Due Diligence Questionnaire

Group 5
Navpreet Kaur Bolla - 05
Payal Golui - 15
K S Nithin - 25
Mangiliputi Jaya Prakash - 35
Arka Roy Chowdhury - 45
Aayush Shekhar - 55

Considering both company specific and industry related generic points

1.) General Management questions to ask in a due diligence Process

1.) Who are the promoters? What is their educational background? Also share
information about their past industry experience?
2.) What is the shareholding pattern. Can you throw some light on the investor
diversity in your organization?
3.) There has been news about some disagreements regarding appointment of
directors in the organization. Is it true. Previously has there been any
discrepancy while electing the directors?
4.) Which other members from the BOD have an interest in other entities? How
much is the interest involved? What is the nature of interest?
5.) How much salary is drawn by the CEO and MD? On what basis is the
renumeration decided?
6.) Previously investors rejected the re-appointment of your MD. Can you comment
on that?
7.) Is there disparity in the salary drawn by promoters as compared to other
companies in the same sector? If yes, then why?
8.) Are the proportion of independent shareholders on the board 50% as required? If
not, why?
9.) Was there any legal case filed against the promoters? If yes, on what grounds?
Has the case been resolved?
10.) Have the promoters been awarded with any recognized industry award?
On what basis?

2.) Legal Questions to ask in a due diligence process.

1. Entity’s legal structure - What is the legal structure of the organization?

2. What is the asset and property ownership structure?
3. In 2011, Apollo took on lease about 10,000 hectares of land in Laos, in South-East
Asia, for rubber plantation. Is the lease contract still in place, what is the lease liability?
4.In 2018, the Centre (Automotive Tyre Manufacturers Association (ATMA)), hiked the
fees charged for special licences issued to rubber manufacturers, dealers and
processors. Is there any fees due because of the hike. If yes, can you throw some light
on that?
5.In tyre Industry, BIS Hallmark is mandatory license for making tyres in India. What is
the time remaining for renewal of license and are the mandatory procedures in place to
re issue the license once it expires?
6.Are the licenses and renewal procedures of licenses related to Intellectual property
rights in place or not?
7.Apollo as well as the tyre industry in general has faced labour issues in the past. Do
you have enforceable labour contracts with labour union in place. If yes, can you throw
some light on the same?
8.Apollo has a substantial amount of secured debt in the capital structure. What are the
securities pledged and is there any penalty clause. Can you share some light on the
same?

3.) Finance based questions for due diligence

1. What were the reasons behind changes in accounting policies, if any?
2. What are the working capital requirements of the company? How are they met?
3. What are the taxes that the company has been liable to, owing to its operations?
How much do these taxes shrink the profit margins? Does the organization face
issues in taxation collection (from customers etc.)? How does it combat the
same? Have there been any tax liabilities in the past?
4. Has there been any significant changes in the revenue streams (due to new
markets, product portfolios etc) in the last five years? If yes, what has been the
reason(s)?
5. What are the steps that the organization takes for its liquidity management?
6. What are the sources of finance (bank and FI loans, debentures, shares) that the
organization has had in its books, and how able is the organization in servicing
its financial obligations? (Collateral, senior and subordinated debt etc.)
7. What are the payout policies that the organization follows? (Reasons for
buybacks, dividends etc)
8. How much does the company spend in R&D? And when shall these investments
get converted into cash flows?
9. How does the business perform with respect to its peers in return generation
(RoE,RoA etc.)? How long will it enjoy its advantage, if it is ahead? And if not,
why has it not been able to do so?
10. How much does the organization invest in opportunities that are unrelated to the
business (? What are the reasons behind such investments?
 11. Were there any M&A activities that were carried out in the past? What were the
reasons and what was the impact on the company’s financials?

