MIRA
INFORM REPORT
|
Report Date : |
11.04.2012 |
IDENTIFICATION DETAILS
|
Name : |
APOLLO TYRES LIMITED |
|
|
|
|
Registered
Office : |
6th Floor, |
|
|
|
|
Country : |
|
|
|
|
|
Financials (as
on) : |
31.03.2011 |
|
|
|
|
Date of
Incorporation : |
28.09.1972 |
|
|
|
|
Com. Reg. No.: |
09-2449 |
|
|
|
|
Capital
Investment / Paid-up Capital : |
Rs.504.090
Millions |
|
|
|
|
CIN No.: [Company Identification
No.] |
L25111KL1972PLC002449 |
|
|
|
|
TAN No.: [Tax Deduction &
Collection Account No.] |
CHNA01479C |
|
|
|
|
PAN No.: [Permanent Account No.] |
AAACA6990Q |
|
|
|
|
Legal Form : |
A Public Limited Liability Company. The Company’s Shares are Listed on
the Stock Exchange. |
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|
|
|
Line of Business
: |
Manufacturing of Automobile Tyres,
Automobile Tubes, Automobile Flaps and Camel Black/ Rethreading Materials. |
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|
|
|
No. of Employees
: |
5257 Approximately |
RATING & COMMENTS
|
MIRA’s Rating : |
Aa (73) |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
Maximum Credit Limit : |
USD 76000000 |
|
|
|
|
Status : |
Good |
|
|
|
|
Payment Behaviour : |
Regular |
|
|
|
|
Litigation : |
Exists |
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|
|
|
Comments : |
Subject is a well established company having good track. Financial position
of the company appears to be sound. Directors are reported to be experienced
and respectable businessmen. Trade relations are fair. Business is active.
Payments are reported to be regular and as per commitments. The company can be considered good for normal business dealings at
usual trade terms and conditions. It can be regarded as a promising business partner in medium to long
run. |
NOTES:
Any query related to this report can be made
on e-mail: infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – September 30, 2011
|
Country Name |
Previous Rating (30.06.2011) |
Current Rating (30.09.2011) |
|
|
A1 |
A1 |
|
|
|
|
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
|
Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
|
Restricted |
C2 |
|
Off-credit |
D |
LOCATIONS
|
Registered Office : |
6th
Floor, |
|
Tel. No.: |
91-484-22381902
to 03/ 22381895/ 22381808/ 22381895/22372767/ 22370780 |
|
Fax No.: |
91-484-22370351 |
|
E-Mail : |
|
|
Website : |
|
|
|
|
|
Head/
Corporate Office : |
Apollo House, 7,
Institutional Area, Sector 32, Gurgaon - 122001, |
|
Tel. No.: |
91-124-6383002 to
18/ 2721000 |
|
Fax No.: |
91-124-6383017 /
3021 |
|
E-Mail : |
|
|
|
|
|
Factory 1: |
Perambra Plant P.O Perambra Thrissur, District Kerala -
680689, |
|
Tel. No.: |
91-480-2725901 to 09 |
|
|
|
|
Factory 2: |
Limda Plant Premier Tyres Limited, Kalamassery Always, Ernakulam (Kerala) – 683104, |
|
Tel. No.: |
91-484-2540261 to 66 |
|
|
|
|
Factory 3: |
Pune Plant Plot A-1, |
|
Tel. No.: |
91-2138-232287 to 90 |
|
|
|
|
Branch Office
: |
4th
Floor, 60 Skylark Building, |
|
Tel. No.: |
91-11-2643 1005 |
|
Fax No.: |
91-11-2647 1283 |
|
|
|
|
Overseas
Office : |
Located at: ·
·
·
|
DIRECTORS
(AS ON 31.03.2011)
|
Name: |
Mr. Onkar S. Kanwar |
|
Designation: |
Chairman and
Managing Director |
|
Age: |
57 years |
|
Qualification: |
B.Sc., Bachelor
of Administration ( |
|
Date of
Joining: |
1st February,
1988 |
|
Previous
Employment: |
BST Manufacturing
Limited |
|
|
|
|
Name : |
Mr. Arun Kumar Purwar |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. K. Jacob
Thomas |
|
Designation : |
Managing
Director, Vaniamapara Rubber Company Limited |
|
|
|
|
Name : |
Mr. Neeraj Kanwar |
|
Designation : |
Vice Chairman and
Managing Director |
|
|
|
|
Name : |
Mr. Nimesh N. Kampani |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Raaja Kanwar |
|
Designation : |
Managing Director,
Apollo international Limited |
|
|
|
|
Name : |
Mr. Robert
Steinmetz |
|
Designation : |
Formal Chief of
international Business Continental Ag |
|
|
|
|
Name : |
Mr. K Jose Cyriac |
|
Designation : |
Director (Kerala Government Nominee) |
|
|
|
|
Name : |
Mr. U. S. Oberoi |
|
Designation : |
Chief (Project
and Corp. Affairs) and Whole Time Director |
|
|
|
|
Name : |
Mr. Machael J. Hankison |
|
Designation : |
Chairman, The
Spar Group Limited, |
KEY EXECUTIVES
|
Name : |
Mrs. Suman Sarkar |
|
Designation : |
Chief Financial
Officer |
|
|
|
|
Name : |
Mr. Shardul S. Shroff |
|
Designation : |
Senior Partner, Amarchand and Mangaldas and
Suresh A Shroff
and Company |
|
|
|
|
Name : |
Dr. S. Narayan |
|
Designation : |
Former principal Secretary to the prime minister of |
|
|
|
|
Name: |
Mr. T. Balakrishna |
|
Designation: |
Principal Secretary, industries Government of Kerala
|
|
|
|
|
Name : |
Mr. P. N. Wahal |
|
Designation : |
Head –
Secretarial and Company Secretary |
|
|
|
|
Name : |
Mr. P. Prabakaran |
|
Designation : |
Additional Chief Secretary Finance Government of Kerala
|
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
(AS ON 31.12.2011)
|
Category of Shareholders |
No. of Shares |
Percentage of
Holding |
|
|
|
|
|
(A) Shareholding
of Promoter and Promoter Group |
|
|
|
|
|
|
|
|
5,330,791 |
1.06 |
|
|
226,496,504 |
44.94 |
|
|
231,827,295 |
46.00 |
|
|
|
|
|
|
|
|
|
|
1,977,000 |
0.39 |
|
|
1,977,000 |
0.39 |
|
|
|
|
|
Total
shareholding of Promoter and Promoter Group (A) |
233,804,295 |
46.39 |
|
|
|
|
|
(B) Public
Shareholding |
|
|
|
|
|
|
|
|
47,861,467 |
9.50 |
|
|
1,617,555 |
0.32 |
|
|
10,000,000 |
1.98 |
|
|
2,520,745 |
0.50 |
|
|
113,787,910 |
22.58 |
|
|
175,787,677 |
34.88 |
|
|
|
|
|
|
|
|
|
|
37,380,431 |
7.42 |
|
|
|
|
|
|
|
|
|
|
52,859,751 |
10.49 |
|
|
549,429 |
0.11 |
|
|
3,643,187 |
0.72 |
|
|
3,500 |
- |
|
|
2,920,762 |
0.58 |
|
|
717,925 |
0.14 |
|
|
1,000 |
- |
|
|
94,432,798 |
18.74 |
|
|
|
|
|
Total Public shareholding
(B) |
270,220,475 |
53.61 |
|
|
|
|
|
Total (A)+(B) |
504,024,770 |
100.00 |
|
|
|
|
|
(C) Shares held
by Custodians and against which Depository Receipts have been issued |
- |
- |
|
|
- |
- |
|
|
- |
- |
|
|
- |
- |
|
|
|
|
|
Total
(A)+(B)+(C) |
504,024,770 |
- |
(1) Indian
