FORE SCHOOL OF MANAGEMENT

Project Report on the Financial

Analysis of Apollo Tyres Ltd.




Submitted to:
Professor Vandana Gupta
FORE School of Management



Submitted by:
Group 4
Kritika Mehra (221066)
Maansi Gupta (221067)
Pankaj Bansal (221084)
Piyush Jain (221089)
R.N.V.S.S. Sri Krishna (221104)
Rahul Verma (221111)
FMG 22, Section B

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CONTENTS
1. Introduction
1.1 Overview
1.2 Vision and values
1.3 Board of directors
1.4 Shareholding pattern
3
3
4
4
7
2. Operating performance
2.1 Sales mix
2.2 Segment wise distribution
2.3 Raw materials
2.4 Peer comparison
8
8
9
9
10
3. Financial analysis
3.1 Goals
3.2 Financial statements
3.3 Cash flow statement analysis
3.4 Financial ratio analysis
12
12
12
16
18
4. SWOT analysis 32




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CHAPTER 1: INTRODUCTION

1.1 Overview
Apollo Tyres Ltd has been in the business of manufacture and sale of tyres since its inception in
1972. Its corporate headquarters are in Gurgaon, India. 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 9 modern tyre facilities and exports to over 118 countries.
Powered by its key brands Apollo, Dunlop (brand rights for 32 African countries) 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.
Apollo Tyres Ltd is the world's 17th biggest tyre manufacturer, with annual consolidated
revenues of Rs 121.5 billion (US$ 2.5 billion) in 2011. Its first plant was commissioned in
Perambra, Kerala. The company now has four manufacturing units in India, one in South Africa,
two in Zimbabwe and 1 in Netherlands. It has a network of over 4,000 dealerships in India, of
which over 2,500 are exclusive outlets. It is currently the second largest player in the domestic
tyre sector with a market share of 18%.
It gets 59% of its revenues from India, 28% from Europe and 13% from Africa. Apollo Tyres
was 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 revenues of $6
billion by 2016.
On 12 June 2013, it was 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. The acquisition of Cooper -- the second biggest U.S. tire maker and No. 11 globally
with annual sales of $4.2 billion -- will give Apollo access to the U.S. market for replacement
tires for cars and light and medium trucks, Cooper's main business. The deal values Cooper at
4.4 times its EBITDA. The two companies had combined sales of $6.6 billion in 2012.Apollo's
cash offer of $35 per share represents a premium of about 43 percent to Cooper's share price on
the New York Stock Exchange. Apollo Tyres, which does not currently operate in the United
States, gets two-thirds of its revenue from India.
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Apollo Tyres Ltd is traded in India on the Bombay, National and Kochi Stock Exchanges, with
53.06% of shares held by the public, government entities, banks and financial institutions as on
June 30, 2012.

1.2 Vision and values
Vision
To be a significant player in the global tyre industry and a brand of choice, providing customer
delight and continuously enhancing stakeholder value.

Values
Customer First
Business Ethics
Care for Society
Empowerment
Communicate Openly
One Family

1.3 Board of directors
The Companys Board of Directors consist of 14 Executive and Non Executive Directors,
including leading professionals in their respective fields.






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The following is the percentage of Executive and Non Executive Directors of the Company:
Category of Directors Number of Directors % of Total number of
Directors
Executive 4 29
Non Executive 10 71
Total 14 100


Management board is as follows:
Onkar S Kanwar (CMD)
Satish Sharma
Dr. Luis C Ceneviz
RiazHaffejee
Sunamsarkar
Marco Paracciani
Robert Stelnmetx
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NeerajKanwar (Vice Chairman & MD)
P.K Mohamed
TapanMitra
Gaurav Kumar
Peter Snel
PN Wahal

Profile of the Chairman & Managing Director:
As the Chairman & Managing Director of Apollo Tyres Ltd, MrOnkar S Kanwar is the chief
architect of the Companys vision and value-driven business strategy. Under his able leadership
Apollo became a professionally managed and a globally recognisedtyre manufacturer. As a
visionary entrepreneur, he plays a critical role in the articulation of Companys business
philosophy.
He is the Past President of the Federation of Indian Chambers of Commerce and Industry
(FICCI) and a former Chairman of the Automotive Tyre Manufacturers Association. Currently,
apart from being a member of the Trade Advisory Committee to the Government of India and the
President of Indian Rubber Manufacturers Research Association (IRMRA), he is also a Member
of the Board of Governors for the Indian Institute of Management (Kozhikode) and the Indian
Institute of Information Technology Design & Manufacturing (IIITDM).

