Apollo Tyres Ltd

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Apollo Tyres Ltd

• May 2009

2

Industry Highlights India

• Significant events
• Key statistics
• Outlook

Industry Highlights South Africa
Apollo Snapshot
3
Significant Events

• Reduced demand in wake of global slowdown
• Sharp reduction in OE demand starting September
  2008 production cuts implemented by major OEs
• Industry forced to take production cuts in Q3
• Situation improved slightly in Q4
• Collapse of credit market
• Liquidity crunch post Lehman debacle
• Soaring Raw Material (RM) Prices
• Rubber at Rs. 130/ Kg for good half of CY 2008
  peaked at Rs.137/ Kg in September 2008
• Crude crossed 100/ barrel in Feb 2008 touched
  an all time high of 145/ barrel in July 2008
• Rubber after experiencing a significant fall in
  Q4, increased to Rs.100/kg by quarter end
  softening of crude in Q4

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Significant Events

• Profits declining
• Price increase taken but insufficient to counter
  the raw material cost impact
• Production cuts resulting in relatively higher
  fixed overheads
• Improvement in Q4 due to pick up in demand and
  softening of raw material cost
• Strengthening of Dollar
• Up from an average Rs.40.0 in FY 2008 to Rs.46.5
  in FY 2009
• Industry a net importer adverse impact on
  profitability
• Measures taken by the Government
• License required to import Truck Bus Radials
  (TBR) in Nov 2008
• Excise duty cut by 4 in December 08 and 2 in
  February 09

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Key Statistics
Vehicle Sales
5 Year CAGR in FY 08 15
Tyre Sales
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Key Statistics
Truck and Bus Tyres FY 09
PCR Tyres FY 09
Light Truck Tyres FY 09
Presence of Large Players
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Outlook
-

• RM prices coming off
• Expected to remain stable at Q4 2009 level in 1st
  half of FY 2010 and then move upwards
• Signs of improvement in OE Replacement demand

• Global meltdown expected to continue
• Slowdown in economic growth
• Liquidity crisis
• No consensus on Dollar Rupee parity. No
  significant movement expected

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Industry Highlights India

• Significant events
• Key statistics
• Outlook

Industry Highlights South Africa
Apollo Snapshot
9
Significant Events

• Industry affected by high raw material prices and
  reduced demand
• Replacement market under pressure due to lower
  consumer spend and liquidity crunch
• Exports affected due to global recession
• Production cuts - Truck and Mining tyres the most
  affected segment
• Currency depreciation against US
• US moved up from an average R7.1 to R8.8 in FY
  08-09. Average for Q4 at R10.0
• Costlier imports - benefiting the domestic
  industry offset by higher raw material prices
• Interest rate touched a peak of 15.5 down to
  12.0 now

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Key Statistics
Truck and Bus Tyres CY 08
PCR Tyres CY 08
Light Truck Tyres CY 08
Presence of Large Players
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Outlook
-

• RM prices coming off
• 15 reduction expected in Q1 FY 2010
• Expected to remain at similar level in Q2 Q3
  and then move upwards
• Market share shifting from imports to local
  manufacturers due to weaker currency
• Infrastructure projects on account of FIFA World
  Cup

• Profitability under pressure
• Unfavorable demand supply situation
• Volatility in currency expected to continue

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Industry Highlights

• Business highlights
• Recent Development
• Financial highlights
• Shareholding information
• Looking ahead

Industry Highlights South Africa

Apollo Snapshot
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Business Highlights
CAGR 22
Consolidated Top Line
14
Business Highlights
Revenue Segmentation
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Business Highlights

• Close to Customers - wide distribution network
• India
• 4000 dealers
• Largest number of exclusive dealers (2100)
• Special Networks Apollo Radial World (190)
  Apollo Pragati Kendra (60)
• Strategic distribution partnership Reliance
  Petroleum, ONGC Tata Motors
• South Africa
• 600 dealers
• Special franchisees (200 Dunlop Accredited
  Dealers)

Distribution Strength
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Recent Development

• Announced acquisition of Vredestein Banden B.V.,
  a 300 Mn Company with manufacturing base in
  Netherlands, and operations all over Europe

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Recent Development

• Manufacturing Plant at Enschede, Netherlands (2
  hours from Amsterdam), close to Dutch/German
  border
• Capacity 5.5 Mn units p.a
• Manpower 1,500

Manufacturing Facility
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Recent Development

• Continuation of our journey to become a global
  player - 2 Bn target
• Entry into European Market
• Presence with a manufacturing site
• Access to existing marketing and distribution
  network
• Leveraging on Vredestein brand positioning in
  Europe
• Enhancing export sales from India using
  Vredestein brand (South East Asia)
• Upgradation in PCR Technology/ Automation

Rationale
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Financial Highlights
Revenue Bridge (Consolidated)
Volumes (-4.4)
Price Mix (13.0)
Others (-2.3)
6.2
Consolidated Net Sales FY 2008/ FY 2009 (Rs. Mn)
FY 2009
FY 2008
Sales growth led by price improvement
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Financial Highlights
Net Sales
EBIDTA Margin
6.2
Net Profit Margin
EPS
FY 2008
FY 2009
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Financial Highlights
Balance Sheet Size
Net Debt
FY 2008
FY 2009
22
Financial Highlights
Net Debt to Equity
Net Debt to EBIDTA
ROCE
ROE
FY 2007
FY 2008
FY 2009
23
Shareholding Information
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Looking Ahead

• Aggressively pursue market shares in India and
  South Africa Market
• Focus on TBR capacity in India
• Focus on integration of Vredestein Banden B.V.

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Thank You