Individuals / Hindu Undivided Family
Individual shareholders holding nominal
share capital up to Rs.0.100 Million BUSINESS DETAILS
|
Line of Business : |
Manufacturing of Automobile Tyres,
Automobile Tubes, Automobile Flaps and Camel Black/Rethreading Materials. |
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|
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|
Products : |
·
Truck ·
Light Truck ·
Passenger Car ·
Farm |
PRODUCTION STATUS (AS ON 31.03.2011)
|
Particulars |
Unit |
Installed Capacity* |
Actual Production@ |
|
|
|
|
|
|
Automobile Tyres |
Nos. |
15260280 |
12311542 |
|
Automobile Tubes |
Nos. |
- |
7390015 |
|
Automobile Flaps |
Nos. |
- |
4294937 |
|
Others |
Nos. |
344256 |
280941 |
* As certified by Management (Includes
capacity under lease agreement)
@ Includes production under Lease Arrangement
and purchases/ conversion of finished Goods by conversion Agents as per details
given hereunder:
|
Particulars |
2010-11 Nos. |
|
|
|
|
Tyres |
275238 |
|
Tubes |
7390015 |
|
Flaps |
4294937 |
|
Others |
280941 |
GENERAL INFORMATION
|
No. of Employees : |
5257 Approximately |
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|
Bankers : |
· State Bank of India · Bank of India · Union Bank of India · Canara Bank · State Bank of Patiala · State Bank of Mysore · ICICI Bank · Axis Bank · IDBI Bank · Standard Chartered Bank · BNP Paribas · Punjab National Bank · State Bank of Travancore · Yes Bank Limited · Dhanlaxmi Bank · HSBC Bank · DBS Bank · Credit Agricole Corporate and Investment Bank (Calyon) · Kotak Mahindra Bank · Bank of Nova Scotia · Deutsche Bank |
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Facilities : |
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Banking
Relations : |
-- |
|
|
|
|
Auditors : |
|
|
Name : |
Deloitte Haskins and Sells Chartered Accountants |
|
Address : |
Chennai, Tamilnadu, India |
|
|
|
|
Cost Auditors : |
N P Gopalakrishnan and Company Cost Accountants |
|
|
|
|
Associates : |
·
Apollo International Limited (AIL) ·
Apollo International Trading LLC, Middle East ·
Encorp E Services
Limited ·
UFO Moviez India
Limited ·
Landmark Farms and Housing (Private) Limited ·
Sunlife Tradelinks (Private) Limited ·
Travel Tracks (Private) Limited ·
Dusk Valley Technologies Limited ·
Classic Auto Tubes Limited (CATL) ·
PTL Enterprises Limited (PTL) ·
Apollo Finance Limited ·
Artemis Medicare Services Limited ·
Artemis Health Sciences Limited ·
National Tyre Services
Limited, Zimbabwe ·
Pressurite (Pty) Limited,
South Africa ·
Pan Aridus LLC, USA ·
Regent Properties ·
CLS Logistics Private Limited ·
Swaranganga Consultancy
Private Limited ·
J and S System Corporation, UK |
|
|
|
|
Subsidiary : |
·
Apollo ( ·
Apollo ( ·
Apollo Tyres South
Africa (Pty) Limited (ATSA) (Subsidiary through AAHPL) ·
Dunlop Africa Marketing ( ·
Dunlop ·
Radun Investments (Private) Limited, Zimbabwe
(Subsidiary through DAMUK) ·
AFS Mining (Private) Limited, Zimbabwe
(Subsidiary through DZL) ·
Pollock and Aitken
(Pty) Limited (Subsidiary through ATSA) ·
Apollo Tyres (Cyprus)
Private Limited (ATCPL) (Subsidiary through AMHPL) ·
Apollo Tyres AG (ATAG),
·
Apollo Tures Middle
East FZE (Subsidiary through AMHPL) ·
Apollo Tyres Holding
(Singapore) Pte. Limited (ATHS) (Subsidiary through
AMHPL) ·
KP Construction and Forestry Development Company
Limited (Name being changed to Apollo Tyres (LAO)
Company Limited) ) (Subsidiary through ATHS) ·
Apollo Tyres (Nigeria)
Limited (Subsidiary through AMHPL) ·
Apollo Tyres Co-operatief U.A. Netherlands (AT Coop) (Subsidiary through
AMHPL) ·
Apollo Vredestein
BV-AVBV Netherlands (Subsidiary through AT Coop) |
CAPITAL STRUCTURE
(AS ON 31.03.2011)
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
730000000 |
Equity Shares |
Re.1/- Each |
Rs.730.000 millions |
|
200000 |
Cumulative Redeemable Preference Shares |
Rs.100/- Each |
Rs.20.000 Millions |
|
|
|
|
|
|
|
Total |
|
Rs.750.000
Millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
504024770 |
Equity Shares |
Re.1/- Each |
Rs.504.020
Millions |
|
|
Add Forfeited Shares |
|
Rs.0.070
Million |
|
|
|
|
|
|
|
Total |
|
Rs.504.090 Millions |
NOTE:
Equity Share of Rs.10 each have been sub-divided into ten
equity shares of Re 1 each pursuant to the resolution passed by the
shareholders at the Annual General Meeting held on July 26, 2007.
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2011 |
31.03.2010 |
31.03.2009 |
|
|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
504.090 |
504.090 |
504.090 |
|
|
2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves & Surplus |
18451.510 |
16761.870 |
13053.040 |
|
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
|
NETWORTH |
18955.600 |
17265.960 |
13557.130 |
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
10933.000 |
8759.460 |
4623.880 |
|
|
2] Unsecured Loans |
8146.700 |
2570.160 |
2331.270 |
|
|
TOTAL BORROWING |
19079.700 |
11329.620 |
6955.150 |
|
|
DEFERRED TAX LIABILITIES |
2410.710 |
1974.510 |
1560.670 |
|
|
|
|
|
|
|
|
TOTAL |
40446.010 |
30570.090 |
22072.950 |
|
|
|
|
|
|
|
|
APPLICATION OF FUNDS |
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net Block] |
23835.770 |
16102.250 |
11433.360 |
|
|
Capital work-in-progress |
5028.260 |
5360.440 |
2814.090 |
|
|
|
|
|
|
|
|
INVESTMENT |
5593.470 |
5593.760 |
2974.480 |
|
|
DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
11363.340
|
5527.280
|
4170.470 |
|
|
Sundry Debtors |
2042.800
|
1375.430
|
872.840 |
|
|
Cash & Bank Balances |
1412.630
|
2588.280
|
3405.980 |
|
|
Other Current Assets |
0.000
|
44.180
|
5.030 |
|
|
Loans & Advances |
3389.300
|
2629.480
|
1952.690
|
|
Total
Current Assets |
18208.070
|
12164.650
|
10407.010
|
|
|
Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Sundry Creditor |
8036.810
|
5810.800
|
4242.830 |
|
|
Other Current Liabilities |
2253.670
|
1095.800
|
358.390
|
|
|
Provisions |
1929.080
|
1744.410
|
956.280
|
|
Total
Current Liabilities |
12219.560
|
8651.010
|
5557.500
|
|
|
Net Current Assets |
5988.510
|
3513.640
|
4849.510
|
