CHAPTER – I

PROFILE OF THE INDUSTRY

Page | 1
HISTORY OF TYRES

The most important application of rubber relates to the transport

sector, of which the tyre Industry consumes over 60% of the total
rubber produced. After the invention of the wheel by the Sumerians
5000 years ago it was refined over the ages. In the year 1846, R.W.
Thomson invented the predecessor of the pneumatic tyres of the
modern age. From there, the tyre industry has grown to be one of the
largest industries of today.

During the last 20 years tyre has been virtually reinvented with most
modern technologies like steel radial tyres, a milestone in the tyre
technology. Tyre sector is experiencing a rapid improvement with the
advent of newer technologies.

A tyre is an annular round shaped container made of elastic material,

reinforced by textile materials and tightened by metal rings.
Geometrically it is a torus, mechanically it is a pressure container,
and chemically a tyre consists of materials from long chain
macromolecules usually different types of rubber. A pneumatic tyre is
a fabricated structure, which holds air that carries the load of the
vehicle with which it is attached to.

INDIAN TYRE INDUSTRY

Indian tyre industry is two tier. The Tier-I players (top six tyre
companies) account for over 85% of industry turnover containing a
well diversified product-mix and presence in all three major segments
i.e. replacement market, original equipment manufacturers (OEM’s)
and exports. Tier-II companies are small in size, mainly concentrating
on production of small tyres (for two/three-wheelers etc.), tubes and
flaps and the replacement market.

The demand and growth for the industry depends on primary factors
like the overall GDP growth, agricultural & industrial production,
growth in vehicle demand and secondary factors like the
infrastructure development, prevailing interest rates and financing
options etc.
The truck and bus market is the largest segment of the industry
accounting for approx. 70% of industry turnover in terms of value and
tonnage - a segment in which Apollo Tyres has maintained the
leadership position amongst the industry players for quite a few years.
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In the year 2005-06, the truck and bus tyres segment volumes
witnessed a healthy growth of approx. 8%. Passenger car segment
tyres volumes grew by approx. 13% in the year under review.

Steep rise in raw material prices with limited pricing flexibility

impacted the profit margins of all the players. Consistent rise in major
raw materials costs (natural rubber, nylon tyre cord, carbon black,
synthetic rubber) have resulted in pressure on the margins of the tyre
companies despite good top line growth. In fact some of the major tyre
companies are operating at break even situation.

Tyre exports are increasing consistently and the industry saw a

growth of approx. 9 % in this area in the year under review. The
radialisation in the important commercial vehicle segment is still at a
mere 2%. This has not really picked up pace. Going forward, we
expect it to gather some momentum but still levels of radialisation in
this segment are predicted to be around 10% in five years time.

The year ahead still looks tough with no respite in the raw material
prices. The cost- push continues unabated and with the industry
players reluctant to take large price increases, the challenge on profit
margins will stay. The story on the demand front though looks good in
medium term with the economy continuing to do well.

HIGHLIGHTS

The fortune of this industry depends on the agricultural and industrial

performance of the economy, the transportation needs and the
production of vehicles.

While the tyre industry is mainly dominated by the organized sector,

the unorganized sector holds sway in bicycle tyres.
In the last five years, the industry managed to achieve a compounded
annual growth of only 4.40 per cent. However in the last fiscal the
industry registered a growth of 7 per cent.

Natural rubber constitutes 25 per cent of the total raw material cost of
the tyres.
The ratio of natural rubber content to synthetic rubber content is
80:20 in Indian tyres, whereas worldwide, the ratio of natural rubber
to synthetic rubber is 30:70.

Page | 3
KEY INDUSTRY DATA

 Industry Turnover: Rs. 20,000 Crores

 Total No. of Tyre Companies: 43
 Industry Capacity Utilization: Estimate: 89%
 Major Players: Apollo Tyres, Ceat, JK, MRF
 Commercial Vehicles: approx. 67% by Revenue

GOVERNMENT POLICY

 Tyre Industry Relicensed since 1987

 Export (of tyres and tubes) freely allowed
 Import (of new tyres and tubes) freely allowed since 2001 except
(Radial Tyres), which is in the Restricted List from 24th Nov.
2008 onwards.
 Import Policy for Used / Retreaded tyres: Restricted Since April,
2008

FUTURE OUTLOOK

The tyre industry in India is truly globalised with imports and exports
showing rapid increase. On the raw material front too, imports and
domestic sourcing are at comparable levels. Global players have
started setting up manufacturing base in India to take advantage of
the growing opportunities in the domestic market both in terms of
sales as well as costs. Noticeably higher spending on infrastructure is
likely to continue to have a direct consequence on tyre demand in the
country for commercial applications. For the passenger car segment
too, higher disposable incomes and more motorable roads will lead to
higher levels of personal transportation.

Page | 4
INTERNATIONAL MARKET

The industry, already bogged by over capacity, is facing a severe

threat of dumping of cheap tyres by South Korea. Under the Bangkok
agreement, signed between India and South Korea in 1976, import of
tyres from the latter into India would attract a concessional duty of 33
per cent as against the normal tariff of 40 per cent.

Two years ago, the industry estimated the growth in the passenger car
radial demand at 20 per cent per annum. However, the auto recession
has hit them badly. But South Korea made a killing by dumping cheap
car radial tyres and walked away with 11 per cent of the tyre market.
Another threat to the industry is the price of its raw materials, most of
which are petroleum by-products. Carbon, synthetic rubber and nylon
tyre cord are offshoots of petrochemicals. Thus, the future of the
industry will swing with the supply of crude oil.

The biggest threat, however, is yet to fully materialize. It will be from

global majors like Bridgestone and Michelin, which control 36 per
cent of the global tyre market. These players have set up their bases in
Southeast Asia and the slump of the markets in this region, coupled
with the vast growth potential of the Indian market, is beckoning them
towards India. Bridgestone has tied up with ACC for a 100 per cent
radial tyre unit and Michelin is also marketing its products through
retail outlets. The industry is driven more by volumes than by margins
and each of the big five in the global tyre industry Continental,
Michelin, Goodyear, Pirelli and Bridgestone generate an annual tyre
production equivalent to the total demand of the Indian market. These
MNCs have deep pockets and can easily withstand losses for 2-3
years. Their financial muscles also permit them to invest in R&D,
which is beyond the reach of the average Indian tyre manufacturer.
The Indian manufacturers are looking at increasing their global
footprints. Apollo is undertaking an expansion plan at its Dunlop
plant in South Africa. Similarly, JK Tyres & Industries has acquired a
Mexican company Tornel. It has also entered into a manufacturing
agreement with Chinese manufacturers to sell JK-branded tyres in the
export markets.

Page | 5
 CHAPTER – II

COMPANY PROFILE

• MRF Tyres

• Apollo Tyres Ltd

• CEAT Tyres Ltd

Page | 6
 MADRAS RUBBER FACTORY

COMPANY PROFILE

MISSION
• To be the largest most profitable Tyre company in India.
• To retain # 1 Position in Truck and Bus segment and to be
amongst Top 2 in all 4 wheelers Tyre segment.
• To make Truck/Bus Radial operations Profitable and Retain
Leadership in the passenger Radial Market.
• To be the largest Indian Tyre exporter continues to be a
significant player in the world in the truck Bias segment.
• To be a customer obsessed company.
• To excel as a value driven organization.
• To be the most preferred Tyre Brand in India.

Page | 7
THE TIMELINE
(1946-2008)

1946

- A young entrepreneur, K. M. Mammen Mappillai, opened a small toy

balloon manufacturing unit in a shed at Tiruvottiyur, Madras (now
Chennai).

1949

- Although the factory was just a small shed without any machines, a
variety of products, ranging from balloons and latex-cast squeaking
toys to industrial gloves and contraceptives, were produced. During
this time, MRF established its first office at 334, Thambu Chetty
Street, Madras (now Chennai), Tamil Nadu, India.

1952

- MRF ventured into the manufacture of tread rubber. And with that,
the first machine, a rubber mill, was installed at the factory. This
step into tread-rubber manufacture, was later to catapult MRF into a
league that few had imagined possible.

1955

- MRF soon became the only Indian-owned unit to manufacture the

superior extruded, non-blooming and cushion-backed tread-rubber,
enabling it to compete with the MNC's operating in India at that
time.

