Apollo Tyres
FINANCIAL STATEMENT ANALYSIS
APOLLO TYRES LTD.
As Part of the Course On FINANCIAL ACCOUNTING
INTRODUCTION
Apollo Tyres Ltd. is a leading Indian tyre manufacturer which commenced its production in 1977 under the leadership of Raunaq Singh. It is built around the core principles of creating shareholder value through reliability in its products and dependability in its relationships with stakeholders. The company offers a range of tyres to consumers in heavy, light and passenger vehicles category. The company has four manufacturing units in India and through its recent acquisition of Dunlop Tires, South Africa, now possesses two manufacturing units each in South Africa and Zimbabwe.
In this report we are presenting a brief strategy analysis of the company, an analysis of the financial performance of the company over the last three fiscal years (2004 to 2006) and a brief financial comparison of the company with the US tire manufacturer Goodyear. We conclude with our views on the financial prospects of the company.
Strategy Analysis
Analysis of the Industry Indian tyre market is estimated to be a Rs.14,500 crore industry with CAGR of 11% in terms of volume in last 5 years (2002-06). It is concentrated as the top four companies Apollo Tyre, JK Tyre, Ceat and MRF control 78% of the total revenue. 70% of the industry revenues are contributed by commercial vehicles (Truck, Bus & LCV)i Passenger car segment is growing faster (CAGR 16%) than HCV, LCV and farm segment, a drastic shift towards a global structure where passenger cars and light trucks constitute 88% by volume and 63% by sales is not expected in the next 3-5 years.
Key Factors affecting industry are: 1. Health Of The Economy: GDP growth rate of 8% plus and stable growth forecast for next 5 years implies continued growth for the tyre industry. Increased economic activity will boost road transportation industry which handles 60% of goods and 80% of passengers in India.ii 2. Interest Rates affect
APOLLO TYRES LTD.
As Part of the Course On FINANCIAL ACCOUNTING
INTRODUCTION
Apollo Tyres Ltd. is a leading Indian tyre manufacturer which commenced its production in 1977 under the leadership of Raunaq Singh. It is built around the core principles of creating shareholder value through reliability in its products and dependability in its relationships with stakeholders. The company offers a range of tyres to consumers in heavy, light and passenger vehicles category. The company has four manufacturing units in India and through its recent acquisition of Dunlop Tires, South Africa, now possesses two manufacturing units each in South Africa and Zimbabwe.
In this report we are presenting a brief strategy analysis of the company, an analysis of the financial performance of the company over the last three fiscal years (2004 to 2006) and a brief financial comparison of the company with the US tire manufacturer Goodyear. We conclude with our views on the financial prospects of the company.
Strategy Analysis
Analysis of the Industry Indian tyre market is estimated to be a Rs.14,500 crore industry with CAGR of 11% in terms of volume in last 5 years (2002-06). It is concentrated as the top four companies Apollo Tyre, JK Tyre, Ceat and MRF control 78% of the total revenue. 70% of the industry revenues are contributed by commercial vehicles (Truck, Bus & LCV)i Passenger car segment is growing faster (CAGR 16%) than HCV, LCV and farm segment, a drastic shift towards a global structure where passenger cars and light trucks constitute 88% by volume and 63% by sales is not expected in the next 3-5 years.
Key Factors affecting industry are: 1. Health Of The Economy: GDP growth rate of 8% plus and stable growth forecast for next 5 years implies continued growth for the tyre industry. Increased economic activity will boost road transportation industry which handles 60% of goods and 80% of passengers in India.ii 2. Interest Rates affect