1. Group - 13 Nilesh Mahale28 Amit Maisheri29 Riyazuddin Patel38 Laukik Pradhan40 Jaydeep Satam47 Strategic Management Case Study - Apollo Tyres

2. Agenda Introduction Theory Application Questions Learning's & Conclusion

3. Apollo at a Glance Established in 1972 A turnover of USD 2.2 billion (INR 133 bn) as of FY 13-14 Available in over 100 countries Over 16,500 employees 8 manufacturing facilities in Asia, Europe and Africa

4. Our Beliefs 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 One Family Communicate Openly

5. Our Products Two Wheelers Trucks OHT - off highway tyres Farm Passenger Cars

6. Data as on March 31, 2014 Geography Customer Product Our Financial Performance Revenue Segmentation by… APMENA 63% ESSAA 37% Replacement 78% OEM 22% Off Highway 11% Passenger Vehicle 36% Truck Bus 45% Light Truck 6% Others 2% APMENA: Asia Pacific, Middle East and North Africa ESSAA: Europe, Sub Sahara Africa & Americas

7. Market structure of Tyre market in India In 2011-12, Indian Tyre industry’s turnover was at Rs. 300 billion with production of 119.2 million tires Export market was valued at Rs. 3.6 billion Major Players – MRF India Limited (Largest Tire manufacturer in India) Apollo Tyres Limited JK Tyre & Industries Limited CEAT Limited Out of 40 companies, only 10 players in India accounted for around 95% of the total tire production Key market segments - Original Equipment Manufacturer (OEM), Replacement Market and Exports Indian tire industry reflected a meager 5% of demand for tiers globally

8. Application of Tires

9. 02 Broad Categories of Tires – Crossply Tires: Criss Cross Fabric Arrangement, Made of Rayon & Nylon Tire Cords. Obsolete Technology hence cheaper – Radial Tires: Better Side Walls Arrangment, Made of Nylon, Polyster, Fibreglass and Steel. Longer Life upto 80% 5% Higher Fuel Efficiency. Initial Cost is high but effectively cheaper.

10. Application of Tires (Radial) Ultra High Speed Passenger Car, Trucks Buses Farm Equipments Off the Road Industry and Specialty: Mining etc.

11. Application of Tires (Radial) Market Share of Apollo Tires as per the Application: Trucks & Buses: 21% Passenger Car: 24% LCV: 23% Tractor Front: 10% Tractor Rear: 16% Tractor Trailor: 7% OTR: 1% 2W/3W, Motorcycle: 0%

12. Challenges of Globalization of Tire Industry of India Dominated by Passenger Cars globally but the Indian tire market was dominated by Trucks & Buses. Limited Product Portfolio, Absence of Aero & Snow Tires. Tie ups with Foreign OEMs. Infrastructure Facilities in Developed Markets v/s Infrastructure Facilities in Developing Markets Availability of Raw Material as per Global Standards. Trade Agreements between Countries.

13. Type of Approach for Globalization i. e. Organic Way or Inorganic Way. Alternate Technology development. Bulkiness of the Product limited the Scope of Exports. Backward Integration w.r.t. International Standards. Government Regulations Currency Fluctuations. Challenges of Globalization of Tire Industry of India

14. Major Player’s Strategy

15. Superior Product Mix – By producing all kinds of tires required by the consumer and other industrial segments Introduction of OTR (Off the road tires by CEAT & JK) which helped in increasing profitability Foreign Collaborations & acquisitions – to establish base Dealer Network – Accessible Supply through Warehouse – Eyeing Foreign Car manufacturers in India Material Composition – Natural Rubber to Synthetic Rubber

16. Challenges Prices of Raw material mainly rubber form 43% Increase cost due to increase in raw material price, difficult in such competition Fluctuating Raw material prices Cost & Quality -Dumping by Foreign markets player from China & some south east Asian countries Retreading – Cost only 20% of New Tire Legal norms forced by Government Difference in Excise Duty & Custom Duty – Import of NR is required fulfill the demand

17. Growth Strategy

18. Growth Strategy adopted Apollo Tires Got Incorporated in 1976, in Gurgaon, India. Almost ruled over the Indian Tyre market till 2005, along with other competitors. Aspired of becoming a US $ 2 Billion company. Entered Global Market in 2006. Acquired Dunlop Tires International (Pty) Ltd. South Africa. In the year 2006. Acquired Vredestein Banden BV, Netherlands in 2009. Aspiring of becoming a US $ 6 Billion Company by 2015-2016.

19. Plans to enter into the China market too. Acquisition of Dunlop marked the entry of Apollo tires in the African market, (Apollo Tyres South Africa (Pty). Ltd. Acquisition of Vredestein Banden BV marked there entry in the European Market. With this entry into the global market, Apollo became the first Indian tire company to enter the global market. Growth Strategy adopted Apollo Tires

20. Challenges that Apollo will face in future growth

21. Rising trend of going greenTariff and non-tariff barriers Demand for green tyresUnfavorable Regional Trade Agreement Technology and raw material from renewable sources Tightening of environment regulation Stringent norms in EuropeRaw material shortage Understanding new marketsIncreasing cost Competition from top international playersCapacity constraints Keeping track of there competitorsFighting cheaper imports from China Overcoming the stereotype

22. Five forces Porters model for Tyre Industry

23. Threat of New Entry Moderate or can be described as low Highly capital intensive Level of technological expertise required is high Strong distribution network required Strong brand names are important

24. Buyer Power OEMs are always in strong position Bargaining power for replacement segment is moderate Replacement market formed 50.3% of the total demand of tyre industry

25. Threat of Substitution High as there are cheaper option options available in the market As there are other players in the market, customers have the option to switch Low switching cost

26. Supplier Power In case of Rubber suppliers, this is low as most of the tyre firms get 150 days credit for buying rubber from international market which is not case if they buy it from domestic rubber growers In case of Other Petro chemical based material (Carbon black, Nylon tyre cord etc.), this is high as India is limping back in case of Petro based raw materials like carbon black and chemicals which account low in quantity terms but are high cost generators

27. Competitive Rivalry This is high, as gradually the overseas players are expanding their wings over Indian tyre industry Industry is seeing high competitive scenario at present because of rising input costs, vehicle manufacturers are not ready to share burden of tyre firms Unorganized sector which gives tough competition to established players like CEAT, JK, Apollo and MRF

28. Learning's & Conclusion To become what it has today, Apollo tyres followed an organic growth strategy that was cautious yet aggressive. Through timely acquisitions and expansion Apollo tyres has been able to establish itself as the No. 1 company in the Indian Tyre industry. Apollo’s strategy is a wonderful example of how to function in an industry heading towards maturity and where competition is high. Can focus on manufacturing of 2/3 wheelers tyers to further increase its market reach Focus on Tier 2 and Tier 3 market in India

29. Thank you