1956

-The quality of the product manufactured was of such a high standard

that by the close of 1956, MRF had become the market leader with a
50% share of the tread-rubber market in India. So effective was
MRF's hold on the market, that the large multinationals had no other
option but to withdraw from the tread rubber business in India.

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1960

- The Company was incorporated as a private limited company on 5th

November. The Company Manufacture automobile, aircraft, cycle
tyres and tubes in collaboration with the Mansfield Tire & Rubber
Co., Mansfield, Ohio, U.S.A. The tyres are sold under the trade name
Masnfield Tyres (MRF). The Company also produces other industrial
products made of rubber like conveyer belt, hoses etc. It took over the
entire business of the Madras Rubber Factory as a going concern as
from 16th November, for a consideration of Rs 25 lakhs.

1961

- The Madras Rubber Factory Private Limited was converted into a

public company on 1st April, and additional capital was issued in
order to start the manufacture of automobile tyres and tubes in
collaboration with the Mansfield Tire & Rubber Co., Mansfield, Ohio,
U.S.A. The Company was given permission to export tyres having
Mansfield trade-mark to all world markets except U.S.A. and Canada.

- 2,49,650 shares allotted without payment in cash. 350 shares

subscribed for by the signatories to the Memorandum of Association.
2,50,000 shares reserved and allotted directors, etc. 5,00,000
shares issued to public in April 1961. The balance 2,50,000 shares
allotted to collaborators as payment for machinery.

1962

- The main plant for production of tyres and tubes were commissioned
on 4th December.

1963

- Nylon Hot-Stretch Unit of the latest design was commissioned in

November.
- 6,25,000 Right Equity shares offered at par in the proportion 1:2.

Page | 9
1964

- With the commissioning of the main plant in 1964, MRF also made
progress in the export of tyres. An overseas office at Beirut (Lebanon)
was established to develop the export market, and it was amongst
India's very first efforts. This year also marked the birth of the now
famous MRF Muscleman.

1967

- MRF became the first Indian company to export tyres to USA - the
very birthplace of tyre technology.

1970

- In March, 5,62,500 bonus equity shares issued in the proportion

3:10.

1973

- MRF scored a major breakthrough by being among the very first in

India to manufacture and market Nylon tyres.

1975

- During September, 12,18,714 bonus shares issued in proportion 1:2.

(Only 12,18,689 shares were taken up).

1978

- The Company finalised a technical know-how collaboration with

B.F. Goodrich Co., U.S.A., which became fully operative in early
1980-81. This agreement was revalidated for further five years.

1979

- The Masfield Tire & Rubber Co., U.S.A. offered for sale out of its
holding 3,74,250 No. of Equity shares of Rs 10 each of the Company
at a premium of Rs 4 each as follows: 3,63,786 shares as rights to the
existing shareholders in the proportion 1:8 and 10,464 shares to the
employees of the Company.

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1980

- The Company crossed several milestones in its history. It went

into technical collaboration with BF Goodrich Tire Co., USA in the
year. The name of the Company, Madras Rubber Factory Ltd.was
changed to MRF Ltd in the year.

1981

- Mansfield Tire & Rubber Co. of U.S.A., offered for the their
Balance shareholding of 3,55,537 No. of Equity shares of Rs 10 each
in the Company at a premium of Rs 4 per share as follows: 3,29,587
shares to the existing resident Indian shareholders and non-resident
Indian shareholders (on non-repatriation basis) in proportion 1:10
and 25,950 shares to the Indian employees, business associates and
dealers of the Company.

- 2,00,000 No. of Equity shares allotted in Feb. 1982 to IFCI at a

premium of Rs 5 per shares on conversion of loans.

1983

- The Company finalised a technical collaboration agreement with

M/s. Marangoni TRS SPA, Italy for the supply of know-how for the
manufacture pre-cured tread rubber for retreading industry.

1984

- Sales crossed INR two billion. MRF tyres were the first tyres
selected for fitment onto the Maruti Suzuki 800 - India's first small,
modern car.

1985

- A letter of intent was obtained for the manufacture of conveyor

beltings and hoses in collaboration with Industiral Pirelli SPA,
Italy. Plans were also on hand to go in for a joint venture with the
aero tyre division of B.F. Goodrich & Co.,for retreading and
subsequently for manufacturing aircraft tyres.

Page | 11
1986

- The Company issued 15% non-convertible debentures of Rs 100

each
(II Series) for Rs 8 croes as rights to the existing shareholders to
Raise finances for modernisation of the Company. Under Cumulative
Interest payment scheme, these debentures are redeemable in 3
annual Instalments of Rs 35 each commencing on 8th May, 1993 at a
premium of 5% in the first instalment. Under the non-cumulative
interest payment scheme,the debentures are redeemable in five equal
annual instalments of Rs 20 each comencing from 8th May 1991 at a
premium of 5% which will be paid on 8th May, 1993.

1987

- (18 months), The Company obtained MRTP clearance and a letter of

intent for the manufacture of pre-cured tread rubber upto 6,000
tonnes per annum by using indigenous technology developed by the
Company.MRTP clearance was also obtained for setting up a new
plant at Tada in Andhra Pradesh for manufacrure of 1.5 million
number of tyres and tubes per annum.

- The Company entered into a collaboration agreement with Vapocure

Of Austraia to manufacture polyurethane paint formulations that can
be rapidly cured at room temperature and would also help in the
manufacture of shatterproof glass. The plant with an installed
capacity of 10,000 tonnes per annum was being set up at
Gummidipoondi in Tamil Nadu.

- `Funskool (India), Ltd. and `Crystal Investment and Finance Co.

Ltd.' became subsidiaries of the Company. Funskool (India), Ltd.
Was promoted in collaboration with Hasbro International, U.S.A., the
World's largest toy makers.

1988

- The MRF Pace Foundation was set up, with international pace
bowler,Dennis Lillee as its Director. Not long thereafter, pace
bowlers rained at the Foundation were selected for the Indian Cricket
Team.

Page | 12
1989

- The Company was identified as `Star Exporter', a status that

enables the company to get priority treatment in several areas
concerned with customs, RBI, etc.

- Aero tyre division of B.F. Goodrich Co., USA was taken over by
Michelin Cie of France.

- Government approved the technical collaboration with Uniroyal

Goodrich Tire Co., U.S.A., a subsidiary of Michelin Cie., France,
For imparting latest technology for bias ply/radial aircraft tyres for a
period of 5 years.

1990

- The Aruna Leathers & Exports Ltd. was amalgamated with the
Company.As per the scheme one equity share of Rs 10 each of MRF
Ltd. was allotted for every 10,000 shares of Rs 10 each fully paid-up
held in ALEL. Accordingly, 25 equity shares were allotted to the
erstwhile shareholders of ALEL.

- The Company introduced `Vapocure' colours in the market.

- (6 months), the Company privately placed 15,00,000 - 14%

non-convertible debentures of Rs 100 each (III Series). The
debentures are redeemable - at a premium of 5% in three annual
instalments of Rs 35 each commencing from 31st July, 1997.

- The Company privately placed with SBI Mutual Fund 10,00,000 -

14% debentures (IVth Series) which are redeemable at a premium of
5% on 26th June, 1998.

- During the year 5,00,000 - 14% debentures were also privately

placed with Infrastructure Leasing & Financial Services, Ltd. These
debentures are redeemable in three annual instalments at a premium
of 5% commencing from 23rd July, 1997.

Page | 13
1991

- The Company promoted a new Company viz. MRF International,

Ltd., in view of the tremendous growth potential in the export market.

- 3,85,000 No. of equity shares issued to (prem. Rs 242 per share)

to the foreign collaborators M/s. Asia Trading Services, Hongkong.

1992

- The Company has formed a new Company, viz., MRF

INTERNATIONAL LIMITED and the Company has received the
certificate of commencement of business.

1993

- K. M. Mammen Mappillai was awarded the Padmashri Award of

National Recognition for his contribution to industry - the only
industrialist from South India to be accorded this honour. MRF also
became the first tyre company in India to cross the INR 10 billion
mark. In addition, the company was voted by the Far Eastern
Economic Review, as one of the ten leading Corporate Groups in India
and a Leader in Asia, and by readers of the A & M magazine, as one
of India's most admired Marketing Companies.

1995
- The Company has received the Top Export Award for the year from
All India Rubber Industries Association.

1996

- The Company has received an award from CAPEXIL - Certificate of

Merit based on the export performance for the year.