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
1.510 |
|
|
|
|
|
|
|
|
TOTAL |
40446.010 |
30570.090 |
22072.950 |
|
PROFIT & LOSS
ACCOUNT
|
|
PARTICULARS |
31.03.2011 |
31.03.2010 |
31.03.2009 |
|
|
|
SALES |
|
|
|
|
|
|
|
Income |
54904.860 |
50365.610 |
40704.410 |
|
|
|
Other Income |
266.910 |
111.830 |
112.470 |
|
|
|
TOTAL (A) |
55171.770 |
50477.440 |
40816.880 |
|
|
|
|
|
|
|
|
Less |
EXPENSES |
|
|
|
|
|
|
|
Manufacturing and Other Expenses |
53316.410 |
42754.970 |
37190.870 |
|
|
|
Increase/(Decrease) in Work in Process and
Finished Goods |
(3746.580) |
(226.760) |
265.860 |
|
|
|
TOTAL (B) |
49569.830 |
42528.210 |
37456.730 |
|
|
|
|
|
|
|
|
Less |
PROFIT
BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C) |
5601.940 |
7949.230 |
3360.150 |
|
|
|
|
|
|
|
|
|
Less |
FINANCIAL
EXPENSES (D) |
1492.920 |
739.460 |
668.430 |
|
|
|
|
|
|
|
|
|
|
PROFIT
BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E) |
4109.020 |
7209.770 |
2691.720 |
|
|
|
|
|
|
|
|
|
Less/ Add |
DEPRECIATION/
AMORTISATION (F) |
1473.540 |
1227.820 |
980.070 |
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE
TAX (E-F) (G) |
2635.480 |
5981.950 |
1711.650 |
|
|
|
|
|
|
|
|
|
Less |
TAX (H) |
652.950 |
1832.070 |
630.470 |
|
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAX
(G-H) (I) |
1982.530 |
4149.880 |
1081.180 |
|
|
|
|
|
|
|
|
|
Add |
PREVIOUS
YEARS’ BALANCE BROUGHT FORWARD |
5891.910 |
3245.330 |
2992.010 |
|
|
|
|
|
|
|
|
|
Less |
APPROPRIATIONS |
|
|
|
|
|
|
|
General Reserve |
1000.000 |
1000.000 |
500.00 |
|
|
|
Debenture Redemption Reserve |
112.500 |
62.500 |
62.50 |
|
|
|
Proposed Dividend |
252.010 |
378.020 |
226.810 |
|
|
|
Dividend Tax |
40.880 |
62.780 |
38.55 |
|
|
BALANCE CARRIED
TO THE B/S |
6469.050 |
5891.910 |
3245.330 |
|
|
|
|
|
|
|
|
|
|
EARNINGS IN
FOREIGN CURRENCY |
|
|
|
|
|
|
|
Export Earnings |
4846.780 |
3135.720 |
2483.840 |
|
|
|
|
0.000 |
2.520 |
19.430 |
|
|
TOTAL EARNINGS |
4846.780 |
3138.240 |
2503.270 |
|
|
|
|
|
|
|
|
|
|
IMPORTS |
|
|
|
|
|
|
|
Raw Materials |
18352.880 |
12426.540 |
10328.930 |
|
|
|
Stores & Spares |
42.760 |
78.200 |
107.500 |
|
|
|
Capital Goods |
3464.700 |
3666.400 |
1086.110 |
|
|
TOTAL IMPORTS |
21860.340 |
16171.140 |
11522.540 |
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share (Rs.) |
3.93 |
8.23 |
2.15 |
|
QUARTERLY RESULTS
|
PARTICULARS |
30.06.2011 |
30.09.2011 |
31.12.2011 |
|
Type |
1st
Quarter |
2nd
Quarter |
3rd
Quarter |
|
Net Sales |
19607.760 |
18448.760 |
20932.210 |
|
Total Expenditure |
18039.960 |
17199.030 |
19256.430 |
|
PBIDT (Excl OI) |
1567.800 |
1249.730 |
1675.780 |
|
Other Income |
12.850 |
8.440 |
4.950 |
|
Operating Profit |
1580.650 |
1258.170 |
1680.730 |
|
Interest |
528.290 |
522.100 |
613.640 |
|
Exceptional Items |
0.000 |
0.000 |
0.000 |
|
PBDT |
1052.360 |
736.070 |
1067.090 |
|
Depreciation |
423.840 |
442.330 |
469.400 |
|
Profit Before Tax |
628.520 |
293.740 |
597.690 |
|
Tax |
184.190 |
73.040 |
171.950 |
|
Provisions and contingencies |
0.000 |
0.000 |
0.000 |
|
Profit After Tax |
444.330 |
220.700 |
425.740 |
|
Extraordinary Items |
0.000 |
0.000 |
0.000 |
|
Prior Period Expenses |
0.000 |
0.000 |
0.000 |
|
Other Adjustments |
0.000 |
0.000 |
0.000 |
|
Net Profit |
444.330 |
220.700 |
425.740 |
KEY RATIOS
|
PARTICULARS |
|
31.03.2011 |
31.03.2010 |
31.03.2009 |
|
PAT / Total Income |
(%) |
3.59
|
8.22
|
2.65 |
|
|
|
|
|
|
|
Net Profit Margin (PBT/Sales) |
(%) |
4.80
|
11.88
|
4.21 |
|
|
|
|
|
|
|
Return on Total Assets (PBT/Total Assets} |
(%) |
6.27
|
21.16
|
7.84 |
|
|
|
|
|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
0.14
|
0.36
|
0.13 |
|
|
|
|
|
|
|
Debt Equity Ratio (Total Liability/Networth) |
|
1.65
|
1.16
|
0.92 |
|
|
|
|
|
|
|
Current Ratio (Current Asset/Current Liability) |
|
1.49
|
1.41
|
1.87 |
LOCAL AGENCY FURTHER INFORMATION
|
Check list by info
Agents |
Available in Report (Yes/ No) |
|
|
|
|
Year of Establishment |
Yes |
|
Locality of the Firm |
Yes |
|
Constitution of the Firm |
Yes |
|
Premises details |
No |
|
Type of Business |
Yes |
|
Line of Business |
Yes |
|
Promoter’s Background |
No |
|
No. of Employees |
Yes |
|
Name of Person Contacted |
No |
|
Designation of Contact person |
No |
|
Turnover of Firm for last three years |
Yes |
|
Profitability for last three years |
Yes |
|
Reasons for variation <> 20% |
----- |
|
Estimation for coming financial year |
No |
|
Capital in the business |
Yes |
|
Details of sister concerns |
Yes |
|
Major Suppliers |
No |
|
Major Customers |
No |
|
Payments Terms |
No |
|
Export/ Imports Details (If applicable) |
No |
|
Market Information |
----- |
|
Litigations that the firm/ Promoters Involved in |
Yes |
|
Banking details |
Yes |
|
Banking Facility Details |
Yes |
|
Conduct of the Banking Account |
----- |
|
Buyer visit details |
----- |
|
Financials, if provided |
Yes |
|
Incorporation details is applicable |
Yes |
|
Last Accounts filed at ROC |
Yes |
|
Major Shareholders, if available |
No |
LITIGATION:
|
Case Details |
Special Civil Application/6473/2008 |
|
Case Status |
Pending |
|
Pending Date |
07/09/2009 |
|
Petitoner Name |
Harmendrasingh Inderjitsingh Sehgal |
|
Respondent Name |
Apollo Tyres Limited |
|
Petitoner Advocate |
Mr. Tushar L. Sheth |
|
Respondent Advocate |
Mr. Kiran C. Raval |
MANAGEMENT DISCUSSION AND ANALYSIS
MARKET OVERVIEW
According to the Centre for Monitoring Indian Economy, India's real GDP
grew by about 9% in FY11, to a positive sentiment in the industry. The Reserve
Bank of India, with a view to rein inflation and high crude oil prices,
resorted to hikes in interest rates.
Tyre sales are closely related to growth in the
automotive sector, which in turn is dependent on the National GDP. In the year
gone by, sales of medium and heavy commercial vehicles put together, in volume
terms, grew by nearly 38%; while the light commercial vehicle category grew by
around 33%, driven in part by smaller 1-ton vehicles. Akey
reason for growth across categories was a shift to the new generationBS3vehicle
platforms from the older BS2.