Profile of the Vice-Chairman & Managing Director:
As the Vice Chairman & Managing Director of Apollo Tyres, Mr. Neeraj Kanwar plays a pivotal
role in Apollos journey towards becoming one of the most admired automotive tyre brands. Mr.
Neeraj Kanwar has pioneered key initiatives in enhancing the competitiveness of the Companys
operations and products across the board. He is responsible for crafting Apollos growth story -
taking the Company from USD 450 million to USD 2.5 billion within a 5 year time span. Under
his able leadership, Apollo acquired Dunlop Tyres International in South Africa and Zimbabwe
in 2006 and Vredestein Banden B V in the Netherlands in 2009 thereby transforming itself into
a multi-geography Company with operations in 3 continents. As a business leader, Mr. Neeraj
Kanwar is associated with leading industry associations and has served as the Chairman of the
Automotive Tyre Manufacturers Association, India.
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1.4 Shareholding pattern
Shareholding Pattern for the Quarter Ended March 31, 2013





Promoters
43%
FII/NRIs/Foreign
body corporate
29%
Public
21%
Financial
institutions/Banks
/Mutual funds
5%
Government of
Kerela/KSIDC
2%
Shareholding pattern
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CHAPTER 2: OPERATING PERFORMANCE

2.1 Sales mix
It is the second largest player in the domestic tyre sector.
It is currently a market leader in the truck and bus category with a market share of 27.5%.


Category Brands Revenue percentage
Commercial vehicles Amar
Amar AT-Rib
Cargo Miler
Cargo Plus
Lug Miler
57%
Passenger vehicles Acelere
Acelere Maxx
Amazer 3G
Amazer 3G Maxx
33%
Truck-Bus
48%
Passenger
vehicle
33%
Off highway
9%
Light truck
9%
Others
1%
Revenue segmentation by product
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Off highway Krishak Super
Powerhaul
9%


2.2 Segment wise distribution
It has a strong focus on the replacement market. It got 66% of standalone revenues and
80% of consolidated revenues from the replacement market.
Exports contributed about 10% to the standalone sales.
Original Equipment market contributed 24% to its standalone revenues.

2.3 Raw materials
The following table shows the raw materials consumed in FY13.
Raw material Rs. (Million)
Fabric 7014.85
Rubber 35353.73
Chemicals 4031.94
Carbon black 7385.22
Others 5171.39
Total 58957.13

From the above table it can be concluded that rubber (natural and synthetic) is the major raw
material used.
The following table shows the breakup of the raw materials depicting how much of the raw
material was imported.
Source of raw materials Percentage (%) Rs. (Million)
Imported 44.51 26243.84
Indigenous 55.49 32713.29
Total 100 58957.13

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Natural rubber, the prime raw material was imported from Thailand, Malaysia and Indonesia
along with the domestic supply to bridge the demand-supply gap and meet the quality
requirements for truck and bus radial tyres.

2.4 Peer comparison
Apollo Tyres is currently second in the Indian tyre industry with a market share of 21%.


The table given below gives the list of the top 3 players (considering their market share as per
volumes) in these 3 major segments.
Truck and Bus Passenger Car Motorcycle
Company Market Share Company Market Share Company Market Share
Apollo Tyres 28 MRF Ltd. 24.8 MRF Ltd. 29.4
MRF Ltd. 22.3 Bridgestone 21.1 TVS Srichakra 25
JK Industries 20 Apollo Tyres 20.3 Falcon Tyres 16.2

As seen in the above table, the Truck & Bus segment is highly competitive with the top 3 players
having market share very close to each other. Apollo Tyres is the market leader in Truck and Bus
MRF Ltd.
24%
Apollo Tyres
21%
JK Industries
14%
Ceat Ltd.
9%
Birla Tyres
9%
Others
23%
% Market share
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segment with a market share of 28%. MRF has a good presence in all the segments and is the
leader in Passenger Car and Motor Cycle with a 25% and 29% share respectively.