- The Far Eastern Economic Review Award was presented to MRF for
the fourth year in succession in recognition of excellence.

Page | 14
1997

- MRF Ltd has been assigned a credit rating of `PR1+' (superior) for
its proposed Rs 100 crore commercial paper (CP) programme by
Credit Analysis and Research Ltd (CARE).

- MRF is setting up a new plant in Pondicherry for the production of

radial tyres.

- The company set up the Arakonam plant in Chennai to produce

bicycle tyres and tubes.

- MRF began manufacturing tyres and tubes in technical

collaboration with Mansfield Tire and Rubber Company, USA. MRF
has launched Nylogrip Zapper, a high performance tyre for new
generation bikes.

- The company tied up with Uniroyal Goodrich Tire Co. of USA, a

subsidiary of the French Tyre giant Michelin, which held 9.8 per
cent stake in the company.

1998

- MRF Tyres has signed an OEM (original equipment manufacturer)

alliance with Siel Honda Motors and Hindustan Motors.

- MRF has launched a market sampling operation for the MRF Zigma.

1999

- MRF Ltd has decided to set up more such clinics in Northern and
Western cities.

- The Company has entered into agreements with the Depositories

viz., National Securities Depository Ltd. [NSDL] & Central
Depository Services (India) Ltd.

- AIRIA Highest Export Award was given in recognition of our

outstanding export performance in respect of Auto Tyres & Tubes
during the year.

Page | 15
2000

- The Company has set up shop in Dubai to target markets in the UAE
as part of its export thrust.

- MRF has launched a steel-belted premium radial tyre variant called

`MRF ZVTS'.

2002

-MRF Tyres Ltd sees slump in commercial vehicle tyre market and
passenger car growth has also declined.

-High court dismisses the writ petition filed by MRF Employees Union
challenging the order of dismissal of a worker, who was the secretary
of the union.

-Advertising Standard Council of India Quashed the objection raised

by MRF by upholding J K Industries claim of being India's Number
one tyre maker in the four wheeler segment.

-MRF Ltd has obtained the 'Outstanding Corporate Sports Initiative'

award from the Federation of Indian Chamber of Commerce and
Industry.

2003

-MRF and Bridgestone are ranked highest in a tie for the second year
in a row in customer satisfaction with original tries according to JD
Power Asia Pacific.

-Shri K.M. Mammen Mappillai, Chairman and Managing Director

expired on march 2nd.

-Mr.C.D Khanna has ceased to be the Director of the company. And

Mr. K S Narayanan has resigned from the board of MRF.

-Mr.N Kumar and Mr Ranjit Issac Jesudasen have been appointed as

the directors of the company.

- Mr K S Narayanan ceased to be director of the Company with effect

Page | 16
from April 17, 2003, consequent to his resignation from the Board of
Directors.

-Mrf Ltd. has informed the Exchange that at its meeting held on
December 19, 2003 the BOD have re-designated Jt. Managing
Director Mr. Arun Mammen as Managing Director of the Company
w.e.f April 01, 2004.

2004

-MRF Ltd. has informed that Mr Ravi Mannath has been appointed as
Additional Company Secretary of the Company w.e.f. January 05,
2004.

-MRF received the highest rankings in the study in four of the five
factors determining overall satisfaction with tyres appearance,
durability, traction and handling.

- MRF Tyres is the biggest consumer of natural rubber in India

during 2002-03

-Ties up with Maruti Udyog to boost motorsports in India

2007

-MRF Ltd launches premium truck tyre Super Lug 50-FS.

The important raw materials of mrf tyres are:-

• Natural Rubber
• Synthetic Rubbers.
• Carbon Blacks
• Process Oils
• Chemicals
• Nylon and Steel Tyre Cords.
• Copper coated Steel Wires etc.

Page | 17
HUMAN RESOURCE MANAGEMENT

The main functions of HR Dept- of MRF are

• Recruitment and Selection

• Training & Development
• Performance Appraisal
• Implementing Incentive Schemes
• Co-Ordinating among different departments.
• Maintenance of Industrial Relationship.

PRESENT BOARD OF MANAGEMENT

Name Designation
K M Mammen Chairman and Managing director
K M Philip Whole Time Director
Ashok Jacob Director
Vijay R Kirloskar Director
Ranjit I Jesudasen Director
Salim Joseph Thomas Director

Name Designation
Arun Mammen Managing Director
K C Mammen Director
V Sridhar Director
N Kumar Director
Sanjay Sharad Vaidya Director

Page | 18
WORKING OF THE COMPANY

During the year under review, the company achieved the following
financial results:

(Rs.Crore) (Rs. Crore)

2007-2008 2006-2007

Total Income 5756.35 5060.92

Profit before tax 211.39 260.96

Provision for taxation 66.83 89.18

Net Profit 144.56 171.78

INDUSTRIAL RELATIONS

Overall, the industrial relations in all our manufacturing units have

been harmonious as well as cordial. Both production and productivity
were improved and maintained at desired levels.

The Management Discussion and Analysis Report gives an overview

of the developments in human resources/industrial relations during
the year.

EXPORTS

Over the years, export sales and marketing activities were primarily
focused in a few core markets identified with potential to grow. This
has greatly helped in a better understanding of market specific
requirements, changes taking place in demand patterns and therefore
helped in offering solutions and innovative products tailor-made for
specific market segments.

The year 2007-08 surely saw some very volatile raw material prices
due to steep crude oil price hikes. This has definitely forced the need

Page | 19
for frequent price corrections in the market which was unusual. It will
also be prudent to note that competition has been continually getting
stiffer from China, especially in truck radials.

The MRF Ltd India has a distribution network of more than 2,500
distributors throughout India as well as having offices in Bangladesh,
the United Arab Emirates, and Vietnam.

Exports, however have been able to maintain the support of its strong
worldwide distribution network and maintain its share of volumes and
revenues in most product segments and markets.

During the last year, the company achieved an export turnover of Rs.
497.22 Crore for the year ended 30th September, 2008 as against Rs.
492.34 Crore for the previous year.

PROSPECTS FOR THE CURRENT YEAR

Towards the end of accounting year 2007-08, we saw the beginning of

an unprecedented global financial crisis. The impact has been so vast
that normalcy may be restored only after a significant period of time.
This global crisis has caused a temporary recession in the automobile
industry but in the long run the automobile industry growth is
predicted to continue. While the global markets are facing a recession,
your company still expects a nominal growth in the domestic market.
High prices of natural rubber as well as crude continues to be a
matter of concern and needs to be watched closely. The profitability of
tyre companies has a correlation to key raw materials like rubber and
crude which account for approximately 70% of costs. There is a
respite in prices of key raw materials. However, the future remains
uncertain.

Liquidity and high interest costs is another area of concern and we

hope that necessary steps will be taken by the government and Reserve
Bank of India to increase liquidity in the system. The steep increase in
the inflow of imported tyres, especially from China, is a matter of
concern and we hope that the government would take adequate
measures to ensure a level playing field In order to remain
competitive, the company is focusing on cost reduction and cost
optimization process across the plants.

Page | 20
DIRECTOR’S RESPONSIBILITY STATEMENT

In compliance with the provisions of Section 217 (2AA) of the

Companies Act, 1956, your Directors confirm that:

(i) In the preparation of the annual accounts, the applicable

accounting standards have been followed and that there are no
material departures;

(ii) They have, in selection of the accounting policies, consulted the

statutory auditors and applied them consistently making judgements
and estimates that are reasonable and prudent so as to give a true and
fair view of the state of affairs of the company at the end of the
financial year and of the profit of the company for that period;

(iii) Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
act for safeguarding the assets of the company and for preventing and
detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a going concern

basis.

SUBSIDIARIES

The Ministry of Company Affairs, Government of India, vide its letter

NO.47/540/2008-CL-III dated 05-09-2008, in exercise of its powers
under Section 212(8) of the Companies Act, 1956, granted an
exemption to the company from the provisions of Section 212(1) of the
Companies Act, 1956, with regard to attaching the balance sheet,
profit & loss account etc., of the subsidiaries for the year ended 30th
September, 2008, since the consolidated financial statement presented
by the company includes the financial information of the subsidiaries.
In view of this, the annual reports of the subsidiary companies have
not been annexed.

The annual accounts of the subsidiary companies along with the

report of the directors and auditors thereon and all related detailed
information will be made available to investors of the company on
request and will also be kept open for inspection at the registered
office of the company
Page | 21
RECENT AWARDS

-During the year, we have received AIRIAs Top Export Awards (Auto
tyre sector) for 2007-2008.