In FY11, the Indian tyre industry clocked an
estimated turnover of Rs.350 billion. In absolute terms, the industry produced
3% more truck-bus tyres in FY11 over the previous
year, while the production of light commercial vehicle and tractor rear tyres grew by 5% and 9% respectively. A significant
production increase of around 30% was noted in the passenger vehicle category.
The overall level of radialisation in the truck-bus
segment, as expected, increased to about16%in FY11. In the coming year, growth
is expected to be aided by a healthy demand from OEMs, but inflationary
pressures may have an adverse impact on this equation.
Additionally, skyrocketing cost of raw materials will continue to pose a
challenge, forcing manufacturers to either undertake hikes, lower production or
sell at a suboptimal price point. Raw material costs went up by as much as 40%
for the tyre industry in the last 12 months. More so
because of price of natural rubber, which comprises 50% of the raw material,
went up by almost 70% in FY11.
The European economy showed signs of gradual improvement with GDP growth
in the Euro Zone countries at 1.8% compared to negative growth in the previous
year of 4.1%. The turnaround was led by Germany with strong growth numbers at
around 3.6%. However, doubts around the financial capabilities of a few debt-ridden
countries, moderated the growth outlook. The Euro recovered from a lower level
of exchange rate US$1.20/€ during mid FY11, after intervention by other Euro
Zone countries in terms of establishing the Stablisation
Fund.
The automobile industry too went through a phase of slow and gradual
recovery in FY11, still recovering from the slowdown. The year continued to
witness a steady demand for tyres, which began in the
latter half of FY10, further boosted by a second successive prolonged and
extreme winter and subsequently, a renewed demand for
winter tyres. Though summer car tyre sales registered growth as well, overall growth was
largely driven by winter tyre sales. A few European
countries introduced fresh legislations around the use of winter car tyres, which contributed to a higher demand.
The second half of FY11 saw a sharp and continued escalation in raw
material prices, mainly driven by prices of natural rubber, which reached its
peak towards the beginning of Q4 FY11 with prices as high as US$ 6 per kg. This
necessitated the need for another price increase in the same year, the first
being implemented at the beginning of the year. For the European market it was
quite an unusual situation to have repeated price increases. However, even this
has not allowed manufacturers to offset the input cost fully.
In South Africa, the GDP growth in FY11 was 2.8%, an improvement
compared to a 1.7% decline in the previous year. Since FY09 interest rates have
been on the decline, aimed at fuelling consumption, but the price of fuel
skyrocketed during FY11; a development which has impacted domestic consumption.
Though inflation officially averaged at a relatively stable 3.7% in FY11, many
economists believe it to be closer to 6%. Hurdles are consistent with exchange
rate fluctuations and uncertainty in the relationship with local labour and Unions.
The automotive industry in South Africa saw rejuvenation in the last
fiscal year. Vehicle export figures in March 2011 were the highest on record.
This performance was based on a recovery on the consumption side of the
economy; as interest rates came down by 6.5 points since December 2008,
reducing debt burdens of private individuals and businesses. Light commercial
vehicle sales showed improvement based on better economic activity, whereas
growth in medium and heavy trucks indicated a willingness to invest in the long
term. Nonetheless, the economic pressures, for example on fuel, might dampen
these going forward.
The tyre industry in South Africa was
challenged by significantly higher labour costs and a
strong union culture – which even caused a month-long strike in FY11, to a
substantial loss in production. The frequent hikes in the cost of the basic
utilities like electricity further escalated conversion costs. Recent
statistics also indicated that across all product categories, the import
portion of the market had reached almost 50%; though this is again very much
currency driven, but at the same time hints at a lack of effective regulations to
curb under declaration of invoices.
In terms of revenue through sales, the tyre
industry grew by 3% and 5% for the passenger car and truck bus tyre
categories.
INDUSTRY STRUCTURE
AND DEVELOPMENTS
The Rs.350 billion tyre industry in India, in
FY11, was dominated by 5 major players – Apollo, Birla,
Ceat, JK Tyres and MRF –
accounting for around 85% of the industry turnover. The said players
manufactured tyres across all segments except for
two-wheelers where only MRF, Ceat and Birla cater to the category. International players like
Bridgestone and Goodyear sold as well, but were restrained due to presence in
limited product categories at their manufacturing facilities in India.
Bridgestone initially focussed on only
passenger car tyres; it had begun with a40%market
share, more than a decade back, and remained the leader in this category until
FY10. However, Bridgestone has over the years lost market share to domestic
players. In FY11, it conceded its pole position to MRF. Goodyear shared a
similar fate and is currently seen as a relatively small player in all
segments, except agriculture tyres.
Other players like Michelin, Hankook and
Yokohama operated in the replacement market, to a limited extent, through
imports from China and Thailand. In the coming years, the industry is expected
to see greater competition
as international players set up manufacturing units in the country; for
instance Michelin and Bridgestone have announced dedicated truck-bus radial tyre units while Continental is seeking an entry through
the acquisition of ModiTyres.
In terms of trends, radialisation in the
truck-bus segment picked up pace and reached 16% in FY11; the same is expected
to reach over 30% by FY14. Considering this, Apollo's investment in its
recently inaugurated all-radial green field in Chennai, Tamilnadu,
does not come as a surprise – the Chennai unit is expected to have a capacity
of 465 metric tonnes (MT) per day by the end
of FY12. Having said that, cross ply tyres still
constitute the bulk of the market and to meet this demand light truck cross ply
tyre capacity was upped by 23MTper day at the Perambra facility. Similarly, the capacity for light truck
and rear tractor cross ply tyres was also increased
by 13 MT per day at the Limda plant; while the
passenger car and light truck radial tyre capacity at
Limda increased by approximately 135 MT per day and
30 MT per day respectively. The 4 Indian manufacturing facilities together
clocked a combined production of around 957 metric tonnes
a day in India, in FY11.
Most domestic players are build greater capacities in this segment. In
FY11, nearly 40% of the truck-bus radial demand was met through imports, a
significant portion of which was channelled by
Michelin.
In FY11, as well as in previous years, the tyre
industry was dominated by commercial vehicle tyres
which accounted for 60% of the turnover. The balance 40% was almost equally
divided between passenger car, two-wheeler, farm and off-highway tyres. The share of passenger and two-wheelers tyres in the industry turnover has increased in the last
few years due to a significantly higher growth, compared to commercial vehicle tyres – this trend is expected to continue in the future.
In anticipation of continued growth in the passenger car segment, most
manufacturers are increasing capacity to be able to meet future demand. In
FY11, imports in the passenger car category stood at around 15%, bulk of which
were imports by the international players.
The biggest influencers in the tyre industry
for FY11 were the upward spiralling prices of raw
materials – especially natural rubber, which negatively impacted the bottom
line of all tyre makers. In this respect, one
positive development for FY11, has been the upper cap on the import duty of
natural rubber at Rs.20 a kg or 20%, whichever is lower. With natural rubber
expected to remain at a level of Rs.220+ per kg or more, going forward the
effective import duty on rubber would be a maximum of 10%, as opposed to the
prevailing 20%. This is expected to provide some relief to the industry.
The European tyre market is dominated by 6
major players, namely, Bridgestone, Continental, Goodyear, Hankook,
Michelin and Pirelli, who account for about 90% of the total business.
In FY11, passenger car tyre sales grew by
around 8%, as recorded in the data published by the European Rubber
Manufacturers' Conference (ERMC), driven by the demand in winter tyres. The agriculture tyre
segment recovered from a significant drop in the previous year, and saw a
growth of about 10% in FY11; however, margins in the segment eroded towards the
later part of the year, due to an inability to offset raw material cost push.
To cater to a growing market, Apollo Vredestein
geared up to undertake capacity expansion – from 5.5 million tyres per annum to 6.4 million tyres
per annum – at its Enschede facility in the
Netherlands; this is expected to be completed by end of FY12.