The following table shows the comparison of Apollo Tyres with other players in the tyre
industry.





Apollo Tyres
JK Tyres
CEAT
0
5
10
15
20
25
30
35
EPS
ROCE
RONW
PBIDTM
Apollo Tyres
JK Tyres
CEAT
Name Sales
Turnover
(Rs. Cr)
Net Profit
(Rs. Cr)
Market Cap.
(Rs. Cr)
Total Assets
(Rs. Cr)
Apollo Tyres 8,507.49 312.67 3172.68 4,219.22
MRF 11,870.18 572.11 5464.87 4,489.23
Balkrishna Ind. 3173.08 355.84 2148.98 3482.50
Ceat 4,881.45 120.35 374.7 1,550.49
JK Tyre&Ind 5,430.83 121.06 344.7 2,962.10
TVS Srichakra 1463.27 7.8 124.63 444.61
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CHAPTER 3: FINANCIAL ANALYSIS

Financial analysis refers to an assessment of the viability, stability and profitability of a business,
sub-business or project. It is performed by professionals that make use of information taken from
financial statements and other reports. These reports are usually presented to top management as
one of their bases in making business decisions. Based on these reports management may:
Continue or discontinue its main operations or part of its business.
Make or purchase certain products in the manufacture of its products.
Acquire or rent/lease certain machines and equipments in the production of its goods.
Issue stock or negotiate for a bank loan to increase its working capital.
Making decisions regarding investing or lending capital.
Other decisions that allow management to make an informed selection on various
alternatives in the conduct of its business.

3.1 Goals
Financial analysis often assesses the firms;
Liquidity: ability to maintain positive cash flow, satisfying short term obligations.
Solvency: ability to pay its obligation to creditors and other third parties in the long-term;
Profitability: ability to earn income and sustain growth in both short-term and long-term.
A companys degree of profitability is usually based on the income statement, which
reports the companys results of operations.
Stability: ability to remain in business in the long run, without having tosustain
significant losses in the conduct of its business. Assessing a companys stability requires
the use of the income statement and the balance sheet, as well as financial and non-
financial indicators.

3.2 Financial statements
The financial statements for the year 2012-13 are as follows:
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Financial performance for the year 2013-13
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Highlights
Apollo Tyres Ltd witnessed revenue growth to the tune of 5.28% during FY13, despite
pressures on the bottom line due to an industry-wide slowdown.
It achieved a net turnover of Rs 85,075 million as against Rs 81,579 million during the
previous financial year. EBIDTA was at Rs 9,555 million as compared to Rs 6,845
million during the previous financial year.
The net profit for the year under review was Rs 3,125 million, as against Rs 1,813 million
in the previous fiscal, a growth of almost 72.4%.
In the year under consideration, Apollo Tyres entered new markets, launched high
performing products for both the passenger and commercial vehicle categories and
redesigned its R&D structure, with a focus on profitability, internal efficiencies and
customer delight.

3.3 Cash flow statement analysis
The Consolidated Statements of Cash Flows are prepared using the indirect method, which
reconciles net earnings to cash flow from operating activities. The reconciliation adjustments
include the removal of timing differences between the occurrence of operating receipts and
payments and their recognition in net earnings. The adjustments also remove cash flows arising
from investing and financing activities, which are presented separately from operating activities.
Cash payments related to income taxes are classified as operating activities.
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3.3.1 Operating activities
The net cash from operations for the year 2012-13 was Rs 7,700 million, an increase of 42.83%
from last year. Operating cash flow resulted primarily from net earnings adjusted for non-cash
items (depreciation and amortization, finance charges, interest income, forex fluctuations,
provisions, etc.), partially offset by changes in working capital.
Working capital changes show an increase in the inventories prior to last year. The trade
receivables have decreased as compared to last year, which reflects efficient working capital
management.
Cash flows from operations are healthy enough to finance regular investments in fixed assets and
other investments and also finance repayment of debt.