4) Operations Questions to ask in Due Diligence

a) How has covid 19 pandemic affected your operations? Is there any supply chain
related problems or shortages. Can you throw some light on ways company
plans to tackle the same?
b) Outsourcing: How are providers performing on overall and individual levels?
c) Cycle Time: What is the average time from purchase order issued through to
payment received from the customers for their purchase?
d) Inventory Analysis: Overall inventory details
e) Customer Service: What Percent of customer orders are shipped complete,
accurate and delivered on time and the details of any multiple shipments for each
customer order.
f) Supplier performance: How well suppliers are performing overall and for key
vendors as to delivering on time, accurately, completely and as to quality?
g) Has the organization received any certifications in the past? (ISO etc)
h) Is the organization a part of any association or chamber?
i) Forecasting Accuracy: How well time is managed for stocking/restocking? Any
impact due to the longer stocking period for particular products?
j) Risks: Any offshore manufacturing and sourcing has potential and other risks?
k) List of all items in inventory including item description, item number, acquisition
date, number of units, and acquisition cost.
l) Description of practices regarding inventory aging, valuation, and obsolescence,
and any methodology changes.
m) Details of inventory reserves and/or write-offs.
n) Details of any consigned inventory arrangements.
o) Are there any energy saving processes put to use? How are the overall
operations being turned to more sustainable options?
p) The critical supply chain component where IT can help i sby fitting RFID tags
onto tyres. It will not only help tracking the tyres within the supply chain but will
also be helpful as an after-sales tool. How is Apollo planning to integrate this new
technology ?

5) HR Questions to ask in due diligence process.

1. Apollo Tyres is the first few in India to go for a Flat Organisational structure. Why
did the company opt for a four-tier flat organisational structure? How efficient has
been this structure over the past years?
 2. What is the Recruiting and Onboarding process of the company?
3. How efficient is the company’s interview guides and new-hire orientation
practices?
4. What are the contracts and benefits of the employees in Apollo Tyres - including
non-compete, non-disclosure, and severance agreements in the company?
5. What are the Key HR policies of the company and details of any filed complaints
by the employees over the years?
6. One of the challenges of the growing economy like ours is nurturing and
retention of talent. What all initiatives and measures are taken up by Apollo to
reskill and upskill their key employees ?
7. What are the Employee Health Insurance Plans and Policies of the company?
8. What are the steps being taken to ensure safety of workers during this
pandemic?

6) Marketing questions to ask in Due Diligence

1. Untapped lucrative market segment - Please state the reasons for the lack of
presence in the two and three wheeler tyre segments.
2. When Apollo is stating their focus is on tyre technology, please state the reasons
why the company is not developing technologically advanced tyres ?
3. How is the company planning to tackle the threat of increasing competition from
cheap Chinese imports, especially in the price-sensitive replacement market ?
4. How is the company planning to thwart the impending competition from the entry
of MNCs like Michelin, Firestone, Continental ?
5. What is the mix of customers (% of B2B and B2C)? Who are the top ten
customers?
6. Is the company planning to enter into any new market. If so, can you please
throw some light on that?
7. Have any previous deals impacted the brand image of the company. What are
the marketing strategies adopted by the company to refurbish its image ?
8. What is the market share of Apollo tyres? How does it compare to other players
in the market?
9. Have there been any complaints regarding the products by customers? What
steps have been taken to improve on these complaints?
10. What is the reward policy for recurring customers? (Discounts, special offers etc.)
11. How is the company planning to increase credit sales ?
7) Social Behaviour and Responsibility

1. What are the potential environmental and social risks associated with the
business activities of the company?
2. What is the number and characteristics of the communities that may be impacted
by the company’s activities ?
3. What are the major CSR initiatives of the company?
4. What are the waste management methodologies undertaken by the company?
How often are they revised?
5. Does the company have a formal community relations department? It is key to
determine the level of existing community outreach and engagement?
6. How much does the company plan to invest in social and relationship capital?
7. Can you throw some light on the value chain initiatives taken by the company for
your suppliers and distributors?