeler
tyres more than 20 years ago.
 As part of company’s 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

186. 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

187. 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

188. 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.

189. 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 segment
and plans to add 55 lakh tyres.

190. Contd.
 Out of this, 5 lakh tyres will be produced at the company’s
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 company’s 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.

191. Overall Analysis of Strategies
followed by JK Tyres
 The growth of JK Tyres can be attributed to the
company’s 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.

192. 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

193. 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.

194. 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.

195. 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.

196. 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.

197. 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.

198. 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.

199. 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-À-vis last year,
better working capital management and lower interest
payments

200. 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.

201. 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 end-to-
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 fully-owned
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.

202. 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 two-wheeler 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.

203. Overall Analysis Of CEAT’s 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.
 CEAT’s 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 CEAT’s
success over the years.

205. 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.

206. 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.

207. 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.
 Apollo’s 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.

208. 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.
 ATL’s continued focus on exports has enabled certain
amount of de-risking against domestic demand slowdown.

209. 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.

210. 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.

211. 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.

212.  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.
Contd.

213. 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.

214. 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.

215.  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.

216.  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.

217.  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.

218.  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.

219.  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 company’s 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.

220.  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.

221.  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.

222.  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
company’s 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.
Contd.

223. 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.

224.  Apollo’s 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.
 Apollo’s 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.
Contd.