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Business to Business
Project: Apollo Tyres
Group Member:Harikesh Pandey A - 31
Shradha Jha A - 16Priyanka Jethva A- 15Tejashree Kadam B -Naved Shaikh B - 44
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Introduction to the Company : Apollo Tyres Ltd
Apollo Tyres Ltd is the world's 7th biggest tyre manufacturer, with annual consolidatedrevenues of Rs 121.5 billion (US$ 2.5 billion) in 2011. It was founded in 1976. Its first plant
was commissioned in Perambra, Kerala. The company now has four manufacturing units inIndia, one in South Africa, two in Zimbabwe and 1 in Netherlands. It has a network of over4,000 dealerships in India, of which over 2,500 are exclusive outlets.
It gets 59% of its revenues from India, 28% from Europe and 13% from Africa. Apollo tyreswas awarded the FICCI award among large industries category for the best Quality systems.
It is planning to become the 10th biggest tyre manufacturer in the world with annual revenuesof $6 billion by 2016.
On 12 June 2013, it is reported that Apollo Tyres Ltd would buy US-based Cooper Tire &Rubber Company for about $2.5 billion in a deal that would make it the world's seventh-
largest tyre maker.Apollo's cash offer of $35 per share represents a premium of about 43 percent to Cooper'sshare price on the New York Stock Exchange.
Apollo Tyres, which does not currently operate in the United States, gets two-thirds of itsrevenue from India.
The acquisition of Cooper, the world's 11th biggest tyre company by sales, will give Apolloaccess to the US market for replacement tyres for cars and light and medium trucks.
The two companies had combined sales of $6.6 billion in 2012.
http://en.wikipedia.org/wiki/Perambra_-Thrissurhttp://en.wikipedia.org/wiki/Keralahttp://en.wikipedia.org/wiki/Zimbabwehttp://en.wikipedia.org/wiki/Netherlandshttp://en.wikipedia.org/wiki/Cooper_Tire_%26_Rubber_Companyhttp://en.wikipedia.org/wiki/Cooper_Tire_%26_Rubber_Companyhttp://en.wikipedia.org/wiki/Cooper_Tire_%26_Rubber_Companyhttp://en.wikipedia.org/wiki/Cooper_Tire_%26_Rubber_Companyhttp://en.wikipedia.org/wiki/Netherlandshttp://en.wikipedia.org/wiki/Zimbabwehttp://en.wikipedia.org/wiki/Keralahttp://en.wikipedia.org/wiki/Perambra_-Thrissur -
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What Industry it belongs to?
Tyre Industry
Technology generation in the Indian tyre industry has witnessed a fair amount of expertise
and versatility to absorb, adapt and modify international technology to suit Indian conditions.
This is reflected in the swift technology progression from cotton (reinforcement) carcass to
high-performance radial tyres in a span of four decades. Globalization has led to the linking
of the economies of all the nations and therefore major Indian players in the tyre industry are
pursuing global strategies to enhance their competitiveness in world markets. The present
section broadly undertakes an overview of the Indian tyre industry through an examination of
its growth trends with respect to production, exports and acquisition of technological
capabilities.
Key Features
At present there are 40 listed companies in the tyre sector in India. 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 Rubber,
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. While the tyre industry is largely dominated by the organized sector, the unorganized
sector is predominant with respect to bicycle tyres. 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. Interestingly, world-wide, the proportion of natural to synthetic rubber in
tyres is 30:70 The sector is raw-material intensive, with raw material accounting for 70% of the total
costs of production Total production figures in tonnage: 11.35 lakh MT & total production of tyres in all
categories: 811 lakh (2007-08)
http://www.mrftyres.com/http://www.jktyre.com/http://www.apollotyres.com/http://www.ceatyres.com/http://www.modigroup.net/modityre/http://www.kesocorp.com/http://www.dunloptires.com/http://www.falcontyres.com/http://www.tcilcorp.gov.in/http://www.tvstyres.com/http://www.tvstyres.com/http://www.metrotyres.com/http://www.bkt-tires.com/Home.aspxhttp://www.bkt-tires.com/Home.aspxhttp://www.metrotyres.com/http://www.tvstyres.com/http://www.tvstyres.com/http://www.tcilcorp.gov.in/http://www.falcontyres.com/http://www.dunloptires.com/http://www.kesocorp.com/http://www.modigroup.net/modityre/http://www.ceatyres.com/http://www.apollotyres.com/http://www.jktyre.com/http://www.mrftyres.com/ -
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Current level of radialization includes 95% for all passenger car tyres, 12% for light
commercial vehicles and 3% for heavy vehicles (truck and bus)
Restrictions were placed on import of used /retreaded tyres since April 2006 Import of new tyres & tubes is freely allowed, except for radial tyres in the truck/bus
segment which has been placed in the restricted list since November 2008 Total value of tyre exports from India is approximately Rs 3000 crore (2007-08) The major factors affecting the demand for tyres include the level of industrial
activity, availability and cost of credit, transportation volumes and network of roads,
execution of vehicle loading rules, radialization, retreading and exports.