- The Company has received an award from CAPEXIL - Certificate of

Merit based on the export performance for the year 1996.

-AIRIA Highest Export Award was given in recognition of our

outstanding export performance in respect of Auto Tyres & Tubes
during the year 1999.

-MRF was ranked highest in customer satisfaction along with

multinational Bridgestone in a study conducted by JD Power Asia
pacific for two consecutive years 220 and 2003.

-The Company has received the Top Export Award for the year from
All India Rubber Industries Association for the year 1996.

COMPETITORS

• Apollo Tyres
• MRF3
• krishna Ind
• Ceat
• JK Tyre & Ind
• PTL Enterprises
• TVS

Page | 22
SWOT ANALYSIS
STRENGTHS:
 It has been six decades since it has been in the market. It is one
of the strongest and the oldest tyres company in India.

 It has an edge over most of the another companies as it also

deals with airplanes tyres.

 Being the star exporter since 1989, it enjoys a lot number of

benefits in exports.

 Mrf tyres provides overall satisfaction for tyres appearance,

durability, traction and handling.

 Its constant new innovations to rule the market.examples are

nylogrip zapper for bikes,zigma , steel belts,premium radial tyre
variantmrf-zvts.

 Its tie ups are its another advantage to have a strong hold in the
market.some of them are uniroyal good rich(U.S),siel
Honda,Hindustan motors , Mansfield,Ohio,U.S(one of the oldest
tie ups.

 The company’s marketing is good. It has reached all the places

nation wide and a lot number of the places abroad..( The
Company has set up shop in Dubai to target markets in the UAE
as part of its export thrust.)

 It’s famous brand ambassadors are surely its assets and one of
the biggest strength in the marketing field. (Sachin Tendulkar,
Brian Lara, Steve Waugh)

WEAKNESS
 It’s been a common notion amongst the customers that the
quality has been degrading.

 Employee unions.

 Lower productivity of labor in comparison to world standards.

 High cost of raw materials.

Page | 23
OPPORTUNITY
 MRF Tyres to manufacture components for aircrafts

 Robust economic growth, particularly vehicle production growth

resulting in health demand growth for tyre in the feature.

 Improved road infrastructure especially on the golden

quadrilateral & north-south, cast-west national highway project
will result in significant increase in movement of goods &
passenger traffic through roads with resultant growth in demand
for tyres.

 Emergence of Indian as a hub for production of small car is

expected to give a thrust to auto component & tyre segment.

THREATS
 Ceat, Apollo Tyres and MRF at 76.71 per cent, 66.96 per cent
and 64.84 per cent, respectively.

 Faster pace of opening up of the economy will increase import of

tyre.

 Reduction in important duties will lead to high volume of type

imports.

 Multinationals with financial muscle setting do manufacturing

facilities in the country.

 Concessional import tariffs for countries like china & South

Korea under regional trade agreements will lead to additional
imports.

THE 7-S MODEL FOR ORGANISATIONAL CHANGE

Page | 24
This is a management tool designed to analyse and understand the key
organisational structures within a company in order to assess its
potential for effective change. The model examines seven key areas of
the company and the relationships of each of these elements to each
other. The elements are grouped into two sub-categories of 'hard
elements' and 'soft elements':

The hard elements represent un-shifting company traits, those which

are relatively stable and simple to define such as company strategy,
structure and systems.The soft elements, on the other hand, represent
more complex traits of the company which are influenced by culture,
environment and individuals. These could be shared values, skills,
style and staff.

STRATEGY:

The company plan or route-map to maintain competitive

advantage

Strategies are the actions a company plans in response to or

anticipation of changes in its external environment. It also includes
purposes, Mission, Objectives, Goals and major action plans and
policies.

STRUCTURE:
Company’s hierarchy.

Organizational structure refers to the relatively more durable

organizational arrangements and relationships. It prescribes the
formal relationship among various positions and activities.
Arrangements about reporting relationship how an organizational
member is to communicate with other members. What roles he is to
perform and what rules and procedures exist to guide the various
activities performed by members are all part of the organizational
structure.

SYSTEMS:

Page | 25
The day-to-day processes and procedures throughout the company.
Management information system at mrf as a well-defined information
network. They have fully equipped technical information department,
which is called as information system group. The most essential
function of this department is to make the strategic & operational
level information at all times.

Every department in this organization has a net work of computer-

integrated serves by which the day to day information and data
storage is managed efficiently by this group. All the departments
namely project and marketing, purchases, quality control stores,
finance etc has computers programmed and are interlined via LAN.

The information system group is responsible for smooth functioning of

all the day-to-day activities, which are computerized in all the
departments. These activities include equipment stock order
generation, bill of material generation, indent generation, raising
purchase orders. Stores management and other production related
activities.

SHARED VALUES:
The core values of the company

Values:
• Customer driven,
• Result oriented with professional work culture.
• Growth balanced with environmental protection and enrichment.

STYLE:
The company leadership style

The style if an organization, according to Mckinsey from work refers

to the “reporting relationship” between the superiors and he
subordinates. It also conveys the flow of communication between
them. the company is following the type of “Line and staff”
organization.

STAFF:

Page | 26
The company's employees and their broad abilities

Staffing is the process of acquiring human resources for the

organization and assuring that they have the potential to contribute to
the achievement of the organization’s goals. It includes selection,
placement, training and development of appropriately qualified
employees.

At MRF for its staff all the facilities arte given. Up gradation work,
process, technology etc are doing day by day. Recently all
departments are computerized at all levels, so company is giving
computer training to all its employees and staff, There is lot of scope
and career opportunities in the firm for the staff.

SKILLS:
The skills and competencies of employees

Technical Skills:-
A technical skill refers to the ability and knowledge in using
the equipment, technique and procedures involved in performing
specific tasks. At MRF employees, both supervisors and workers,
working in all the production related department posses the technical
skill such as engineering skills, computer skills, etc. which are needed
to handle work related tools, machines and equipments.

Human skills consists of the ability to work effectively with other

people both as individual and as member of a group, At mrf.
employees and staff are expected to have human skills so that they can
work cooperatively with one other and build effective teams spirit,
which in turn helps in achieving the organization goals.

REGISTERED ADDRESS

Page | 27
124, Greams Road ,Chennai (Madras) Tamil Nadu-600006
Tel: 044-28292777
Fax: 044-28295087
Email: mrfshare@mrfmail.com
Website: http://www.mrftyres.com

Explore MRF connections

Registrars
MRF Ltd. 124, Greams Road
Tel: 044-28292777
Fax: 044-28295087
Email: mrfshare@mrfmail.com
Website: http://www.mrftyres.com

APOLLO TYRES LTD. (ATL)

Page | 28
APOLLO TYRES LTD. is currently the 16 largest tyre manufacturer in
the world and the second largest in India. It is also one of the fastest
growing tyre companies in the world.

Apollo currently enjoys the largest market share in heavy commercial

vehicle and light truck tyres. For the past few years, Apollo has
registered not only the highest sales and turnover growth in the
industry but is also by far the most profitable. Innovative marketing
practices and cost control at every level have made a considerable
difference to the company's bottom line.

Apollo Tyres is also the first tyre manufacturer to have obtained an

ISO 9001 certification for all its facilities in October 1994. The
company believes in maintaining strict quality control standards to
enhance customer satisfaction at all times. These have resulted in
recognition in terms of awards and certifications for introducing some
of the best quality management systems in the industry.

Apollo was also one of the few tyre manufacturers to obtain the QS
9000 certification in March 2001.All Apollo products conform to the
standards prescribed by the Government of India (DGS&D) and to at
least one or more of the following standards: the Indian Defence
Ministry (CQAV), the Department of Transport, USA (DOT), the
European Economic Commission (ECE), the Saudi Arabian Standards
Organization (SASO) and Co venin of Venezuela.

BUSINESS ACTIVITY: Manufacture and sale of tyres

ALLIED BUSINESSES: Tread rubber for commercial vehicle tyres

and distribution of alloy wheels for passenger cars

FINANCIAL YEAR: April 1 to March 31

NET SALES TURNOVER : Rs.3002.12 Crores as on March 31, 2006

NO OF EMPLOYEES: Approximately 7,000

PRODUCT RANGE: Truck and Bus Bias, Light Truck Bias and
Radial, Passenger Car Radial, Farm Bias and Radial
VISION:
“A leader in the Indian tyre industry
And a significant global player,
Page | 29
 Providing customer delight
And enhancing shareholder value.”

