OVERVIEW
Apollo Tyres Ltd, with its corporate headquarters in Gurgaon, India, is in the business of manufacture and sale of tyres since its inception in 1972. Over the years, the company has grown manifold, establishing its footprint across the globe.
The company has manufacturing presence in Asia, Europe and Africa, with 8 modern tyre facilities and exports to over 100 countries. Powered by its key brands — Apollo and Vredestein, the company offers a comprehensive product portfolio spread across passenger car, light truck, truck-bus, off highway and bicycle tyres, retreading material and retreaded tyres.
At the end of its financial year on March 31, 2013, Apollo Tyres had clocked a turnover of US$ 2.34 billion, backed by a global workforce of approximately 16000 employees.
Apollo Tyres Ltd is traded in India on the Bombay, National and Kochi Stock Exchanges, with 56.5% of shares held by the public, government entities, banks and financial institutions as on September 30, 2013.
ATL has tremendous leverage in the international tyre market and with technology skills of the Indian company would be integrated to the newly acquired plants to generate better operational efficiency and also improve production and productivity. Sourcing of raw materials like natural and synthetic rubber and chemicals could be made more efficient because of the acquisitions in the European arena and could result in better economies of scale for Apollo tyre.
To diversify its presence in global markets and to generate nearly 60% revenue from overseas market, ATL has undertaken overseas acquisitions. In May 2009 ATL has acquired Dutch tyre-maker Vredestein Banden BV for Rs 1,200-1, 500 Cr, this acquisition taken place with the mix of internal accruals and debt financing. Vredestein Banden BV a strong sales and marketing network besides a production unit in Enschede, Netherlands with capacity of 55 lakh tyres. It will give ATL access to the challenging European market. ATL's revenue will reflect as a result of this acquisition in upcoming quarter results.
To increase its presence in the radial tyres segment of commercial vehicles, ATL has also made an investment of about Rs 1,300 crore in Chennai for a Greenfield project, which is likely to be operational November this year.

VISION AND VALUES
VISION
“A significant player in the global tyre industry and a brand of choice, providing customer delight and continuously enhancing stakeholder value.”
VALUES
C - Care for customer
R- Respect for associate
E- Excellence through team work
A-Always learning
T- Trust mutually
E- Ethical values

COMPANY SNAPSHOT: Date of Establishment | 28th September, 1972 | Revenue | Rs. 8,711.73 Cr | Market Cap | 123.96B | Corporate Address | Apollo House, 7, Institutional Area, Sector-32, Gurgaon - 122001
Haryana - India
Phone : 2383002-10
Fax : 2383351 | Management Details | Name | Designation | Onkar S Kanwar | Chairman & Managing Director | Sunam Sarkar | Whole Time Director | K Jacob Thomas | Director | Robert Steinmetz | Director | S Narayan | Director | Vikram S Mehta | Director | Pallavi Shroff | Addnl. & Ind.Director | | | Neeraj Kanwar | Vice Chairman & Mng.Director | U S Oberoi | Whole Time Director | Nimesh N Kampani | Director | Akshay Chudasama | Director | A K Purwar | Director | P H Kurian | Independent Director | | Business Operations | Tyres & Tubes | Financials | Total Income | Rs. 8835.78Cr | | Net Profit | Rs. 442.62Cr | | Net Worth | Rs. 2739.82Cr | | Total Debt | Rs. 894.40Cr | | EPS | 8.78 | | Quick Ratio | 0.36 | Company Secretary | Mr. Prem Wahal | Auditors | M/s. Deloitte Haskins & Sells, ChennaiM/s. N P Gopalakrishnan & Co. |

OPERATIONS It was a tough year for tyre makers and this is reflected in sales growth numbers at Apollo tyres Ltd which witnessed an increase of 4.03% during FY14. On a standalone basis, your Company achieved a net turnover of Rs. 86,101 million as against Rs. 85,075 million during the previous financial year. EBIDTA was at Rs. 11,781 million as compared to Rs. 9,556 million during the previous financial year. The net profit for the year under review was Rs. 4,426 million, as against Rs. 3,125 million in the previous fiscal, a growth of almost 41.63%.

PRODUCTION During the year under review (2012), your Company’s production has shown a consolidated output of 525,205 metric tonnes (MT) as against 525,062 MT in the previous year. RAW MATERIALS The demand supply gap of rubber in India continued to grow and imports of rubber from Thailand, Malaysia and Indonesia were necessary to offset the shortfall in domestic supplies. The customs duty on Natural Rubber was increased during the year to Rs. 30/kg or 20% whichever is lower. While this led to an increase in the cost of imported natural rubber, high production and a suppressed global demand saw a fall in global natural rubber prices to around USD 2/kg by the end of the fiscal. The brent crude prices were in the range of USD 105 - 110 per barrel in FY 14. Synthetic Rubber prices remained subdued in the year.

