One

of the leading tyre companies in India with turnover of Rs 4,100 crore in FY 2009 5 year CAGR of 20% in India
Sales (Rs Crores)
50000 40000 30000 20000 10000 0 2005 2006 2007 2008 2009

Sales

Sales (100% = Rs 41,000 Cr) 14 24 62

India Europe SA

Sales (100% = Rs 41,000 Cr)

15
Replacement

85

OEM

Market Share - Truck and Bus Tyres FY 2009 3% 19% 13% 18% 19% 28%

Apollo MRF JK Ceat Birla Others

Market Share - PCR Tyres FY 2009 4% 23% 13% 19% 3% 19% 19%
Apollo MRF JK Ceat Goodyear Bridgestone Others

 Rs.20,000 crore

Industry in FY 2009 Highly concentrated with top 10 players accounting for 95% production Extensive distribution networks High correlation with the prices of key raw materials such as rubber and crude oil High correlation to the automobile industry

Growing Economy

Increase in income level Increase in demand for passenger cars Increase in demand for passenger car tyres Replacement demand after 24-48 months

Increase in demand of freight movement Increase in commercial vehicle demand Increase in tyres demand from OEMs

Increase in wear and tear of tyres Replacement demand for Tyres

Replacement demand after 12-18 months

Increase in tyre sales

1. Savings rate 2. Car density per family 3. Family structure

Economic factors

1. 2. 3. 4. 5.

GDP growth Disposable Income IIP Service sector growth Cost of raw materials

Socioeconomic behaviour

Government policies

1. Length of roads 2. Demand for vehicles 3. Replacement segment vs. OEM

Infrastructure and Transport

1. FDI/FII regulations 2. Import/ Export regulations 3. Political stability

 GDP

Growth GDP grew at 7.8% in FY 2009-2010 on account of growth in industrial and services sector Disposable Income - It has been growing at 9.5% p.a. thus fueling growth in sales of passenger cars Cost of Raw materials - In the last few months, price of domestic natural rubber has increased by almost 40%

Import duty on natural rubber is as high as 20% but import duty on finished tyres is as low as 10%, thus affecting local manufacturers competitiveness Continued emphasis being placed by the Central Government on development of infrastructure, particularly roads, agricultural and manufacturing sectors

 Length of

roads was 3,320 thousand kms, out of which, only 65 kms is highways Lack of good roads signifies greater replacement rate. At the same time, it acts as a demotivator for people contemplating buying vehicle Sale of passenger cars has grown at 9% p.a. between 2006-09

 As the

culture of nuclear families spreads, more two-wheelers/ four-wheelers are being demanded Number of upper-class and upper-middle class families with more than one car per family seems to be increasing exponentially Mindset shift from savings toward EMI culture

 Contingency plan

For boost in transportation demands due to agriculture Close watch on taxation and loan rates which would affect

Disposable Income Increase or decrease in prices of complementary products.

Monitor

wage rates, employment rates ,FDI as they are accurate reflectors of macroeconomic condition.

 Decrease in

rainfall ->poor agricultural growth >adverse effect on tyre industry

breakthroughs Improvement in inputs and processes. situations like recession vs unexpected incentivesTwo sides of the spectrum.

New

Exceptional