The anticipated legislation on labelling,
covering factors like noise, rolling resistance and wet grip, is also scheduled
to be implemented in FY12. This is expected to have a major impact on product
development in the coming years, as all tyre makers
will have to focus on achieving the highest grade.
As mentioned earlier, recent statistics have indicated that across all
product categories in South Africa, the import
portion of the market reached a level of nearly 50% in FY11; while this
strengthened the portfolio of major manufacturers like Hankook,
Michelin and Pirelli, it also led to an inventory build up of quality imports
from the Far
East. At the retail level, a few of the global retail outfits are
expected to open shop in the near future.
On the product front, Continental launched a new truck tyre range, backed by an aggressive marketing strategy.
Most tyre categories remained stable throughout the
year; however, due to a downturn in the construction industry this segment
declined – however, this trend has been reversing. Additionally, there was a
downturn in the cross ply tyre segment of around 40%.
With an eye on the future, Apollo Tyres South
Africa set in motion a process to further build capacities at its 2 units in
Ladysmith and Durban. The Ladysmith facility will see an expansion in its
passenger vehicle range with production increasing from 80 MT per day to 104 MT
per day. While the Durban plant is scheduled to up it truck-bus radial
production from 60 MT per day to 72 MT per day. However, these capacity
developments will only be fully realized by the end of FY12.
FY11 has been a story of escalating raw material prices and a strong
Rand. Whilst the raw material phenomenon affected most manufacturers globally,
a strong Rand opened the floodgates for cheap and/ or under-invoiced imports in
the country, in the absence of non-porous regulations to check the same.
The tyre industry in South Africa was also
impacted by high labour costs and a strong union
culture. Additionally, there was a port strike leading to a 10-day production
stoppage. Frequent hikes in the cost of the basic utilities like electricity,
further escalated conversion costs.
SEGMENT WISE
PERFORMANCE
Despite the cost push, and the closure of the Perambra
facility for over a quarter which resulted in production and sales losses,
Apollo's India Operations grew by around 9% in FY11. Though the replacement
market continued to provide the bulk of the revenue, like the last financial
year, revenue growth through the OE segment was a welcome sign. There was no
change in the revenue contributed by exports. Product wise revenue segmentation
suggested that while the truck-bus segment continues to be the major revenue
earner, it is very slowly yielding space to passenger vehicle and light truck
categories.
For a burgeoning Indian automobile market, Apollo Tyres
introduced a slew of new products and sizes. The Company emerged to be the
leading producer in the passenger vehicle tyre
category, with the simultaneous release of Aspire and Acelere
Maxx ranges, especially for A3+ segments in India and
Europe.Anew17 inch size was added to the Hawkz range,
making it the ideal choice for premium sports utility vehicles. In the
commercial vehicle segment, the Company further fortified its dominance by
introducing the Endurance range of radial tyres,
which was confirmed by the Automotive Research Association of India as being
the most fuel efficient radial tyres in the category.
The agriculture segment was boosted with the launch of Krishak
Gold cross ply tyres meant for hard soil
applications.
Simultaneously, with OEM demand growing to 1.2 million tyres per month, the Company's India Operations, which
has always worked in close collaboration with its OE partners, expanded
and intensified its OE presence in FY11. Apollo now dominates the OEM business
with presence in more than 34 leading car models like Volkswagen Polo, Mahindra Scorpio and Xylo, Maruti SuzukiSX4and Fiat Linea.
Exports out of India Operations to the larger Zone I continued as well.
Apollo retained its position of being the largest exporter of passenger vehicle
tyres from India; and despite a demand slump,
passenger vehicle exports registered marginal growth. The truck-bus cross ply tyres were challenged by degrowth
compared to the previous
fiscal, but exploration of fresh markets continued, with Bangladesh
being the newest entrant in the list of long term export destinations.
The retread business of Duratreads grew by 53%
with the release of new low weight patterns. Plans are underway to launch a
complete radial retread range in the near future.
Truck-bus radial sales grew by 135%, albeit from a low base. This is
expected to be further bolstered by the presence of Apollo Endurace.
The Company lost cross ply market share close to 3% across replacement and OEM,
due to the prolonged strike at one of its plants in Kerala.
To reinvigorate position in the market, the Company announced the 2 edition of
the Apollo CV Awards, the first-of-its-kind Awards for the commercial vehicle
industry and its customers, that seek to recognise
and honour the champions and stalwarts of the
industry – vehicles, people and organisations which
established new benchmarks in not just product performance and service, but who
also created value for the industry as a whole. Earlier in the year, the
Company also participated in the International Mining and Machinery Exhibition
to connect with its off-highway customers.
In order to encourage safe driving and correct tyre
maintenance practices amongst its passenger vehicle customers, the Company
carried out Safe Drive workshops across multiple locations, including large Corporates, petrol pumps and parking lots. On the lifestyle
front, Apollo Tyres continued to run the Apollo
Highway On My Plate show on NDTV Good Times Channel. A hugely popular
street-food show, which has enabled the Company to connect with a growing
segment of customers who enjoy road travel and are open to new thoughts and
experiences.
However, the most significant product milestone, for the year
consideration, was the launch of brand Apollo in Europe at Reifen
2010 in Essen, Germany; arguably the world's largest tyre
exposition. Apollo branded tyres – Amazer 3G Maxx, Acelere, Aspire and the 4x4 range of Hawkz
in summer tyres and, Acelere
Winter and Hawkz Winter in winter tyres
– were made available to customers in select European countries including
Germany, Italy, the Netherlands and the United Kingdom, at a uniform price
point. Apollo also tied-up with retail chain Kwik-Fit
to sell the Apollo brand of tyres through the 180 Kwik-Fit car service centres
across The Netherlands. Kwik-Fit, which is the
largest independent automotive parts, repair and replacement specialists in
Europe and one of the largest in the world, will sell the entire summer and
winter range of passenger vehicle and 4x4 tyres from
Apollo.
Investments in R&D continued and the Company further nurtured its
collaborations with premium technical institutes, testing centres
and raw material suppliers. Various projects have been initiated to tap into
the latest technology and research trend. These include reduction of cycle time
in all operations, optimisation of components in the tyres, and standardisation of
materials and processes. New technological approaches and computing
capabilities have also been tried to improve productivity and quality in
manufacturing processes like mixing, extrusion, calendaring, building and
curing. While some projects are underway to understand the possibility of using
more of synthetic rubber and eco-friendly raw materials for manufacturing.
Two top-rung German magazines of immense repute – ADAC and Auto Bild – on tyre testing, gave high
billing to Apollo's Amazer 3G Maxx
and Acelere tyres in their
recent tests conducted with brands available in the German market. The high
ranking and superior performance on wet, dry and braking tests came as a
testimony to the technological superiority of the products on offer.
Apollo Vredestein BV has registered an
impressive top line growth of 14% over FY10. Apollo Vredestein
continues to be largely a replacement market brand in Europe with the category
contributing as much as 87% of the total revenue, whilst original equipment
manufacturers accounted for the remaining 13%. Passenger car tyre segment constituted 90% and agriculture tyres 8% of total revenue. Even though, the journey to
increase capacity in passenger car tyres from 5.5 to
6.4 million tyres a year began, there were lost sales
opportunities due to production capacity constraints.
Riding on a strong demand from the replacement market, the Company in
addition to opening 3 Vredestein Design stores –
multi-brand outlets – in Belgium and Germany, also expanded its highly popular Quatrac 3 range of passenger vehicle tyres
by introducing the revolutionary Quatrac Lite. Amongst the first fewgreen
all season tyres, Quatrac Lite, meets all the environmental regulations due to be
implemented across the European Union in 2012 and is focused on fuel
efficiency. At the same time, the new Quatrac Lite meets the premium quality and safety standards for
which ApolloVredestein is acknowledged.