MARKETING For Apollo Tyres'' India operations, the year began with the launch of Apollo 4G range of tyres for passenger vehicles. To further strengthen its product offering in India, the Indian operations launched its premium European brand, Vredestein, in India to cater to high-end cars and SUVs. In the Off highway tyres segment, an aggressive approach helped the Company launch a slew of products for the segment. These included a new Farm product range, Krishak Gold, product for the specialty segment row crop and sub 30 HP tractor and the new XMR with Live Bond Steer mile technology. To tap the high potential ASEAN market, Apollo Tyres opened its sales office in Bangkok, Thailand. After Dubai for the Middle East region, this was the second ''home market'' outside Company’s operations in India, The Netherlands and South Africa. The Company continued to ramp its branding presence in India and other parts of the world. The Company tied up with global football club, Manchester United and launched a high-decibel brand –''There are no Shortcuts'' – campaign in India during the year.

EXPORTS Apollo Tyres exports to over 100 countries across the globe. The products, including heavy and light commercial tyres, passenger car tyres, etc. are finding acceptance in many markets due to the high product quality. In FY14, the South African operations saw a healthy exports number contributing about 31% of its total revenues. While the European operations continued to focus on domestic market, their entry into various export markets has demonstrated a favourable response.

EXPANSION PROGRAMME AND FUTURE OUTLOOK The Company will look at capacity expansion, Greenfields and Brownfields in line with its overall growth strategy. One of the key pillars for the Company’s success will be technology. To further strengthen this, the Company has setup a commercial vehicle R&D facility in Chennai, India, as well as a passenger vehicle R&D centre in the Netherlands. The has Board approved a Greenfield Project in Eastern Europe, at a project cost of approximately Euro 500 million over the next 4 years,

ACQUISITION/RESTRUCTURING Apollo was to acquire Cooper Tire & Rubber Company(Cooper) in an all-cash transaction valued at approximately Rs. 14,500 crores (USD 2.5bn). However, the deal could not go through due to the differences inter-alia between Cooper Tire and its joint venture company Cooper Chengshan (Shandong) Tire Co. Ltd. in China.

S.W.O.T. ANALYSIS Parent Company | Apollo Tyres Limited | Category | Tyres and tubes | Sector | Manufacturing, Automobiles | Tagline/ Slogan | Go the Distance | USP | World’s 17thbiggest tyre manufacturer | STP | Segment | 4 wheeler tyre manufacturer; OEM (30%), Replacement(70%) and demand | Target group | | Positioning | | PRODUCT PORTFOLIO | Brands | | S.W.O.T. | Strength | * Production base in three countries with three product brands * Extensive distribution * Leading player in commercial vehicle segment * Ultra high performance in car tyre segments in Europe * Largest producer and exporter in Indian car tyre segment | Weakness | * Not invested in two and three wheeler tyre segment * In Africa, manufacturing facilities are sub-optimal * Company unable to pass cost escalations to customers | Opportunity | * First mover in truck & bus radial segments * Apollo brand car tyres in Europe will make sizable leverage * Dunlop in Africa can explore more geographical advantages * Market in A. America, Australia, Russia S-E Asia yet to be explored | Threat | * Slow down in India economy * Increased competitions from global players * redundant capacities needing investments * Raw material price volatility * Unpredictable political, economical and currency fluctuations at S. Africa * Decline in demand in Europe | COMPETITION | Competitors | M.R.F., Ceat, Birla Tyres, Vikrant Tyres, Goodyear etc |

APOLLO TYRES LIMITED’S STRATEGY FOR COMPETITIVE ADVANTAGE:

* Differentiation and Innovation * Diversification into transportation and logistics * I.T. Drive * Operational Excellence * Product Leadership

DIFFERENTIATION AND INNOVATION: * 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 * 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 * 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
DIVERSIFICATION INTO TRANSPORTATION 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.
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 * 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 * 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. * 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 * 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 * 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 * 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 * 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

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 * 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. 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.