3.3.2 Investing activities
Net investing activities consumed Rs. 4054 million of cash in 2012-13 mainly due to capital
spending and acquisitions of fixed assets to the tune of Rs.3693 million, and investments made in
subsidiary companies. This outflow was partially offset by proceeds from asset sales and interest
income from investments.
The cash used in investing activities saw a decrease of 25% from last year. However a negative
figure in investing activities shows that the company consistently makes huge investments in
fixed assets to maintain capacity and overall operations.

3.3.3 Financing activities
The net cash used in financing activities increased significantly from Rs.206 million in 2011-12
to Rs.3210 million in 2012-13. This increase is mainly attributable to the fact that significant
amounts of short term and long term borrowings have been repaid in FY13, and partially due to
the increase in finance charges over the year. The debt repayments have been mainly funded
from surpluses generated from operating activities.

Dividends (net of dividend tax) paid have been consistent over the two financial years at Rs. 292
million.

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3.3.4 Overall outlook
Net increase in cash and cash equivalents is Rs. 435 million as opposed to a negative figure of
Rs.287 million in the previous year. This improvement in the cash position is accountable mainly
to the significant increase in the cash from operations.
Cash used in investing activities did not change very significantly. A noticeable change, though,
is observed in the cash used in financing activities. However, this increase in the cash used in
financing activities was set off by the increase in the cash flows from operating activities,
resulting in positive net cash flows. The company enjoys a healthy flow of cash from operating
activities and the cash position is stable.
In a comparison with the previous year, the cash performance was better for the current year.

3.4 Financial ratios analysis
The term financial or accounting ratios is used to describe significant relationship between
figures shown on a balance sheet, in a profit and loss account, in budgetary control system or in
any other part of accounting. Accounting ratios thus show the relationship between accounting
data.
Ratios show how one number is related to another. It may be expressed in the form of co-
efficient, percentage, proportion, or rate. For example the current asset and current liabilities of a
business on particular date are$200,000 and $100,000 respectively. The current ratio would be
expressed as C.A/C.L (i.e. 200,000/100,000) i.e. C.A is two times the C.L. ratio sometimes is
expressed in the form of rate. For instance ratio between two numeric facts, usually over a period
of time, e.g. stock turnover is three times a year.
Financial ratios are useful indicators of a firm's performance and financial situation. Most ratios
can be calculated from information provided by the financial statements. Financial ratios can be
used to analyze trends and to compare the firm's financials to those of other firms. They can also
be used to compare the firms financials with the industry average. In some cases, ratio analysis
can predict future bankruptcy.


3.4.1 Liquidity ratios
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Liquidity ratios provide information about a firm's ability to meet its short-term financial
obligations. They are of particular interest to those extending short-term credit to the firm. Two
frequently-used liquidity ratios are the current ratio (or working capital ratio) and the quick ratio.

Current Ratio: The current ratio is the ratio of current assets to current liabilities:
Current Ratio =Current Assets / Current Liabilities

Year 2009-10 2010-11 2011-12 2012-13
Current Ratio 0.99 0.76 0.72 0.78




One drawback of the current ratio is that inventory may include many items that are difficult to
liquidate quickly and that have uncertain liquidation values.

Quick ratio: The quick ratio is an alternative measure of liquidity that does not include
inventory in the current assets.
The quick ratio is defined as follows:
Quick Ratio = (Current Assets Inventory)/Current Liabilities
0
0.2
0.4
0.6
0.8
1
1.2
2009-10 2010-11 2011-12 2012-13
Current Ratio
Current Ratio
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The current assets used in the quick ratio are cash, accounts receivable, and notes receivable.
These assets essentially are current assets less inventory. The quick ratio often is referred to as
the acid test and a ratio of 1:1 is considered satisfactory.

Year 2009-10 2010-11 2011-12 2012-13
Quick Ratio 0.74 0.61 0.54 0.48


Liquidity position of Apollo Tyres:
Current ratio of Apollo Tyres is more or less the same in each year, and is not very high. The
companys current ratio is less than 1 which shows that the availability of current assets in rupees
is less than current claims against them. The ratio falls below the ideal ratio of 2:1 but the typical
values for the current ratio vary across firms in different industries. In this case, the industry
norm for current ratio is 1.63 and Apollo Tyres ratio falls short of this norm.