Though Apollo is presently one of the leading tyre companies, the

continued success will depend on its future plants. The company is
laying steps for increasing production capacity. In the future there is
a plan to manufacture tyres with matching colors to the vehicles
according to the needs of the customers.

CORE VALUES

CREATE It means
C- Care of Customers
R- Respect for Associates
E- Excellence through Teamwork
A- Always Learning
T- Trust Mutually
E- Ethical Practices

OBJECTIVES OF APOLLO TYRES LTD

The corporate objectives of Apollo Tyres Ltd are as follows.

 Employee satisfaction.
 Customer delight.
 Revenue growth.
 Operating margin improvements.

CORPORATE SOCIAL RESPONSIBILITY

AND COMMUNITY OUTREACH

Page | 30
The War Wounded foundation

Apollo Tyres assisted in the establishment of this independent

foundation, whose aim is to enable soldiers injured during active duty
to pursue an alternative career. The company is one of the key patrons
of the WWF and actively encourages war wounded soldiers to become
a part of its network of business partners. Apollo Tyres assists
interested individuals with initial business training and knowledge of
the tyre sector and absorbs them as part of the company's regular
dealership network. Currently, over 50 former Indian armed force
personnel are Apollo dealers.
As part of its giving programme, every second year, Apollo donates
light and effective, artificial limbs to worthy soldiers shortlisted by
the Foundation in consultation with the Indian Army. These limbs
allow former soldiers to be more productive and effective in their
daily lives and businesses.

Emergency Medical Service

In association with the Lifeline Foundation based in Baroda city of

Gujarat, Apollo Tyres set up the first Emergency Medical Service or
EMS in the city of Baroda. A 24-hour emergency number can be used
by any citizen to seek assistance in case of a medical need. The
network is connected to all city hospitals with a fleet of ambulances
and the facility is available to all residents or visitors to the city. The
rescue and medical facilitation work is also carried out on the
National Highways in the state.

Education and Healthcare Infrastructure

In the villages that surround Apollo Tyres' manufacturing facilities,

health and education infrastructural support is provided to augment
the existing facilities. Apollo plays a lead role in ensuring school
buildings, study materials and hardware like computers are available.
On a regular basis the company undertakes special activities for the
learning and entertainment of the school children.
To work towards a healthy community, Apollo Tyres' doctor from the
manufacturing unit visits the village every week for consultations and
basic medical care. For intensive check-ups referrals are made to the
nearby medical facility. From time to time, special eye, cardiac and
general health check-up camps are undertaken at these villages for all
residents.
Page | 31
With an eye on empowering more individuals to become
entrepreneurs, regular adult literacy classes are held for the village
women. Once this is completed they are encouraged to undergo a
skill-based training which could enable them to work out of the home
and still being in an income.

HIV- AIDS AWARENESS

As a corporate Apollo Tyres believes in investing in initiatives which

have the ability to have a direct impact on the lives of its stakeholders,
while strengthening the company's existence as a business entity. This
ensures that all activities are sustainable, measurable and form a core
part of its entire business plan. The largest area of work involves
awareness and prevention of HIV-AIDS. Three key groups are
addressed directly through this programme's on-ground activities.
People in the Commercial Vehicle Segment like truck drivers,
cleaners, loaders, etc. Apollo has established targeted intervention
centres called Apollo Tyres Health Care Clinics outside the capital
city of New Delhi, Kanpur in Uttar Pradesh, Coimbatore in Tamil
Nadu, Vashi outside Mumbai city and Nagpur in Maharashtra,
Udaipur and Jaipur in Rajasthan. Others large trucking centres are
being considered for future Clinicsites. These Clinics are run by
qualified doctors, counsellors, pharmacists and outreach workers who
focus on:
• Diagnosis and treatment of STD’s
• Behavioral change communication
• Condom promotion

Employees: A complete workplace programme caters to awareness

creation among all white and blue-collar employees. At all locations,
Master Trainers have been trained to facilitate continuous knowledge
upgradation and implementation of all on-ground activities.

Page | 32
Business partners: This is the key vehicle for taking the AIDS
awareness and prevention programme to a larger mass of the active
working population. Apollo Tyres works with its business partners to
assist them in undertaking workplace programmes for their employees.
“At Apollo Tyres we believe that our work in the community is an
investment and an opportunity, to create a difference in the lives of
our stakeholders and customers” – Onkar. S. Knawar (Chairman)

SHARE-HOLDING PATTERN OF ATL

ACQUISITIONS
1995 - Acquired Premier Tyres Ltd. in Kerala.
2006 - January 30, Dunlop South Africa is acquired.

FINANCIAL DATA

TURNOVER AND NET PROFITS

Page | 33
 Apollo Tyres Ltd – Apollo Tyres Ltd- Net
Turnover Profits
Year Rs. in Crs Year Rs. in Crs
1998-99 1998-
1154.02 31.08
99
1999-00 1999-
1368.75 76.06
00
2000-01 2000-
1458.70 25.42
01
2001-02 2001-
1710.00 42.40
02
2002-03 2002-
2025.10 120.02
03
2003-04 2003-
2314.31 70.42
04
2004-05 2004-
2656.8 67.63
05
2005-06 2005-
3002.12 78.17
06

CURRENT FINANCIAL POSITION

Sales from operations during the financial year ended March 31, 2006
amounted to an all time high of Rs. 3,002.12 crore as against Rs.
2,656.81 crore during the previous year, recording a growth of
approx.13%.

Operating profit, before interest and depreciation, amounted to Rs.

223.92 crore as against Rs. 184.64 crore during the previous year,
registering an increase of approx. 21.27%. Net profit, after providing
for interest, depreciation, tax and exceptional items amounted to Rs.
78.17 crore, as against Rs. 67.63 crore during the previous year.

The strong performance of Apollo is a combination of high growth in

sales alongwith enhanced operations management, better working
capital management, aggressive marketing and overall cost reduction
measures adopted by the Company.

During the year, your Company realigned its relationship with

Michelin and exited from the Joint Venture Company “Michelin Apollo
Tyres (P) Ltd.”, as radialisation in commercial vehicle tyres segment
in Indian markets had not reached anticipated levels. The Company

Page | 34
recovered almost its entire investment in the JV through sale of its
49% stake back to Michelin. This re-alignment would enable the
Company to utilise the available resources better towards other
growth opportunities in short to medium term.

TRENDS IN SALES QUANTITY (PRODUCTS)

Product/s Mar Mar Mar Mar Mar

manufactured/t 2001 2002 2003 2004 2005
raded
Automobile 16.33 19.85 24.35 28.25 29.19
Flaps Lakh Lakh Lakh Lakh Lakh
nos nos nos nos nos

Automobile 30.68 32.54 36.67 43.83 53.81

Tubes Lakh Lakh Lakh Lakh Lakh
nos nos nos nos nos

SWOT ANALYSIS OF APOLLO TYRES LTD.

STRENGTHS

 Continued Market Leadership in the dominant industry segment

i.e. Truck / Bus tyres.

 Global presence with acquisition of Dunlop Tyres International

(Pty) Ltd in South Africa.

 Robust Operation Center for managing IT operations across 140

Locations supported by ERP / Dealer Portal / Information
Systems Security Control etc.

 Presence in technology products in car radial segment.

 Dynamic & Progressive Leadership.

 Responsive to changes in market conditions and product

profiles.

 Product innovation and technical superiority.

Page | 35
  Strong Brand recall in a price sensitive market.

 Economies of transportation cost on account of closeness to

natural rubber growing belt.

WEAKNESSES

 No presence in two/three wheeler segment.

 Declining profit margins due to raw material cost push.

OPPORTUNITIES

 Continuous thrust in road infrastructure and construction of

expressways & national highways. Creation of road
infrastructure has given, and will increasingly give a
tremendous fillip to road transportation in the coming years.
Tyre industry will play an important role in this changing
product mix of transport.

 Leadership position in the commercial vehicle segment will

enable the Company to leverage new and related business
opportunities.

 Access to global sources for raw materials at competitive prices

due to economies of scale.

 Steady growth in vehicle production in the immediate future

leading to growing demand.

THREATS

 An increase in the flow of tyres from competitive sources like

China.