Production
Fig 1: Category-wise tyre production in India for 2007-08 & 2008-09 with percentage of
change
Source: Automotive Tyre Manufacturers Association (ATMA). Data available only for two
years
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Figure 1 displays production figures for different categories of tyres in the year 2007-08 and
2008-09 (April-September). It shows a relatively significant increase in percentage of
production of tyres in the segments related to passenger cars, tractors, light commercial
vehicles and motorcycles. On the other hand, production of tyres for scooters and mopeds
declined by nearly 8 per cent.
SALES
Fig 3: Supply of key tyre categories to various segments like replacement market, original
equipment market (vehicle manufacturers) and export market for the year 2007-08
Sour ce: Automotive Tyre Manufacturers Association (ATMA). Data available only for two
years
Tyre supplies are targeted and marketed primarily to the following categories: Replacement
market, Original Equipment Manufacturers, Export, Government Supplies and State
Transport Undertakings. The replacement market is significant for manufacturers of tyres in
the category of motor cycles, scooters/mopeds and tractors, while the OEM segment is
significant for the category of passenger cars and jeeps.
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Technology generation
Technology generation in the Indian tyre industry is essentially geared to development
research, involving the change of tread design, reinforcement material etc. Most of the major
players do not engage in basic research due to the high costs involved. The source of
technology for the domestic firms has been through reverse engineering, joint ventures and
collaborations.
The emphasis given by Indian tyre companies to applied research and the setting up of well-
equipped in-house R&D centers by the companies, which are manned by experts and
experienced professionals, have also helped in technology upgradation. Indian tyre
technology has exhibited versatility in maintaining inflow of technology through foreigncollaborations and tailoring the same to Indian needs. R&D is essentially business or market
driven. However, raw material suppliers could also help in conceiving new projects.
Compound development and in-process problems have been the main thrust of in-house R&D
in the Indian tyre industry. (Iyer & Upadhyay, 2008)
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Fig 4: Comparison of R&D Expenditure, Exports, Sales & Raw Materials Expenditure
among all companies for the period from 2000-07
Note: The primary vertical axis depicts expenditure on R&D (at current prices) in Rs
(crores), while the secondary vertical axis depicts the percentage of exports and raw material
expenses in relation to sales.
Source: CMIE database (figures generated from the 40 listed companies in the sector)
A significant proportion of R&D effort in the tyre sector is carried out by four or five top
companies. The proportion of raw material expenditure in relation to sales has witnessed a
sharp spurt in 2007. The proportion of exports to total sales continues to be negligible in the
tyre sector and a major portion of the sales revenue is garnered through the domestic market.
Expenditure on Imported Technology and R&D Intensity: Comparison between Top
Ten Firms and All Other Companies in the Tyre industry
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Fig 5: Comparison of expenditure on imported technology (at current prices) and R&D
intensity among top ten players and all remaining firms (sectoral aggregate) in the Indian tyre
sector.
Note: The primary vertical axis depicts expenditure on imported technology (at current
prices) in Rs (crores), while the secondary vertical axis depicts R&D intensity (in
percentages).
Source: CMIE database
Tyre technology up gradation is an extremely difficult process, particularly in the Indian
scenario, due to several factors. First, since tyre technology encompasses various disciplines
such as polymer, chemical, steel etc. compromises have to be made in the up gradation of
technology because of a) the conflict and complementarity inherent in these disciplines,
b) the usage pattern of the tyres and c) the cost factor. Further, a tyres performance could be
affected due to factors such as the weather, loading pattern etc. Despite these bottlenecks
technology up gradation in Indian tyre industry during the last few decades has been
significant. This has been possible to some extent due to government approvals of
collaborations with MNCs in this sector. The emphasis given by Indian tyre companies to
applied research, the setting up of well-equipped in house R&D centres by large tyre
companies, manned by experts and experienced professionals have also helped in technology
up gradation. Indian tyre technology has exhibited versatility in maintaining inflow of
technology through foreign collaborations and tailoring the same to Indian needs.
Automation
Tyre production traditionally, is multi-stage, with significant inter-stage differences in the
intensity of labour requirement, and a highly complex process involving the use of around 37
different materials including rubber, steel, fabrics and vulcanizing materials. The production
system in the Indian tyre industry has been traditionally very labour intensive. The
automation of manufacturing processes has increased gradually, which has slashed the size of
the workforce to a considerable degree and has effected a change in its composition. The
degree of automation has been greater in the area of radial technology, while cross ply
technology is still labour intensive. The firms have been resorting to automation in order to
tackle problems related to labour unionization and indiscipline in the sector.
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The rationale provided by the firms for the increasing drive towards automation of themanufacturing facilities has been that high quality and uniformity of the final product usuallycannot be guaranteed with a labour intensive process. (Iyer & Upadhyay 2008).