Apollo Vredestein launched its largest ever
mega billboard campaign to coincide with the opening of the Geneva Autosalon in March 2011. The billboards which featured the Vredestein Sportrac 3 – in an
attempt to communicate to customers that Apollo Vredestein
is not just a winter tyre specialist but also
manufactures world-class summer tyres – were on view
in 37 major European cities, stationed across prime locations with heavy
traffic. While the participation in tyre and auto
shows allowed Apollo Vredestein to interact with its
key OE partners, suppliers and auto aficionados, promotional campaigns enabled
it to create awareness amongst its customers in a refreshing and clutter-free
fashion.
Apollo Vredestein also devised a strategic
brand promotion called Premium Styling By Vredestein
– a new concept focused on the Company's ultra high performance tyres. It is designed to attract the attention of car
tuning and styling firms, who improve the performance and appearance of
exclusive cars. Thus far, the Company has partnered with Carlsson
and Arden Automobilbau GmbH, both recognised
luxury car styling boutiques.
On the R&D front continuous efforts were made to enhance product
safety and performance. An endorsement for the same was Vredestein
Sportrac 3 securing the pole position in the most
prestigious summer tyre test in Europe, which was
carried out in collaboration between ADAC, ÖAMTC and TCS, the German, Austrian
and Swiss automotive clubs respectively.
A look at the revenue from various product segments, of Apollo Tyres South Africa, reveals that truck-bus and passenger
vehicle contributed to more than 69% of the revenue, even as revenue from the
passenger vehicle category declined marginally as compared to last fiscal –
primarily due to a production loss inQ1FY11.
Apollo Tyres South Africa operates in a market
which is increasingly being dominated by imports. Being a player in the market,
the organisation continued releasing newer
high-performing products and campaigns which aimed at ensuring customer delight
and enabled it to retain its market share in a highly competitive environment.
New products launched included 5 new sizes in the light truck range
–SP560, Regal RST300 and MST300.Onthe
consumer communication front, Apollo Tyres
South Africa took forward its Driven By Precision position for brand Dunlop, by
launching a new advertisement campaign. The new communication positioned the
Dunlop Zones – exclusive Dunlop branded retail outlets – as the ultimate
destination for a premium tyre fitment experience and
outstanding service from committed professionals and experts.
Apollo Tyres South Africa's products were also
seen out and about at the acclaimed Gauteng Motor
Show, which attracts thousands of automotive fans and focuses on
high-performing passenger vehicle, 4x4, truck, motorbike tyres
and accessories. Meanwhile, Apollo Tyres South Africa
illustrated the lifestyle side of brand Dunlop by continuing its sponsorship of
the Surf SkiWorld Cup. This international sporting
gala is a perfect fit for the dynamic
performance- centric Dunlop brand.
The Company's constant endeavours to ensure
that only world-class products and services are made available to its
customers, resulted in Brand Dunlop – sold in 32 African countries – emerging
as the #1 brand in the tyre category, in a survey
commissioned by Rapport and City Press newspapers on South Africa's iconic
brands in FY11. This was an independent survey measuring the usage of more than
8,000 brands under 19 different the product categories by South African consumers.
Additionally, Apollo Tyres South Africa was
voted Tyre Manufacturer of the Year by the Tyre Dealers and Fitters Association. This is an annual
award based on various criteria including, amongst others, product quality,
delivery and price. A much coveted award as it comes from the tyre community.
The Company's R&D efforts were targeted towards expanding its light
truck radial tyre range. Finite Element Analysis was
successfully deployed by Apollo Tyres South Africa's
truck-bus radial development team to derive an optimised
footprint and design for its highway steer products. In viewof
EU legislations and OE demand for low-rolling resistant tyres,
development work also commenced on newer versions of silica tread compounds,
using best practices as applied in Apollo Vredestein,
and leveraging on the work done by Apollo's R&D centres
in
The Netherlands and India.
OUTLOOK
In India, with raw material prices continuing their northward trend, a
continued cost push on this front poses the biggest concern for the near
future. Natural rubber is expected to remain at a level upward of Rs.220 per kg
for the better half of FY12. The cap on the import duty at Rs.20 per kg or 20%,
whichever is lower, which became effective from April 1, 2011, might provide
some relief to the Industry. Simultaneously crude oil prices are also expected
to move northwards in the wake of protests and uncertainty in the Middle East.
To combat the impact of increasing raw material prices, significant
price hikes are needed which may not be easy to implement due to multiple
factors including a potential slowdown in demand. A significant price increase
of 20%+ has already taken place in the last 15 months, making it difficult for
the market to absorb more.
However, demand in OEM segment, across categories, is expected to remain
strong in the near future, with an expected boost in the truck-bus tyre replacement market after observing a comparatively
slow 2 half of FY11. The passenger vehicle tyre
replacement market is expected to grow at a significantly high rate, much like
it did in FY11. The truckbus radial market is also
predicted to grow in the near future, thus putting Apollo Tyres
in an advantageous position vis-ŕ-vis competition. Though rising interest costs
and inflationary pressures may prove to be a challenge for the scenarios
mentioned above.
Banks and economic forecasts predict a slow but steady economic recovery
in Europe. However inflation remains a concern on the back of high prices of
crude oil and other basic commodities. Though austerity measures announced by
many European countries, including Pension Reforms, will yield results in the
long term, some early success in terms of positive trend on controlling
deficits will boost the confidence of the financial market and supplement an
economic revival.
Outlook for Apollo Vredestein BV is largely
positive. Demand from replacement car tyre segments
continue to be strong. Tyre dealers are already in
discussion with manufacturers to secure supplies of winter tyres
for the FY12 winter season. All tyre manufacturers
had been forced to increase prices towards the end of FY11. Similar price hikes
are not being ruled out in the course of FY12, if raw material costs continue
to remain at, or above, prevailing levels.
As mentioned earlier, environmental regulations are expected to be
rolled out across the European Union in 2012. To ensure compliance to the same,
the Company has established a Certification Cell which will take care of all
matters related to homologations, e-marking and environmental labelling of tyres. For Apollo Tyres South Africa, capacity enhancement at both its
Ladysmith and Durban plants are on track. The Company is also in the process of
upgrading its product portfolio, in conjunction with Apollo's R&D
facilities in both the Netherlands and India, to ensure the highest quality
products in its domestic market and the ever increasing export destinations.
OPERATIONS
The Company registered a net turnover of Rs.54,905 million as against
Rs.50,366 million during the previous financial year, a growth of 9%. The
Company registered EBIDTA of Rs.5,603 million as compared to Rs.7,949 million
during the previous financial year. The net profit for the year was Rs.1,983
million, as against Rs.4,150 million in the previous fiscal. The steep hike in
raw material prices coupled with production loss, due to labour
problems, at one of the units had an adverse impact on the profitability of the
Company.
The consolidated net turnover of the Company as a group has increased to
Rs.88,677 million during FY 2010-11 as compared to Rs.81,207 million during the
previous financial year, registering a growth of 9.2 %. The consolidated EBIDTA
was Rs.10,042 million for FY 2010-11 as compared to Rs.11,963 million for the
previous financial year. On consolidated basis, the Company earned net profit
of Rs.4,402 million for FY 2010-11 as against Rs.6,534 million for the previous
financial year.
The amount available for appropriations, including surplus from previous
year amounted to Rs.7,874 million. Surplus of Rs.6,469 million has been carried
forward to the balance sheet after providing for dividend of Rs.252 million,
dividend tax of Rs.41 million, debenture redemption reserve of Rs.112 million
and general reserve of Rs.1,000 million.
The Company sustained its leadership position in the Indian tyre industry despite challenging market conditions and
production loss caused due to labour problem, at the Perambra unit in India, due to lock out from June 11, 2010
to August 21, 2010. In May 2010 there was also a 2-week strike at the ports in
South Africa, affecting the supply of raw materials to the Durban and Ladysmith
facilities. In September 2010 the Company’s South Africa Operations were again
brought to a standstill by an industry-wide labour
strike, which was resolved after prolonged negotiations.