 Cheaper imports on account of import from countries which are

signatories to Regional Trading Agreements (RTA’s).

 With crude prices scaling upwards, pressure on raw material

prices can be expected.

Page | 36
  Continuous increase in the prices of natural rubber, which
accounts for nearly one third of total raw material cost.

MCKINSEY’S 7S MODEL OF APOLLO TYRES

STRATEGY:
Apollo Tyres Ltd. aims to be the ‘supplier of choice’ for its entire
customer base. To achieve this we invest in Research & Development,
Technology Enhancement and Quality to ensure the superiority of our
offerings in all aspects. We have already commenced on the journey to
going beyond being a mere tyre supplier to our consumers to
becoming a complete solution provider for all their transportation
needs.

SHARED VALUES:
Transparency by classifying and explaining the Company’s policies
and actions to those towards whom it has responsibilities, i.e.
maximum possible disclosures without hampering the Company’s and
shareholders’ interests.

Professionalisation ensures that the management teams at all levels

are qualified for their positions, have a clear understanding of their
roles and are capable of exercising their own judgement, keeping in
view the Company’s interest, without being subject to undue influence
from outsiders.

Trusteeship brings into focus the fiduciary role of the management to

align and direct the actions of the organization towards creating
wealth and shareholder value.

Corporate Social Responsibility ensures the promotion of ethical

values and setting up exemplary standards of ethical behaviour in our
conduct towards our business partners, colleagues, shareholders and
general public, i.e. abiding by the laws, showing mutual respect and
acting with honesty and responsibility. Corporate social responsibility
ensures that the Company contributes to society’s overall welfare by

Page | 37
undertaking not-for-profit activities, which could benefit all or any of
its stakeholders in society.

Safeguarding Integrity ensures independent verification and truthful

presentation of the Company’s financial position. For this purpose,
the Company has also constituted Audit Committee, which pays
particular attention to the financial management process.

STYLE:
At Apollo Tyres Ltd., corporate governance is all about the processes,
which involve direction and control of affairs of the Company in a
fashion that ensures optimum returns for the stakeholders. Corporate
governance is a broad framework, which defines the way a corporate
body functions and interacts with its environment. It is a combination
of voluntary practices and compliance with laws and regulations
leading to effective control and management of the organization. The
company is open, accessible and consistent with communication and
shares long-term perspective and firmly believes that good Corporate
Governance practices underscore its drive towards competitive
strength and sustained performance. Thus, basic Corporate
Governance norms have been institutionalized as an enabling and
facilitating business process at the Board, Management and
operational levels.

STAFF:
Human resources play a crucial role in the development process of the
present economy. Though the exploitation of natural resources,
availability of physical and financial resources and international aid
play prominent roles in the growth of modern economies, none of
these factors is more significant than efficient and committed
manpower. Recruitment is done through advertisement and
employment exchange. Candidates are called for interview and final
decision is with the chief executive. As of now there are no major
constraints in attracting the right talent since the organisation is a
reputed one and the compensation package is really attractive. Apollo
provides training for both managers and workers. Training program
for managers consists of both internal and external program. The
workers undergo internal training programmes conducted by experts.
External training is done by deputation to professional training
centers.

Page | 38
SYSTEM:
The system department is responsible for computerisation of different
departments of ATL. The main function of this department, operates
and co ordinates all systems in the organization. The simple structure
of department facilitates speedy communication flow with in the
department.

CEAT Tyres Ltd .

COMPANY OVERVIEW

CEAT Limited is a tyre manufacturing company based in Mumbai,

India. CEAT is an abbreviation for Cavi Electrici Affini Torino.
Founded in Italy as CEAT Tyres by Virginio Bruni Tedeschi, the
company established its manufacturing in India in 1958 and was sold
to Pirelli by Virginio's heir Alberto Tedeschi in the 1970s. The
company's Indian division was then taken over by RPG Enterprises in
the year 1982 which also got the rights to the CEAT brand and
renamed the company as CEAT Limited. Its tagline is "Born Tough".

Let’s take a quick glance at the history of the company.

• CEAT International was first established in 1924 at Turino in

Italy and manufactured cables for telephones and railways.
• In 1958, CEAT came to India, and CEAT Tyres of India Ltd was
established in collaboration with the TATA Group.
• In 1982, the RPG Group took over CEAT Tyres of India, and in
1990, renamed the company CEAT Ltd.

VISION

“Ceat will at all times provide total customer satisfaction through

products and services of highest quality and reliability.”

Page | 39
MISSION

“To nurture an exciting and challenging work environment with

fairness and transparency.”

OPERATIONS

CEAT produces over 6 million tyres a year and commands around 14%
share of the Indian tyre market. The Company manufactures a wide
range of tyres, catering to all user segments. This includes tyres for
heavy-duty Trucks and Buses (T&B), Light Commercial Vehicles
(LCV), Earthmovers and Forklifts (specialty segment), Tractors,
Trailers, Passenger Cars (PC), Motorcycles, Scooters and Auto-
rickshaws. CEAT earns around 65% of its revenue from the T&B
segment. The Company currently operates 2 plants in Maharashtra,
one in Bhandup and the other in Nasik. It has a robust national
network consisting of 33 regional offices and over 3,500 dealers,
among which ~75 are exclusive dealers running CEAT Shoppe outlets.

REACH
CEAT's solid brand equity has helped it achieve a strong footprint in
both the domestic and the international market. It has a presence in
over 110 countries. In 2007-08, the Company also became the number
one tyre exporter in the country with exports valued at Rs.505 crores.

QUALITY POLICY

CEAT is the first tyre company in India to get the ISO/TS 16949
certification, which is a combination of ISO 9000 and QS 9000. It is a
quality management system that promotes continuous improvement.
It ensures:
• The PDCA (Plan, Do, Check and Act) cycle of process
approach.

Page | 40
 • Trim supply chain by preventing defects and reducing
waste.
• Export to almost all parts of the world.
• Fundamental quality management system requirements.
• No multiple certification audits.
• Customer satisfaction.

HUMAN-RESOURCE MANAGEMENT

BOARD OF DIRECTORS
R. P. Goenka - Chairman
H. V. Goenka - Vice Chairman
Paras K. Chowdhary - Managing Director
M. A. Bakre
A. C. Choksey
S. Doreswamy
Mahesh S. Gupta
H. Khaitan
Bansi S. Mehta
Hari L. Mundra
K. R. Podar

MANAGEMENT TEAM

Paras Chowdhary - MD
Arnab Banerjee - VP - Sales & Marketing
K. J. Rao - VP - Outsourcing
Sunil Sapre - CFO (Chief Financial Officer)
Tom Thomas - Executive Director (Technology & Projects)
Hundal Singh - VP-Manufacturing
Rahul Ghatak - VP- Human Resources

Page | 41
CORPORATE SOCIAL RESPONSIBILITY (CSR)

CEAT's motto is "to positively impact the lives of employees and local
communities directly affected by our business."

It does this through a series of result-oriented initiatives like:

• Providing opportunities for better education, health
improvement and employment.
• Socio-ecological projects to promote a healthy and safe
environment.
• Healthcare programmes and camps.
• Adopted the Tirat Shate village close to the plant in Nasik,
where the Company undertakes various development
programmes.

SOCIAL CONTRIBUTION
CEAT do this through a series of result-oriented initiatives like:
Providing opportunities for better education, health improvement and
employment
Socio-ecological projects to promote a healthy and safe environment

Healthcare programmes and camps

Free Eye Check-up Camp Kirat Seth Village

Page | 42
CEAT have also adopted the Kirat Seth village close to their plant in
Nashik, where they have carried out various development
programmes. They have also invested in providing basic necessities
like fresh drinking water, proper sanitation, and medical facilities.
Constant efforts are also toward enhancing income standards by
imparting vocational guidance. Women of the village have been
trained to make phenol and liquid soap, which is procured by the
company’s plant. Other healthcare schemes for the village include
regular free eye check-up camps and aids awareness drives.

ACHIEVEMENTS & AWARDS

 The 2007-08 Raid de Himalayas 2 wheeler Rally was won on

CEAT Tyres

 CEAT was the No.1 in exports amongst all tyre companies in

India. (Source ATMA Report 2007-08)

 CEAT Shoppe wins Best Innovation Award 2007-08.

 CEAT won the Employer Branding Award for "Excellence in

Training 2007-08" (Awards by the Asia Pacific HR congress)

 CEAT has adopted a village "Tirad Seth", near Nasik as part of

its CSR activities.