Quick Ratio of Apollo Tyres is also not very high compared to the ideal ratio of 1:1.
However this may not necessarily mean that the company is facing a liquidity crunch. As we can
see from the statements that the company enjoys a positive cash flow from operations and has
adequate cash and bank balances. Therefore, we can conclude that the liquidity position of
Apollo Tyres, though, may not be great but is stable.

3.4.2 Solvency ratios
The term solvency of a company can be defined as the ability of a firm to meet its long term
obligations.
Debt to equity ratio: The Debt-To-Equity ratio is total debt divided by total equity.
Debt-to-Equity Ratio = Total Debt/Total Equity
Debt ratios depend on the classification of long-term leases and on the classification of some
items as long-term debt or equity.

Interest coverage ratio: The interest coverage ratio indicates how well the firm's earnings can
cover the interest payments on its debt. It is calculated as follows:
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Interest Coverage = EBIT/Interest Charges
Where, EBIT = Earnings before Interest and Taxes

Year 2009-10 2010-11 2011-12 2012-13
Debt-equity
ratio
0.59 0.84 1.03 0.97
Interest
coverage ratio
7.76 2.62 2.04 2.78


0
0.2
0.4
0.6
0.8
1
1.2
2009-10 2010-11 2011-12 2012-13
Debt-Equity Ratio
Debt-Equity Ratio
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Solvency position of Apollo Tyres:
Debt equity ratio of Apollo Tyres has increased over a period of three years and has decreased
for the year 2012-13. Overall this ratio has been below 1, which is neither very low nor too high
for the tyre industry. The ideal debt to equity ratio is 2:1 but it may vary across different
industries. In case of the tyre industry, the industry norm is 1.44. So, if we compare Apollo
Tyres ratio with the industry norm, we can say that it is below the industry norm in all the four
years. This means that the company largely depends on internal sources for its financing
requirements and has low debt in its capital structure.
Looking from a long-term prospective, a low debt to equity ratio is always good for a company
because it indicates that the company will have enough room to raise funds from external sources
if it may have the need to do so in future.

The interest coverage ratio indicates the number of times interest charges are covered by funds
that are ordinarily available for their payment. Ideally, the higher this ratio the better it is for any
company. Then again, it may not be very high in all the industries. The ratio for Apollo Tyres,
although not very high, has come down from 7.76 in 2009-10 to 2.78 in 2012-13. This may be a
cause for concern. But since the industry average is at 2.15 for the year 2012-13, we can say that
Apollo Tyres solvency position is better than the industry average.
0
1
2
3
4
5
6
7
8
9
2009-10 2010-11 2011-12 2012-13
Interest Coverage Ratio
Interest Coverage Ratio
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3.4.3 Profitability ratios
Gross profit margin: Gross profit margin may be indicative of to what extent the selling prices
of goods per unit may be reduced without incurring losses on operations. It reflects efficiency
with which a firm produces its products. As the gross profit is found by deducting cost of goods
sold from net sales, higher the gross profit better it is. There is no standard gross profit ratio for
evaluation. It may vary from business to business. However, the gross profit earned should be
sufficient to recover all operating expenses and to build up reserves after paying all fixed interest
charges and dividends.
Gross profit margin = Gross profit/Net sales * 100

Net profit margin: Net profit ratio is used to measure the overall profitability and hence it is
very useful to proprietors. The ratio is very useful as if the net profit is not sufficient, the firm
shall not be able to achieve a satisfactory return on its investment.
This ratio also indicates the firm's capacity to face adverse economic conditions such as price
competition, low demand, etc. Obviously, higher the ratio the better is the profitability. But while
interpreting the ratio it should be kept in mind that the performance of profits can also be seen in
relation to investments or capital of the firm and not only in relation to sales.
Net profit margin = Net profit/Net sales * 100
Operating Profit Margin = Operating Profit/Net Sales * 100

Year 2009-10 2010-11 2011-12 2012-13
Gross profit
margin
13.76 7.90 6.48 7.94
Operating
profit margin
16.19 10.58 8.75 10.52
Net profit
margin
8.19 3.61 2.21 3.63
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Profitability position of Apollo Tyres:
The gross profit margin has not increased very significantly over the previous year, having
increased from 6.48% in 2012-12 to a mere 7.94 % in the year 2012-13. Likewise, the net profit
and operating profit margins too have not shown any major jumps from the preceding financial
year.
This conservative growth in profitability figures can be attributed to a global auto slowdown.
The Indian automotive industry, often considered to be a barometer of the economy, was not
immune to the global slowdown. In FY13, the industry witnessed weak customer sentiment and
high interest rates. The Indian tyre industry, in particular, was affected by low export demand.
However, profitability was maintained because of reduced raw material cost.