PRODUCTION
The Company’s production has shown a consolidated growth of 2.8%, in
production tonnage, by generating an output of 438,524 metric tonnes (MT) as against 426,641 MT in the previous year.
RAW MATERIALS
During the year, raw material dynamics in the tyre
industry have undergone a significant change, primarily from the perspective of
key raw material prices, which have risen beyond expectations. Robust demand
from China and India, along with resurgence of output in the industrialised countries, saw prices of natural rubber
peaking to US$ 6/kg in the international market. The supply of natural rubber
was also adversely impacted in the year due to climatic conditions in rubber
growing regions. The domestic rubber prices reached an all time high of
Rs.241/kg during the year, registering an increase of almost 70% over the
prices in the last fiscal.
Crude oil prices also crossed the US$ 100/barrel level on geo-political factors
and strong demand growth from major economies across the globe. Crude based
items, namely, synthetic rubber, nylon tyre cord
fabric, polyester fabric, carbon black and rubber chemicals also showed a
rising trend during the course of the year. Moreover, anti-dumping duty on
nylon tyre cord fabric, carbon black and rubber
chemicals continued.
Considering that the global GDP is projected to grow at 4% in 2011-12,
fuelling the demand for commodities and base metals, prices of major
commodities such as natural rubber, crude oil and steel are likely to remain
bullish.
Despite a challenging environment with respect to raw materials, the
Company strives to remain globally and regionally attractive to customers and
investors by continuing to focus on working capital management, alternative
energy source development, new vendor development and nurturing existing
relationships with business partners. These strategic initiatives are expected
to fuel the Company’s growth across geographies.
MARKETING
FY 2010-11 was a landmark year for company. For starters, the Company
introduced its flagship Apollo brand in the European market at, what is
arguably the world’s largest tyre exposition, Reifen in Essen, Germany. Later in the year, coinciding
with the opening of the International Geneva Motor Show or Salon International
de l’Auto, Apollo launched its biggest ever mega
billboard campaign for brand Vredestein. During March
2011, the billboards were on view in 37 major European cities – placed in prime
high traffic locations.
In India, Apollo launched a high-voltage passenger car radial
advertising campaign titled “Road Is A Friend”, which was aided by an
aggressive consumer promotion scheme called “Exchange For A Tubeless Future” to
promote the use of tubeless PCR tyres. However, the
focus was on below-the-line promotional activities, with individual and fleet
customers, through initiatives like Apollo ET ZigWheels
Awards for recognising excellence amongst automakers
and Apollo Safe Drive which promotes safe driving and tyre
maintenance.
Brand Dunlop, sold in 32 African countries, emerged as the # 1 brand in
the tyre category, in a survey commissioned by
Rapport and City Press newspapers on South Africa’s iconic brands. This was an
independent survey measuring the usage of more than 8,000 brands under 19
different product categories by South African consumers. The South Africa
Operations took forward their Driven By Precision position for brand Dunlop, by
launching a new advertisement campaign.
The new communication positions the Dunlop Zones – exclusive retail
outlets – as the ultimate destination for a premium tyre
fitment experience and outstanding service from committed professionals and
experts.
EXPORTS
Exports of passenger car radials, despite a demand slump, grew
marginally over the previous year’s sales volumes. The Company continues to be
the largest exporter of passenger car radials from India with a share of over
75% vis-ŕ-vis exports by domestic industry. Truck-bus cross ply sales volumes
fared as per expectations; though price undercutting by competition and
increasing preference for radial tyres posed to be a
challenge. The year also witnessed the successful pilot launch of Apollo's
truck-bus radial tyres in select markets of Asia,
Africa and the Middle East – this category shows tremendous potential for
growth in the coming years.
Apollo’s European Operations largely focus on the domestic replacement
market and there is not much by way of exports. On the other hand, the
Company’s South African Operations saw a healthy growth in exports with almost
23.7% of the current financial year’s revenue coming from this segment,
compared to 17.5% in the previous year.
EXPANSION PROGRAMME/FUTURE OUTLOOK
The greenfield project of the Company in
Chennai, is progressing as per schedule. At present the facility is producing
7,500 passenger car radial (PCR) tyres and 2,000
truck-bus radial (TBR) tyres per day. It would reach
its planned capacity of 16,000 PCR tyres per day and
6,000 TBR tyres per day by the last quarter of the
current financial year. The unit is supplying to major OEMs like Hyundai, Tata Motors, Ashok Leyland and Mahindra, all of whom have reviewed the product performance
favourably. Supplies to other major OEMs' like Ford,
Nissan and Maruti Suzuki is expected to commence
shortly.
During the year, the cross ply light truck tyre
production was enhanced by 1000 tyres per day to its
current 2030 tyres per day, at the Perambra facility. Similarly, an increase in production was
also undertaken at the Limda unit – 1581 to 2151 tyres per day for light truck cross ply and 351 to 651 tyres per day for rear tractor cross ply; resulting in the
total tonnage production going up by approximately 36 MT/day. On the radial
front, the PCR and light truck radial (LTR) production at the Limda facility was upped to around 18,000 tyres per day and 2,000 tyres per
day, respectively, taking the total radial tonnage production at the said
facility to approximately 165 MT/day.
The Company’s units in South Africa are in the process of further
production building – from 10,000 PCR tyres per day
to 13,000 PCR tyres per day at Ladysmith and from
1000 TBR tyres per day to 1200 TBR tyres per day at Durban. The said production increase and modernisation and quality improvement project includes
installation of a new calender line, fischer cutter, triplex extruder, bead apexing
and high speed PCR tyre building machines. The total
cost of such an expansion in South Africa would be around Rand 275 million
(equivalent to Rs.1820 million) and the same is expected to be completed by
September 2011. However, the total production increase would be realised only by the last quarter of the current financial
year.
The European Operations expanded PCR capacity from 5.2 million to 6.4
million tyres per annum, with an investment of 6
million (equivalent to Rs.380 million). The increased capacity is already under
utilisation since the last quarter of the year,
allowing the Company to sell higher volumes in the European market.
SUBSIDIARY COMPANIES
As on March 31, 2011, the Company had 35 subsidiaries including indirect
subsidiaries. During the year, the following changes have taken place in
subsidiary companies:
During the year, Apollo (Mauritius) Holdings Private Limited, The
Company’s subsidiary has incorporated Apollo Tyres
Holdings (Singapore) Pte. Limited w.e.f.
September 8, 2010 and Apollo Tyres (Middle East) FZE w.e.f. January 2, 2011 as its wholly owned subsidiaries.
The main activity of the Middle East Company will be warehousing and
trading of tyres manufactured at various locations in
India, South Africa and the Netherlands to cater to customers in Middle Eastern
and African countries.
Apollo Tyres Holdings (Singapore) Pte. Limited acquired 95% shareholding in K P Construction
and Forestry Development Company Limited (name being changed to Apollo Tyres (Lao) Company Limited) w.e.f.
February 15, 2011 which would be engaged in business of natural rubber
plantations.
Vredestein Kft the Company’s
step subsidiary in Hungary through Apollo Vredestein
B V formed a wholly owned subsidiary of Vredestein Ro
SRL w.e.f. August 18, 2010.
Apollo Tyres (Pte)
Limited ceased to be the subsidiary Company of Apollo (Mauritius) Holdings
Private Limited w.e.f.
June 4, 2010.
The Ministry of Corporate Affairs vide its letter No: 5/12/2007-CL-III
dated February 8, 2011, has granted a general exemption to the companies under
section 212(8) of the Companies Act, 1956 from attaching a copy of the balance
sheet and the profit and loss account of the subsidiary companies, and other
documents, to the Annual Report of the companies, subject to fulfilment of certain conditions specified in the aforesaid
circular.