 ICQCC Distinguish award for Quality Circle in 2002 at

Lucknow, India

 NCQC Distinguish award for Quality circle in 2004 at Mumbai,

and in 2006 at Kanpur, India

 CCQC Mumbai Chapter Distinguish Award for Quality Circle in

2007

 RPG Best TQ\M Team Award for CFT in 2005 and 2006

 Recognized with RPG BTT Six Sigma Team Award in 2005-06

 Winner of RPG Quality award in 2003, 2004 & 2006

 Certificate of merit in RPGOE in 2005

Page | 43
  100 percent vendors are ISO certified

 Rated amongst top four auto ancillaries

 National Exports Award (CAPEXIL) - 13 times

 Best Exports certificate of merit - 7 times in the last 20 years

PERFORMANCE
During 2007-08, CEAT recorded sales of Rs.2603 crores, an increase
of about 9% over the previous year. The Company's EBIDTA stood at
Rs.288 crores against Rs.153 crores in 2006-07, an increase of about
89%. The Profit After Tax (PAT) of the Company increased from Rs.39
crores in 2006-07 to Rs.149 crores (including an exceptional income
of Rs.80 crores) in 2007-08, an increase of about 279%. The Company
recorded the highest profit in the last 50 years in 2007-08. At the same
time, the Company recorded the highest ever growth in sales and also
emerged as the number one tyre exporter in the country. The shares of
the Company are listed on the Bombay Stock Exchange (BSE) and the
National Stock Exchange (NSE).

Manufacturing Facilities

• 4 Manufacturing plants - 2 in India and 2 in Sri Lanka

• 10 outsourcing units for tyres, tubes and flaps
• 3 dedicated 2-3-wheeler plants controlled by CEAT

CEAT Bhandup Plant

Page | 44
 CEAT Nashik Plant

ALLIANCES
2 Wheelers

-----------------------------------------------------------------------------------
3 Wheelers

-----------------------------------------------------------------------------------
Passenger

-----------------------------------------------------------------------------------
Truck

-----------------------------------------------------------------------------------
LCV

-----------------------------------------------------------------------------------
Farm Tyres

Page | 45
-----------------------------------------------------------------------------------
OTR Tyres

FINANCIAL DATA

Balance Sheet of Ceat ------------------- in Rs. Cr. -------------------

Mar '04 Mar '05 Mar Mar Mar
'06 '07 '08
12 mths 12 mths 12 12 12
mths mths mths
Sources Of Funds
Total Share Capital 35 .09 35.10 45.68 45.68 34.24
Equity Share Capital 35.09 35.10 45.68 45.68 34.24
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 299.34 261.81 303.3 332.9 465.56
2 6
Revaluation Reserves 290.13 333.23 0.00 0.00 13.45
Networth 624.56 630.14 349.0 378.6 513.25
0 4
Secured Loans 319.52 338.85 291.2 275.7 265.39
2 6
Unsecured Loans 150.89 111.78 126.4 101.2 64.63
2 4
Total Debt 470.41 450.63 417.6 377.0 330.02
4 0
Total Liabilities 1,094.9 1,080.7 766.6 755.6 843.27
7 7 4 4

SHAREHOLDING PATTERN
Page | 46
 No. of
Holding
Particulars shares
(%)
(in Lakhs)
Promoters 43.2 197.1

Non-promoter -

Corporate Holding 5.8 26.3

Institutions 24.6 112.3

Foreign 8.7 39.0

Public & Others 17.7 81.0

SWOT ANALYSIS

STRENGTHS

 Market Leadership in the Truck/ Bus segment of the tyre industry

.i.e., around 65%

 Global presence by exporting tyres in around 110 countries.

 Presence in technology products in car radial segment.

 Dynamic & Progressive Leadership.

 ISO/TS 16949 Certification, which is combination of ISO 9000

and QS 9000.

 Strong Brand equity in both domestic and international market.

 Economies of transportation cost on account of closeness to

natural rubber growing belt.

 Robust Operation Center for maintaining operations consisting

of 33 Regional Offices and over 3,500 dealers among which 75

Page | 47
 are exclusive dealers running CEAT Shoppe Outlets with the
help of Dealer Portal / Information Systems Security Control etc.

WEAKNESSES

 Lower productivity of labour compared to international

standards.

 Declining profit margins due to raw material cost push.

OPPORTUNITIES

 Continuous thrust in road infrastructure and construction of

expressways & national highways. Creation of road
infrastructure has given, and will increasingly give a
tremendous fillip to road transportation in the coming years.
Tyre industry will play an important role in this changing
product mix of transport.

 Being number-1 exporter in the country can exploit the market.

 Leadership position in the commercial vehicle segment will

enable the Company to leverage new and related business
opportunities.

 Access to global sources for raw materials at competitive prices

due to economies of scale.

 Steady growth in vehicle production in the immediate future

leading to growing demand.

THREATS

Page | 48
  An increase in the competitive at International level from
sources like China and South Korea.

 Import of cheap truck radials in the Indian market from China

and South-east Asian countries,

 With crude prices going high, raw material prices can be

expected to increase at faster rate.

 Continuous increase in the prices of natural rubber, which

accounts for nearly one third of total raw material cost.

MCKINSEY’S 7S MODEL ANALYSIS

STYLE
It conveys the flow of communication between the superiors and their
subordinates. It is been said that Ceat Tyres ltd. follows “Line and
Staff” organisation. Both downward and upward communication
follows the path of formal channel. All the activities of the
organisation is communicated from one department to another through
formal channel.

STAFF
At Ceat Tyres ltd. up gradation work, process, technology etc are done
by all its staff day by day. All departments are computerized at all
levels, so company is giving aggresive training to all its employees
and staff. There is lot of scope and career opportunities in the firm for
the staff.

SKILLS

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Employees and staff are expected to have human skills so that they can
work cooperatively with one other and build effective team spirit,
which in turn helps in achieving the organisational goals. Technical
Skills such as engineering skills, computer skills, etc are needed to
handle work related to tools, machines and equipments.

SYSTEM
Ceat tyres ltd. has fully equipped technical information department
which makes the strategic and operational information for the
organisation. All the departments such as marketing, purchases,
quality control stores, finance, etc are computer programmed and are
interlined via LAN.

STRUCTURE
Ceat Tyres ltd. Maintained decentralized form of organization. It is
Being transaction-based, not personality driven. Focused on the long
term in compensation and planning. No blurring of the boundary
between corporate and personal resources

STRATEGY
Ceat will at all times provide total customer satisfaction through
products and services of highest quality and reliability. To nurture an
exciting and challenging work environment with fairness and
transparency

SHARED VALUES
• Customer Sovereignty
• People Orientation
• Innovation and Entrepreneurship
• Transparency and Integrity
• Anticipation, speed and flexibility
• Passion for superior performance

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 CHAPTER III

RESEARCH METHODOLOGY

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OBJECTIVE OF THE STUDY

Objective includes primary and secondary data-

Primary data is facts and information collected specifically for the

purpose of the investigation at hand.

Secondary data is facts and information gathered not for the

immediate study at hand but for some other purpose.
Secondary data has been gathered by others for their own purposes,
but the data could be useful in the analysis of a wide range of real
property. In general, secondary data exists in published sources.

The objective of the study is to:

• Understand the structure and functions of tyre industry

• Understand how the different departments function and the
internal activities between them.
• To know the strength & weakness of the companies in the
industry.
• The origination and sustainability of tyre industry.

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 • To know what it contributes to the country.

The study is to have an exposure into the functioning of the

organization and its different departments.

SCOPE OF THE STUDY

The study was done during the month of July 2009. The
organization selected by me to conduct the study is Tyre Industry.

METHODOLOGY OF THE STUDY

The methodology included quantitative and qualitative methodological

studies. The study was undertaken by Aashish Jain, Arijeet Jaiswal,
Kevin James.

LIMITATIONS OF THE STUDY

The Major Limitations are

 The time constraint was the reason why we can’t do an in depth

study into the organization.
 The company was reluctant to reveal some official reports and
documents as it is kept confidential.
 Data inconsistency is the reason which may lead to inaccurate
information of the industry.

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CHAPTER IV

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 COMPARATIVE SWOT ANALYSIS

STRENGTHS

MRF Tyres Apollo Tyres CEAT Tyres

It has an edge over most Continued-Market Presence in

of the another Leadership in the technology
companies as it also dominant industry products in car
deals with segment i.e. Truck / radial segment.
airplanes tyres Bus tyres.

