Tire Industry India

November 2014

Executive Summary
Market
Overview

Global tire market is expected to grow at a CAGR of p% through 20-- to 20-- to reach INR yy bn in
20- Huge demand from Asia Pacific region will boost the industrys growth
Indian tire industry is expected to reach INR xx bn in 20--, growing at a CAGR of q%

Drivers &
Challenges

Drivers:
Replacement Demand
Rising Automobile Sales
Scope in Radialization
Increasing Exports
Increasing Investment in Road
Construction

Key Trends

Retreading of Tires
Emergence of Tubeless Tire Market
Advent of Green Tires
Focus on Radial Tires

Challenges:
Price Volatility in Rubber Prices
Absence of Raw Materials
Inappropriate Duty Structure for
Natural Rubber

Key Players

Competitive
Landscape

Company A

Company B

Company C

Company D

Company E

Company F

TIRE INDUSTRY IN INDIA 2014.PPT

Macroeconomic Indicators

Introduction
Market Overview
Export-Import

Drivers & Challenges

Government Initiatives
Trends

Competitive Landscape
Opportunities
Strategic Recommendations

Appendix
TIRE INDUSTRY IN INDIA 2014.PPT

Rising automobile demand from Asia Pacific region to boost

global tire market
Market Overview Global (1/2)
Global tire market is expected to grow at a CAGR of p% through 20-- to 20-- to reach INR xx bn in 20- Huge demand from the replacement tire segment and increasing commercial and passenger vehicles sales in
developing countries is expected to drive growth in the world market
Asia Pacific region is expected to show the strongest growth fuelled by huge demand from India and China
Further, new construction and infrastructural projects and increase in middle class population as well as rise in
disposable income of this section in developing countries will boost the global tire industrys growth
However, unstable prices of raw materials and increasing dependency of tire manufacturers on OEMs for sales are
some of the challenges faced by the global tire industry

Global Tire Industry Size and Growth (Value)

INR bn
y4
y3

p%
x1

x2

x3

20--e

20--e

x4

x5

20--e

20--e

x6

y2
y1
0
20--

20--e

Note: OEM refers to Original Equipment Manufacturer

TIRE INDUSTRY IN INDIA 2014.PPT

Growth in automobile sales and advent of new vehicle

models has been the key driving force to the tire industry
Market Overview India (1/2)
Indian tire industry is expected to grow at a CAGR of p% through FY 20-- to FY 20-- to reach INR x6 bn in 20--.
It manufactures a diversified range of tires catering to the various Indian transport vehicles
However, specialized tires such as aero tires are not manufactured in India

Organized sector accounts for a major share in the overall tire sector while the unorganized sector is dominant in the
bicycles segment
Performance of the tire industry is closely related to that of the automotive sector.
There has been a significant increase in the tire supplies to OEMs across all segments

Indian Tire Industry Size and Growth (Value)

INR bn
y4
y3

p%
x1

x2

x3

x4

FY 20--

FY 20--e

FY 20--e

FY 20--e

x5

x6

FY 20--e

FY 20--e

y2
y1
0

TIRE INDUSTRY IN INDIA 2014.PPT

SAMPLE

Exports of New Rubber Pneumatic Tires (1/2)

Export of New Rubber Pneumatic Tires (Value-Wise)

INR mn
a4
P%
a3

x3

x4

x2
x1

a2

a1
FY 20--

FY 20--

FY 20--

FY 20--

Export of New Rubber Pneumatic Tires (Volume-Wise)

mn

Q%

b5
b4

y3
y1

y2

FY 20--

FY 20--

y4

b3
b2
b1

TIRE INDUSTRY IN INDIA 2014.PPT

FY 20--

FY 20-6

SAMPLE

Exports of New Rubber Pneumatic Tires (2/2)

Export Based on Value Country-Wise
FY20--

FY20-a1
x1
x2

x7
x6

x5

x3
x4

a1

y1

b1
c1

y2

d1

y3

y7

e1

y4

f1
g1

y6

Exports Based on Value Product-Wise

FY20--

y5

b1
c1
d1
e1
f1
g1

Exports Based on Volume Product-Wise

FY20--

z1
z2

a2

d1
d2

c2

b2

a2

c2

b2

d3

z3

TIRE INDUSTRY IN INDIA 2014.PPT

Drivers & Challenges Summary

Drivers

Challenges

Replacement Demand

Price Volatility in Rubber Prices

Rising Automobile Sales

Absence of Raw Materials

Scope in Radialization

Inappropriate Duty Structure for

Natural Rubber

Increasing Exports
Increasing Investment in Road
Construction

TIRE INDUSTRY IN INDIA 2014.PPT

Order books of the players is growing owing to strong

demand from replacement of tires
Replacement Demand

Impact

Replacement demand for tires accounts for more than xx% of the total demand for tires
Increasing replacement demand is generating strong order books for the players in the industry
Business catering to the replacement of tires is a high margin business generating strong
revenues
Replacement market is dominated by widespread dealer distribution network including
exclusive dealer of the companies as well as multi company dealers