The annual accounts of the subsidiary companies will be made available
to Shareholders on request and will also be kept for inspection by any
Shareholder at the Registered Office and Corporate Headquarters of the Company,
and its subsidiaries.
CONTINGENT LIABILITIES (AS ON 31.03.2011)
|
Particulars |
31.03.2011 |
31.03.2010 |
|
|
(Rs. In Millions) |
|
|
|
|
|
|
Sales Tax |
94.610 |
108.240 |
|
Income
Tax-Disputed Demands under Appeal |
-- |
-- |
|
Claims not
acknowledged as debts – Employee
Related |
23.900 |
21.540 |
|
– Property
Disputes |
2.600 |
2.600 |
|
– Others |
8.830 |
5.830 |
|
Provision of
Security (Bank Deposits pledged with a Bank against which working capital
loan has been availed by Apollo Finance Limited, an Associate Company) |
73.300 |
99.520 |
|
Guarantee given by
Company for the loan taken by Sub-Subsidiary Companies |
2570.400 |
673.500 |
|
Guarantees given
by bankers on behalf of the Company |
528.000 |
497.660 |
|
Custom Duty |
23.500 |
23.500 |
|
Excise Duty* |
177.300 |
56.340 |
|
Irrevocable
Letters of Credit |
2916.730 |
3865.720 |
* Excludes demand
of Rs.532.12 Million (Rs.532.12 Million) raised on one of the Company’s units
relating to issues which have been decided by the Appellate Authority in Company’s
favour in appeals pertaining to another unit of the
Company. Show-cause notices received from various Government Agencies pending
formal demand notices have not been considered as contingent liabilities.
FIXED ASSETS:
·
Land
·
·
Buildings
·
Plant and Machinery
·
Electrical Installation
·
Furniture, Fixtures and
Office Equipments
·
Vehicles
WEBSITE DETAILS:
PROFILE:
Subject is a high-performance company and the leading Indian tyre manufacturer. Head quartered in Gurgaon,
a corporate-hub in the National Capital Region of India, Apollo is a young,
ambitious and dynamic organisation, which takes pride
in its unique identity. Registered as a company in 1976, Apollo is built around
the core principles of creating stakeholder value through reliability in its
products and dependability in its relationships.
Apollo’s present strength and market dynamism steps from its early years of
strife in establishing itself as a tyre manufacturer
within the closed Indian economy. Over two decades, Apollo worked on a
portfolio of products, tuned to customer needs and an array of innovative
marketing initiatives to establish itself as a leader in its home market. Some
of these include segmenting customers by their load and mileage requirements,
running tyre loyalty programmes,
establishing customer contact programmes which
resulted in better health and driving habits, introducing India’s first farm
radials and India’s first range of high-speed tubeless passenger car tyres.
For the first time, in 2006 Apollo ventured outside
In 2009, Apollo acquired Vredestein Banden B V in the
The company currently produces the entire range of automotive tyres for ultra and high speed passenger cars, truck and
bus, farm, Off-The-Road, industrial and specialty applications like mining, retreaded tyres and retreading material. These are produced across Apollo’s
eight manufacturing locations in
In the three domestic markets of
For Subject, offering the right product to the right customer is essential.
Special efforts are made to understand customer needs and segment the market accordingly.
After which, products are developed for niche applications within a larger
category to enable the company to provide efficient, fuel and cost-saving
products to each customer segment. Innovation has always been an integral part
of the Apollo way of doing business, this applies as much to product
development and marketing as to how the company as a whole is focused on
challenging existing boundaries.
An integral part of the Subject world is its community involvement and giving programmes directly related to its business. In
Apollo is one of the largest corporate investors in developing sporting talent
through its Mission 2018, which is focused on nurturing and training youngsters
in the sport of tennis to enable an Indian to win a Singles Grand Slam
Championship by the year 2018.
MEDIA RELEASE
APOLLO LAUNCHES
ASPIRE 4G AT THE 82ND GENEVA MOTOR SHOW
Apollo markets to
now also include Switzerland, Austria and Denmark
After the success
of its winter and summer passenger vehicle tyres in
the European market, Apollo Tyres launched an ultra
high performance summer tyre ‐‐ Aspire 4G,
at the Geneva Motor Show. This next generation tyre
from Apollo Tyres will be available in W and Y speed
ratings suitable for speeds up to 300 kilometers per hour. The Aspire 4G will
cater to around 50% of the cars in the highly fragmented summer W and Y speed
rated European market, with fitment in cars like the BMW 5‐series, Mercedes E‐class, Audi A6 and
Volkswagen Passat.
Speaking at the
formal launch of Apollo Aspire 4G, Neeraj Kanwar, Managing Director, Apollo Tyres
Limited said, “This tyre is a product
of cross geography collaboration between our research and manufacturing teams
in The Netherlands and India. Post the launch in Europe, we will make the
Aspire 4G available in each of the non‐
European
markets we currently manufacture and export to.”
Apollo Aspire 4G
has a minimalistic, asymmetric design to cater to
superior handling in wet and dry conditions; shorter braking distance and low
noise. The wide outer shoulder with narrow intermediate groves lead to better
contact for dry handling. Three wide circumferential grooves reduce aquaplaning
and heighten grip in wet conditions. The centre rib which is optimised for stiffness, lends higher steering precision.
The Aspire 4G easily and precisely responds to any unexpected steering
corrections, providing maximum driving safety, especially through the optimized
contour and a wider contact surface. The unique mix of raw materials ensures
maximum traction and shorter braking distances on wet and dry surfaces. The
Aspire 4G meets the highest European requirements for external rolling noise
and wet grip.
Rob Oudshoorn, CEO, Apollo Vredestein
B V commented, “We are beginning production with 9 sizes which cater to the
majority of cars in the W and Y rated category in Europe. Both the Apollo
summer and winter range have found high acceptance in Europe in the past year
in Germany, UK, Netherlands, Italy and Greece. Given this we are now expanding
our base into Switzerland, Austria and Denmark. The Aspire 4G has been
extensively tested at IDIADA, Spain and ATP Papenburg,
Germany, with some excellent results.”
At the Geneva
Motor Show, Apollo Aspire 4G is fitted on the futuristic Evonik
Light Weight Design (LWD) car, on display at the Green Pavilion. Apollo Tyres and Evonik, in association
with sports car manufacturer Lotus Engineering, have developed this eco‐friendly car. Christened Evonik
LWD Lotus, this car, riding on Apollo tyres, offers
low rolling resistance and fuel savings of up to 8%.
About Apollo Tyres Limited
Apollo Tyres Limited is a high‐performance
company and the leading Indian tyre manufacturer. It
is built around the core principles of creating stakeholder value through
reliability in its products and dependability in its relationships. The company
has four manufacturing units in India, four in Southern Africa and one in the
Netherlands. Apollo's subsidiary companies are Apollo Tyres
South Africa Pty Limited (previously known as Dunlop Tyres)
and Apollo Vredestein BV in the Netherlands. India,
South Africa and Europe are the company’s three domestic markets from where
products are exported to over 70 countries. In each of the domestic markets the
company operates through a vast network of branded, exclusive and multi‐product outlets.
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a
proceedings for violating money-laundering, anti-corruption or bribery or
international economic or anti-terrorism sanction laws or whose assets were
seized, blocked, frozen or ordered forfeited for violation of money laundering
or international anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or investigation
registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.51.20 |
|
|
1 |
Rs.81.50 |
|
Euro |
1 |
Rs.67.15 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
6 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
9 |
|
--LIQUIDITY |
1~10 |
9 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
9 |
|
--CREDIT LINES |
1~10 |
9 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
YES |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
73 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest capability
for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect.
Satisfactory capability for payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
- |
NB |
New Business |
- |
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.