Being the star exporter Global presence with Global presence by

since 1989,it enjoys a acquisition of Dunlop exporting tyres in
lot number of benefits in Tyres International around 110
exports, exporting in (Pty) Ltd in South countries.
more than 75 countries. Africa.

MRF TYRES, is India's Managing IT 33Regional Offices

number one tyre operations across 140 and over 3,500
producing company in Locations supported by dealers among
six manufacturing plant ERP / Dealer Portal / which 75 are
across India Information Systems exclusive dealers

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 Security Control etc. running CEAT
Shoppe Outlets.

WEAKNESS

MRF Tyres Apollo Tyres CEAT Tyres

High cost of raw Less profits as Declining profit

materials. material cost is high. margins due to raw
material cost push.

Its been a common No presence in Lower productivity

notion amongst the two/three wheeler of labour
customers that the segment. compared to
quality has been international
degrading. standards.

OPPORTUNITIES

MRF Tyres Apollo Tyres CEAT Tyres

MRF Continuous thrust in Leadership

Tyres manufactures road infrastructure and position in the
components for construction of commercial vehicle
aircrafts and expressways & national segment.
number of aircrafts highways.
are increasing.
Emergence of Steady growth in Being Bus/truck as
Indian as a hub for vehicle production in specialization
production of small the immediate future production exploits
car is expected to leading to growing the market in great
give a thrust to auto demand form.
component & tyre
segment.

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THREATS

MRF Tyres Apollo Tyres CEAT Tyres

Concessional Cheaper imports on Import of cheap

import tariffs for account of import from truck radials in the
countries like china countries which are Indian market from
& South Korea signatories to Regional China and South-
under regional Trading Agreements east Asian
trade agreements (RTA’s). countries,
will lead to .
additional imports.

Multinationals with An increase in the flow An increase in the

financial muscle of tyres from competitive at
setting do competitive sources International level
manufacturing like China. from sources like
facilities in the China and South
country. Korea.

CHAPTER V

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 FINDINGS

MRF Tyres

MRF is the market leader among tyre manufacturers in India, with a

24% share in terms of revenues. Its leadership position, coupled with
its strong brand recall and high quality, MRF commands the price-
maker status.

MRF has a strong presence in the T&B segment, the largest segment
of the tyre industry, and commands around 19% market share in the
segment. It is the leader in the two/ three-wheeler segment (including
motorcycles) and tractor front tyres, and holds second place in the
passenger cars and tractor - rear tyres.

Exports account for around 12% of the gross sales in MRF. The
Company has a distribution network of 2,500outlets within India and
exports to over 65 countries worldwide

Apollo Tyres (ATL)

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Apollo Tyres is the second largest player in the Indian tyre industry,
with a market share of 22%, in terms of revenues, and the largest
player in the T&B segment, with around 22% market share and 82% of
its product mix coming from this segment. It also enjoys a strong
brand recall. ATL derives 80% of its revenues from the replacement
market, where the EBITDA margins are higher; hence, at operating
levels, Apollo Tyres has better margins compared to those of its peers.
ATL is a strong player in the domestic market, with just 2% of sales
coming from exports.

CEAT Tyres Ltd

CEAT has a 14% market share, in terms of revenues, and is an

average player across categories. 68% of its product mix comes from
the MHCV segment. Its leading brands in the T&B segment are Lug
XL, Mile XL and Rib XL, Secura in two-wheelers and Formula-1 in
passenger radials. In terms of profitability, CEAT has lower margins
compared to its peers, in spite of deriving 60% of its revenues from
the replacement market.

CHAPTER VI

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 CONCLUSION

The industry is definitely set to grow, with an estimated volume

growth of 12-14% in 2006-07. Both, OEM and Replacement demand
would drive growth, with exports also adding-in. The growing
economy and the infrastructure sectors provide the much-needed
impetus. However, tyre companies face immense competition, together
with price and cost pressures. Pricing pressure, from OEMs because
of their high bargaining power and in the replacement market due to
huge competition, is a substantial dampener. Companies are now
giving emphasis to innovation in product and process technology and
to operational efficiencies. However, the continuously rising trend
witnessed in the prices of raw materials remains an area of concern.
Though the rubber prices have come down from their peaks of Rs 115,
to Rs 82 currently, the trend is very volatile.

Tyre companies would definitely show improvement in the margins,

sequentially, and if prices remain at these levels, profitability would
improve. But then, it is highly dependent on the prices of major raw
materials like Rubber, Carbon Black, NTC Fabric, SBR and PBR,
which are highly volatile. However, with surging automobile sales, if
demand for tyres increases without the supply catching up with it,

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then, prices of tyres are likely to increase. This may provide some
benefit to the tyre companies.

If we view the financial performance of various tyre-manufacturing

companies, most of them are operating at wafer-thin margins and any
substantial increase in costs would hurt the business adversely. Also,
reviewing the balance sheet, the ROCE and RONW are at very low
levels. The industry leader, MRF, has an ROCE of 6.7% and an RONW
of 5.5%. Apollo is a little better off, with ROCE and RONW at 12.8%
and 14.8%, respectively. Hence, we do not find tyre stocks attractive,
from an investment perspective.

At current levels, all tyre stocks look fairly valued. One can invest at
lower levels, keeping in mind the view on rubber prices. When rubber
prices fell from their highs, all tyre stocks performed well on the
bourses, giving good returns; nevertheless, they should be looked-at
only from a trading perspective.

The industry is definitely set to grow, but the huge competition, huge
buyer power, pricing inflexibility and cost pressures prove as
detriments. Tyre companies are operating at very thin margins and
their return ratios are also not attractive. One can look at tyre stocks
but only from a trading perspective

CHAPTER VII
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 IMPLICATIONS

IMPLICATIONS

 A bit more promotional activities could enhance building

brand image.

 Company should try to increase its market share in the

radial tyre segment.

 More atomization should be done so as to reduce the number

of workers.

 Their should be some classes or training arranged for better

understanding of SAP.

 Reaching better horizons by fostering new partnerships.

 Increase production for increased profits.

 Initiate major strategies towards empowering dealers.

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  Having strong position in truck and tractor segment, can
explore passenger vehicle segment.

BIBLIOGRAPHY

Aswathappa K. Human Resource & Personnel Management-

Tata Mc Graw Hill Publishing Co. Ltd.,
2002 Edition.

Chary S. N Production & Operations Management-

Tata Mc Graw Hill Publishing Co. Ltd., 1999
Edition.

Prasanna Chandra Financial Management Theory and Practice

Tata McGraw Hill publishers (2004)

C.R. Kothari Research Methodology Methods and Techniques

New Age Publishers (2004)

A Prism Solution Printed at Thomas Press

Page | 63
List of URL’s Referred

• http://www.ceatyres.com/knowus_com_corporate.html

• http://www.ceatyres.com/knowus_com_vision.html

• http://www.ceatyres.com/knowus_com_achvmts.html

• http://www.ceatyres.com/knowus_oems_alliances.html

• http://www.ceatyres.com/knowus_beyond_cares.html

• http://en.wikipedia.org/wiki/CEAT_Tyres

• http://www.moneycontrol.com/competition/mrf/comparison/MRF

• http://www.moneycontrol.com/competition/mrf/comparison/MRF

• http://docs.google.com/gview?
a=v&q=cache:XrQ9hAGGaSwJ:www.pr
sindia.org/docs/bills/1180001447/scr1187944991_Tyre_corp.pdf
+swot+analysis+on+mrf&hl=en&gl=in

• http://www.mydigitalfc.com/industry/tyre-companies-get-stuck-a-
rut-312

• http://www.mrftyres.com/mrf_exports.html

• http://www.moneycontrol.com/financials/mrf/balance-sheet/MRF

• www.apollotyres.com

• http://www.moneycontrol.com/financials/ceat/balance-sheet/C07

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ANNEXURE

MRF Tyres

INDIAN AUTOMOBILE component manufacturers and tyre makers are

planning to venture into uncharted territory of aircraft components
production. Indian-based MRF Tyres, Minda NTS and Sundram
Fasteners are moving ahead with plans to supply components to
aircraft manufacturers.
India’s leading tyre manufacturers MRF, has taken an initiative in this
regard. The company is also making tyres for helicopters fore defence
services.

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