3.4.4 Activity ratios
These are concerned with measuring efficiency in asset management. They are also called
efficiency or assets utilization ratios. An activity ratio may be defined as a test of the relationship
between cost of sales and the various assets of the firm. The greater is the rate of turnover or
conversion, the more efficient is the utilization / management.
Depending upon the various types of assets, there are various types of activity ratios.
0
2
4
6
8
10
12
14
16
18
2009-10 2010-11 2011-12 2012-13
Gross profit margin
Operating profit margin
Net profit margin
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Assets turnover ratio: This ratio is also known as investment turnover ratio. It is based on the
relationship between the cost of goods sold and assets/ investment of a firm. Depending upon the
different concepts of assets employed, there are many variants of this ratio.

Inventory (stock) turnover ratio: This ratio indicates the number of times inventory is replaced
during the year. It measures the relationship between the cost of goods sold and the inventory
level. This ratio measures how quickly the inventory is sold showing efficient inventory
management.

Debtors Turnover Ratio: It establishes the relationship between net credit sales and average
debtors of the year. It indicates the number of times the receivables are turned over in ayear in
relation to sales.

These ratios show how the resources are efficiently utilized in the concern and are as follows:
Year 2009-10 2010-11 2011-12 2012-13
Asset turnover
ratio
2.56 2.10 2.46 2.27
Inventory
turnover ratio
11.19 7.11 7.94 8.48
Debtor
turnover ratio
48.27 35.11 31.35 29.68

The Asset turnover ratio for Apollo Tyres has not shown much variation over the years, and has
not been very high. A high ratio indicates efficient utilization of fixed assets. However, since the
industry norm for FY13 was at 1.57, we can conclude that the assets of the company have been
efficiently employed for driving sales.
The inventory turnover ratio has shown an increasing trend over the past three years, which
indicates better performance since it means that the investment in stocks is leading to higher
sales. Also, the industry average was at 5.59 for FY13, placing Apollo Tyres above the industry
performance in terms of efficient utilization of inventory.
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The debtor turnover ratio shows how quickly the debtors are converted into cash. A high ratio
indicates prompt collections from debtors. Ideally, this ratio should show an upward trend but for
Apollo Tyres, it has been decreasing over the years. However, on the positive side, the
companys ratio is much higher than the industry norm of 6.91, and is one of the highest in the
industry. This indicates that Apollo Tyres is better able to manage its debtors than the other
companies in the industry.
Overall, Apollo Tyres performance has been better than the industry performance, indicating
efficient utilization of the resources and facilities at its disposal.


0
0.5
1
1.5
2
2.5
3
2009-10 2010-11 2011-12 2012-13
Asset turnover ratio
Asset turnover ratio
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3.4.5 Capital market ratios
Earnings per share (EPS) ratio: The earnings per share is a good measure of profitability and
when compared with EPS of similar companies, it gives a view of the comparative earnings or
0
2
4
6
8
10
12
2009-10 2010-11 2011-12 2012-13
Inventory turnover ratio
Inventory turnover ratio
0
10
20
30
40
50
60
2009-10 2010-11 2011-12 2012-13
Debtors turnover ratio
Debtors turnover ratio
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earnings power of the firm. EPS ratio calculated for a number of years indicates whether or not
the earning power of the company has increased.

Dividend payout ratio: The payout ratio and the retained earnings ratio are the indicators of the
amount of earnings that have been ploughed back in the business. The lower the payout ratio, the
higher will be the amount of earnings ploughed back in the business and vice versa. A lower
payout ratio or higher retained earnings ratio means a stronger financial position of the company.