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
Future prospects of the Indian Tyre industry
The Indian Tyre industry is expected to show a healthy growth rate of 9-10% over the next
five years, according to a study by Credit Analysis and Research Limited (CARE) . While the
truck and bus tyres are set to register a compounded annual growth rate (CAGR) of 8%, the
light commercial vehicles (LCV) segment is expected to show a CAGR of about 14 %.However, we have to also take account of the effect of the global recession on the sector in
making these assessments. The growth of the sector is closely linked to the expansion plans
of the automobile companies, the governments thrust on development of road infrastructure
and the sourcing of auto parts by the global Original Equipment Manufacturers (OEMs).
Some significant hurdles towards attaining these projected growth rates could be raw material
related price volatility, rupee appreciation and the looming threat of cheap Chinese imports.
The Indian tyre companies need to make active efforts to explore newer markets as theexisting markets for bus-truck tyres, which account for about 45 % of the total export
volume, is nearing saturation. There is also an urgent need to increase the degree of
radialization in order to safeguard their share in the export market. Global tyre manufacturers
have been making constant efforts to innovate and offer a diverse range of products such as
tyres with pressure warning systems, run flat tyres, eco-friendly tyres and energy efficient
tyres. In this context, the Indian domestic companies have to pursue a growth strategy of
continuous innovation and increasing emphasis on product differentiation.
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Segment
Segment:Automobile and industry equipment manufacturers /OEMs
Target market :Apollo tyres TG are all groups manufacturing following vehicle: Passenger Vehicles(e.g.) Car Motorcycle Bicycle Bus
Commercial Vehicles(e.g.) Truck( / lorry) Van Coach Bus Taxicab Trailers Box truck (also known as a straight truck)
Off-High Way Vehicles: Pickup trucks All-Terrain Vehicle (ATV) / Motorcycle Motorsports Rally, Desert Racing , and Rock crawling.
http://en.wikipedia.org/wiki/Truckhttp://en.wikipedia.org/wiki/Vanhttp://en.wikipedia.org/wiki/Coach_(vehicle)http://en.wikipedia.org/wiki/Bushttp://en.wikipedia.org/wiki/Taxicabhttp://en.wikipedia.org/wiki/Trailer_(vehicle)http://en.wikipedia.org/wiki/Box_truckhttp://en.wikipedia.org/wiki/Pickup_truckhttp://en.wikipedia.org/wiki/All_Terrain_Vehiclehttp://en.wikipedia.org/wiki/All-terrain_vehiclehttp://en.wikipedia.org/wiki/Motorcyclehttp://en.wikipedia.org/wiki/Motorsporthttp://en.wikipedia.org/wiki/Rallyinghttp://en.wikipedia.org/wiki/Desert_Racinghttp://en.wikipedia.org/wiki/Desert_Racinghttp://en.wikipedia.org/wiki/Desert_Racinghttp://en.wikipedia.org/wiki/Rallyinghttp://en.wikipedia.org/wiki/Motorsporthttp://en.wikipedia.org/wiki/Motorcyclehttp://en.wikipedia.org/wiki/All-terrain_vehiclehttp://en.wikipedia.org/wiki/All_Terrain_Vehiclehttp://en.wikipedia.org/wiki/Pickup_truckhttp://en.wikipedia.org/wiki/Box_truckhttp://en.wikipedia.org/wiki/Trailer_(vehicle)http://en.wikipedia.org/wiki/Taxicabhttp://en.wikipedia.org/wiki/Bushttp://en.wikipedia.org/wiki/Coach_(vehicle)http://en.wikipedia.org/wiki/Vanhttp://en.wikipedia.org/wiki/Truck -
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Positioning:Luxury, Style, Utility & Safety.
Vision: A significant player in the global tyres industry and a brand of choice, providing customerdelight and continuously enhancing stakeholder value.
Values : Customer First Business Ethics Care for Society Empowerment Communicate Openly
One Family
Competitors1. Bridgestone2. CEAT3. MRF4. Continental5. Goodyear6. Yokohama7. Pirelli
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SWOT
Strength1. Wide product variety
2. Excellent Geographical coverage across Asian, European and African markets.3. Good financial position.4. Good Brand awareness about the product.5. Over 4000 dealerships in India and over 900 in South Africa.6. Has manufacturing plants at India, SA, Zimbabwe and Netherlands.Weakness1. Low presence in latest car models.2. Low presence in two/three wheeler segment3. Brand yet to establish itself like the market leaders
Opportuni ty1. Emerging markets and improved lifestyle2. More tie- ups with Automobile companies as its mainly into B2B market. 3. Improved Infrastructure has fuelled more and more transportation4. Emergence of India as a hub for small car productionThreats
1. Price wars2. Stiff competition from national and international brands
3. Cheaper technologies4. Volatility in prices and availability of raw material as indias rubber production is less thanits demand5. Government Policies w.r.t export duties, import duties, tax levied on automobile industriesand economic condition of nation as it determines the sale of automobiles.
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