OPERATIONAL EXCELLENCE
APOLLO TYRES LIMITED – Operations Overview:
Vertical Integration
Vertical integration is a strategy used by a company to gain control over its suppliers or distributors in order to increase the firm’s power in the marketplace, reduce transaction costs and secure supplies or distribution channels. In it forward integration is a strategy where a firm gains ownership or increased control over its previous customers (distributors or retailers) and backward integration is a strategy where a firm gains ownership or increased control over its previous suppliers.
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. The Company manufacture automobile tyres and tubes, camel back/retreading materials and rubber conveyor belts.
1981: After the expiry of the original agreement the Company negotiated with General Tire International Co., U.S.A., for the renewal 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.
1986: ‘General Tire International Corporation', U.S.A. was taken over by `Continental Gummi werke GmbH', West Germany
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.
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.
1995: A new plant for manufacturing tubes and flaps at Ranjangaon near Pune was commissioned during the year.
2001: Apollo Tyres Ltd. has zeroed in on Tamil Nadu for setting up its Rs 450-crore Greenfield truck radial tyre manufacturing plant.
2003: Technical & Financial Collaboration with Michelin Group.
2006: Apollo Tyres rolls out DuraTreads 2008: Apollo Tyres establishing plant in Hungary 2009: Acquisition of 100% shareholding control of Vredestein Banden B.V., Netherlands 2010: Apollo to launch Vredestein tyres in India. Apollo Tyres has introduced 6 new products in the European market. Apollo Tyres South Africa (Pty.) Ltd. (ATSA), a wholly-owned-subsidiary of Apollo Tyres Ltd.
2011: Tamil Nadu government and the tyre manufacturer Apollo has signed a
MoU relating to investment of Rs 2,100 crore as part of Apollo’s Greenfield project.

Driven by the Five Pillars of TQM The management philosophy is based on five pillars of TQM (Total Quality Management) - Management Commitment, Customer Focus, Quality Costs, Quality Systems and Continuous Improvement - which rests on the foundation of Total Employee Involvement Program, Daily Management and Kaizen. The Total Employee Involvement Program: The Total Employee Involvement program ensures that responsibility for the company's performance is the shared responsibility of employees at all levels. It provides the employees with the opportunity to be involved in breakthrough activities and other improvements, over and above their daily routine. Daily work management: Daily work management consists of defining and monitoring key processes, ensuring that they meet set targets, detecting abnormalities and preventing their recurrence. TVS Motor encourages continuous improvement in all aspects of work, using Cross Functional Teams (CFT), Supervisory Improvement Teams (SIT) Quality Control Circles (QCC) and suggestion schemes
What about Kaizen? The five pillars start with policy management, which is used to arrive at the annual breakthrough objectives. There are generally not more than three company objectives, arrived at after a detailed exercise, which are deployed and reviewed periodically. The company conducts an exhaustive range of training programs, utilising both in-house skills and consultants from all over the world. The programs are conducted for all employees, at all levels.

PRODUCT LEADERSHIP
Product leadership is a business strategy in which companies try to consistently offer the best products to customers, with price and service being secondary considerations to product quality. This represents the company’s value proposition, or why customers choose to buy from them. The vast majority of organizations will choose one of three value propositions: low cost (an operational excellence model), best product (product leadership), or best relationship (customer intimacy). Making this selection is vital for any business in order to make decisions on everything from hiring to marketing to resource allocation. The choice of a value proposition also enhances Balanced Scorecard development by facilitating the creation of objectives and measures throughout the framework, particularly in the Customer and Internal Process perspectives.
When faced with this model some organizations insist they must excel at all three value propositions. Given today’s competitive realities this is an understandable reaction, but practically it can cause more headaches and confusion than benefits as companies attempt to be all things to all people and wind up instead offering mediocre service to everyone. Despite the challenges and potential pitfalls, we can see more and more companies attempting to balance at least two value propositions as we can see in the case of APOLLO.
The reason why APOLLO is jumping into the radial tyre market and competing directly with companies that possess decades of experience and success in the market is because of a number of reasons: First, they appear to have overcome their quality woes. Once considered a trouble-prone brand, APOLLO is now a leader in quality surveys. Second, they have little room for growth in their core market of “bias truck-bus” segment.
The choice of a value proposition impacts virtually every facet of a company’s operations from manufacturing to distribution, to marketing and promotion to name just a few. The question for APOLLO, and all those companies attempting to pursue two value propositions, is how they will manage the trade-offs inevitably necessary to achieve success with both. It should be an interesting ride.

QUALITY STANDARDS: PPM
PPM (Parts per million) is a measurement used today by many customers to measure quality performance.

Definition: One PPM means one (defect or event) in a million or 1/1,000,000

The monitoring and measurement systems we have today have paved the way for improved quality. We can now control the process in order to control the quality. Quality cannot be inspected in after the fact. It is the result of careful planning, design, and execution.
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.
Apollo has reduced its PPM considerably and increased its profits by:-
First, by demonstrating a systematic and scientific approach to design and manufacturing their facility.
Second, by training personnel in the use of the tools and methodology.