Dividend Yield: This ratio indicates the return on the market price of a share and is calculated as
DPS/MPS * 100

Year 2009-10 2010-11 2011-12 2012-13
EPS 8.23 3.93 3.60 6.20
DPS 37.8 25.2 25.2 25.2
Dividend Yield 1.06 0.72 0.63 0.6



0
1
2
3
4
5
6
7
8
9
2009-10 2010-11 2011-12 2012-13
Earnings per share
Earnings per share
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Return on equity: It is the bottom line measure for the shareholders, measuring the profits
earned for each dollar invested in the firm's stock. Return on equity is defined as follows:
Return on Equity = Net Income/Shareholder Equity

0
5
10
15
20
25
30
35
40
2009-10 2010-11 2011-12 2012-13
DPS
DPS
0
0.2
0.4
0.6
0.8
1
1.2
2009-10 2010-11 2011-12 2012-13
Dividend Yield
Dividend Yield
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Return on investment: This ratio is more meaningful to the equity shareholders who are
interested to know profits earned by the company and those profits which can be made available
to pay dividends to them. Interpretation of the ratio is similar to the interpretation of return on
shareholder's investments and higher the ratio better is.

Year 2009-10 2010-11 2011-12 2012-13
ROE 26.98 10.97 9.21 14.26
ROI 24.99 11.65 12.81 17.43



0
5
10
15
20
25
30
2009-10 2010-11 2011-12 2012-13
Return on equity
Return on equity
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Market performance of Apollo Tyres:
The EPS helps in evaluating the prevailing market price of share in the light of profit-earning
capacity. The more the EPS, the better is the performance and prospects of the company. For
Apollo Tyres, its EPS has been on a declining trend, barring FY13, where in it jumped to Rs
6.20/share from Rs 3.60/share in FY12. The EPS has been higher for other companies in the
industry.
The company has maintained constant dividend of Rs. 25.2/share. The dividend yield has shown
a downward trend mainly because of constant DPS and increasing market price of shares over
the years, resulting in a decrease in yield per share.
The ROE has increased from 9.21 in FY12 to 14.26 in FY13. This is a favorable trend for the
owners and investors of the company.
The Return on Investment or Capital Employed has been on an upward trend over the last three
years, which shows an improvement in overall performance within the company. Moreover, the
industry average for this ratio for FY13 was 10%. Apollo Tyres having registered a return of
17.43% in the same year, performed more than satisfactorily in terms of industry performance.

0
5
10
15
20
25
30
2009-10 2010-11 2011-12 2012-13
Return on Investment
Return on Investment
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CHAPTER 4: SWOT ANALYSIS
The diagnosis of a firms strengths and weakness can be fruitful only if the environment factors
and market conditions are considered along with the internal capabilities. This approach
essentially involves matching of the internal capabilities with the environmental opportunities
and threat and is known as SWOT (strength and weakness, opportunities and threats) analysis.
Strengths:
First Indian Tyre Company to launch
exclusive branded outlets for truck tyres
and introduce radial tyres for farming
machinery segment.
Strong brand value lends credence to its
growth plans.
Diversified market base across multiple
geographies.
Extensive distribution networks in
domestic markets.
Leading player in the commercial vehicle
segment in India.
Dynamic leadership.
Weakness:
Not a strong presence in the 2 and 3
wheeler segment in India.
Inability to pass on cost escalation to
consumers, resulting in pressure on
margins..
Low earnings per share as compared to
other players in the industry.
Opportunities:
Started offering radial retreading facilities
to the truck and bus category, which it can
use to further leverage leadership position
in the market.
Company is foraying into high potential
markets such as South America, Australia
and Eastern Europe.
Acquisition of Cooper Tyres to increase
global presence.
New product segments-industrial tyres.
Threats:
Economic slowdown in key markets-
Indian and Europe leading to decreased
volumes and capacity utilization.
Increased competition from global players
such as Michelin and Bridgestone.
Highly dependent on automobile industry.
High raw material price volatility
translating into pressures on margins during
a quick rise in their prices.
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Division of work:
1. Chapter 1 and Chapter 4 : Piyush Jain (221089)
2. Chapter 2: Rahul Verma (221111)
3. Chapter 3: Kritika Mehra (221066)
Maansi Gupta (221067)
R.N.V.S.S. Sri Krishna (221104)
4. Chapter 4 and Cash flow statement analysis: Pankaj Bansal (221084)