Replacement Demand in T&B Segment

x

Replacement Demand in PV Segment

q3%

p3%
p2%

q2%

q1%
p1%

Apr-Dec FY 20--

Apr-Dec FY 20--

Note: T&B refers to Trucks and Buses, PV refers to Passenger Vehicles

TIRE INDUSTRY IN INDIA 2014.PPT

Trends Summary

Emergence of Tubeless Tire

Market

Retreading of Tires

Key
Trends
Focus on Radial Tires

Advent of Green Tires

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Competitive Benchmarking (1/5)

Public Trading Comparables (FY 2014)
Company A

Company B

Company C

Market Capitalization (INR

mn)
Share Price (INR)

EV/EBITDA (x)

EV/Revenue (x)

PE Ratio

Note: Top 3 Public companies based on the Market Capitalization; Market Capitalization is as on 30/10/2014, Share Price is as on 29/10/2014 and PE ratio is as on
30/10/2014
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Competitive Benchmarking (2/5)

SAMPLE

Key Ratios of Top 3 Companies Operational Basis (FY 2014) (1/4)

Gross Margin

Net Margin

x2

a4
a3

y2
x1

a2

Operating Margin

z2
y1

x3
y3

z1

z3

a1
Company A

Company B

Company C

Company B recorded gross margin of x2%, higher than that of Company A and Company C which recorded gross margin
of x1% and x3% respectively
Company B recorded highest operating margin of y2%, followed by Company C and Company A which recorded
operating margin of y3% and y1% respectively
Company B recorded a net margin of z2%, higher than that of Company C and Company A which recorded net margin
of z3% and z2%

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SAMPLE

Public: Domestic Company Company A (1/4)

Company Information

Offices and Centres India

Corporate Address
Tel No.
Noida

Fax No.
Website
Year of Incorporation
Ticker Symbol
Stock Exchange

Headquarters

Products and Services

Category

Products/Services

Key People
Name

Designation

Person 1
Person 2
Person 3
Person 4
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SAMPLE

Public: Domestic Company Company A (2/4)

Financial Snapshot
Total Income

INR mn

a4

Key Ratios

y1

y2

Net Profit/Loss

INR mn

y4

y3

b4

a3
a2

b3
x1

x2

x4

x3

a1

b2
b1

20--

20--

20--

20--

Financial Summary
The company reported total income of INR x4 mn in FY 20--, registering an
increase of p% over FY 20- The company earned an operating margin of z1% in FY 20--, an increase of
z2 percentage points over FY 20- The company reported debt to equity ratio of d1 in FY 20--, an increase of
d2% over FY 20--

Key Financial Performance Indicators

Indicators
Total Enterprise Value (INR mn)
EPS (INR)
PE Ratio (Absolute)

y-o-y change
(2014-13)

2014

2013

2012

2011

Profitability Ratios
Operating Margin
Net Margin
Profit Before Tax Margin
Return on Equity
Return on Capital Employed
Return on Working Capital
Return on Assets
Return on Fixed Assets

Cost Ratios

The company earned a net profit of INR y4 mn in FY 20--, as compared to

net profit of INR y3 mn in FY 20--

Market Capitalization (INR mn)

Particulars

Value

Operating costs (% of Sales)

Administration costs (% of
Sales)
Interest costs (% of Sales)

Liquidity Ratios
Current Ratio
Cash Ratio

Leverage Ratios
Debt to Equity Ratio
Debt to Capital Ratio
Interest Coverage Ratio

Efficiency Ratios
Fixed Asset Turnover
Asset Turnover
Current Asset Turnover
Working Capital Turnover
Capital Employed Turnover
Improved

TIRE INDUSTRY IN INDIA 2014.PPT

Decline

14

SAMPLE

Public: Domestic Company Company A (3/4)

Key Business Segments

Key Geographic Segments

a1

a3

a4

b3

s3
s2

a2

p1%

p2%

p3%

p4%

s1
20--

20--

x2

x3

x4

y1
z1

y2
z2
r1

y3
z3
r2

9%y4
z4
r3

2011

2012

2013

2014

b2
b1

20--

x1

20--

Business Highlights
Description

News

Overview

Company A is engaged in the manufacture and sales of tires for more than 40 years

Manufacturing Facilities

Manufacturing presence in Asia, Europe and Africa

Recently in Sep 2014, confirmed Hungary as the location for the first greenfield manufacturing facility
outside India

New Ventures and Product

Launch

In Feb 2014, announced entry in Qatar to tap the potential market for truck-bus radials and high
performing passenger car tires
In May 2014, introduced two new tires Apollo Alnac 4G All Season and Apollo Alnac 4G Winter tires at
the international tire exhibition in Germany
Opened its first branded retail outlet in Kuwait in Aug 2014

TIRE INDUSTRY IN INDIA 2014.PPT

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SAMPLE

Public: Domestic Company Company A (4/4)

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Opportunity Areas Summary

Opportunity Areas

Gujarat

Tamil Nadu and

Andhra Pradesh

Maharashtra

NCR and
Surrounding

Tire manufacturing plants should be built near the major automobile production or assembly facilities to
capitalize on the growing opportunities provided by the existing as well as the emerging auto hubs in India

TIRE INDUSTRY IN INDIA 2014.PPT

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Strategic Recommendations

SAMPLE

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Thank you for the attention

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