DISSERTATION

ON

MARKET ANALYSIS OF THE INDIAN TYRE

INDUSTRY
For the partial fulfillment of the award of the degree of

BACHELOR OF BUSINESS ADMINISTRATION

BY

BARNINI CHATTERJEE
Enrollment number: A90606418023
Semester: 6
Batch: 2018-2021

AMITY SCHOOL OF BUSINESS

AMITY UNIVERSITY

KOLKATA

(i)

1
 DECLARATION

I hereby declare that the project work entitled ‘MARKET ANALYSIS OF THE INDIAN

TYRE INDUSTRY’ submitted to AMITY UNIVERSITY, KOLKATA is a record of an original

work done by me under the guidance of PROF SUVOBROTO BANERJEE. This project work is

submitted in the partial fulfillment of the requirements for the award of the degree of Bachelor of

business administration. The results embodied in this thesis have not been submitted to any other

University or Institute for the award of any degree.

BARNINI CHATTERJEE

Date: 26.04.21

Place: KOLKATA

(ii)

2
 FACULTY GUIDE APPROVAL PAGE

The research work embodied in this dissertation entitled ‘MARKET ANALYSIS OF THE

INDIAN TYRE INDUSTRY’ submitted by BARNINI CHATTERJEE, A90606418023 in the

partial fulfillment of the requirements for the award of the Degree of Bachelor Of Business

Administration to the AMITY UNIVERSITY, KOLKATA is based on the experiments and

studies carried out by her. This work is original and has not been submitted in part or full for any

other degree or diploma of any university or institution.

Signature of Prof Suvobroto Banerjee, Faculty Guide.

Date:

Place:

(iii)

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 ACKNOWLEDGEMENT

I would like to express my deep and sincere gratitude to my faculty guide PROF. SUVOBROTO

BANERJEE. His Knowledge and logical way of thinking has helped me immensely. His

understanding, encouraging and personal guidance has helped me make this Dissertation

successful. Without his invaluable advice and assistance, it would not have been possible for me

to complete this dissertation. Thank you for your continuous support for the important work in

this field. I would like to acknowledge each and everyone who contributed for this project work

either directly or indirectly.

Thanking You,

BARNINI CHATTERJEE.

(iv)

4
 CONTENTS

Sl. No. TOPICS Pg. No.

1 COVER PAGE 1(i)

2 DECLARATION 2(ii)

3 FACULTY GUIDE APPROVAL PAGE 3(iii)

4 ACKNOWLEDGEMENT 4(iv)

5 ABSTRACT 6

6 INTRODUCTION 7-9

7 LITERATURE REVIEW 10 - 18

8 COMPANY PROFILE OF MRF TYRES 19 - 24

9 MARKET ANALYSIS OF MRF TYRES 25 - 35

10 COMPANY PROFILE OF APOLLO TYRES 36 - 43

11 MARKET ANALYSIS OF APOLLO TYRES 44 - 53

12 COMPANY PROFILE OF JK TYRE 54 - 66

13 MARKET ANALYSIS OF JK TYRE 67 - 70

14 FINANCIAL COMPARATIVE ANALYSIS 71 - 77

15 CONSUMER SURVEY 78 - 89

16 RECOMMENDATIONS 90 - 93

17 FINDINGS 94 - 100

18 CONCLUSION 101

19 REFERENCES 102 - 104

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 ABSTRACT

Technology generation in the Indian tyre industry has witnessed a fair amount of expertise and

versatility to absorb, adapt and modify international technology to suit Indian conditions. This is

reflected in the swift technology progression from cotton (reinforcement) carcass to

high-performance radial tyres in a span of four decades. Globalization has led to the linking of

the economies of all the nations and therefore major Indian players in the tyre industry are

pursuing global strategies to enhance their competitiveness in world markets. The present

section broadly undertakes an overview of the Indian tyre industry through an examination of its

growth trends with respect to production, exports and acquisition of technological capabilities.

Indian tyre industry has been reporting good growth figures over the past few years, spurred by

the growing passenger vehicle and two-wheeler market. It has emerged as one of the most

competitive markets in the world and with the emergence of new technology, ultra-modern

production facilities and availability of raw materials, the sector is poised to grow further. Major

technological changes have taken place in tyre design from conventional bias or diagonal ply

from the past to the current steel radial tyres, tubeless tyres, with low aspect ratio tyres, puncture

resistant tyres etc. Testing standards have also evolved accordingly to ensure high performance,

mileage, safety, reliability, and longevity of the tyres. The Indian tyre industry has been quick in

adopting the latest technology trends through foreign collaborations and tailoring these to Indian

needs. The manufacturers are also investing in the development of green tyres‘ and in capacity

expansion for radial tyres. Innovative technologies like self-inflation and run flat tyres (RFT) are

also gaining popularity in the Indian market. The market for radial tyres in the commercial

vehicles segment has seen rapid growth in recent times.

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 INTRODUCTION
Automotive tire is the circular vehicle component made of rubber used to cover the wheel’s rim

externally. The major function of the tire is to protect the wheel rim and offer tractive force

between the road surface and the vehicle. Since it is manufactured from rubber, it also provides a

flexible cushion, thereby reducing the impact of the vibrations and absorbs the shock of the

vehicle. Rubber tyres consist of tread, jointless cap piles, beads, and other materials, which

include synthetic rubber, carbon black, and fabric. There is an increase in the demand for tires

exponentially due to the rise in the demand for vehicle production to cater to the surge in

requirement of vehicles across all segments. Thus, the tire demand is ultimately governed by

automobile production.

The tyres industry and retailers alike have fared well in the last 5 years, given the comparison

with other industries in the automotive sector, for example- the domestic demand for tyres has

grown strong due to increased incomes of consumers and the willingness to spend on new

technologically advanced make, and in return they have spurred automobiles sales across the

globe. But, somehow the tyre retailers have faced a few hurdles as the soaring rubber prices have

caused an uncomfortable stir on the cost of manufacturing and purchasing tyres for the end user

as well as the maker and the ever increasing and fluctuating high fuel prices that have also led to

less distance traveled per vehicle, resulting in lessening demand for new tyres by the retailer or

the consumer.

The global automotive tire market is driven by increase in automotive production & sales across

different vehicles segments and rise in competition among tire manufacturers. In addition,

introduction of advanced technology in the manufacturing process is anticipated to propel the

growth of the automotive tire market. However, factors such as volatile prices of raw materials

7
and developments in the market of retreading tires are expected to hamper the growth of the

market. Further, advancement in technology and fuel efficiency and safety concerns coupled with

the government support is expected to create numerous opportunities for the growth and

expansion of the market.

The automotive tire market is segmented into season type, vehicle type, rim size, distribution

channel, and region. By season type, it is divided into summer, winter and all season tires. By

vehicle type, it is divided into passenger cars, commercial vehicles, and electric vehicles. The

commercial vehicles segment is further divided into light & heavy commercial vehicles. By rim

size, the market is categorized into less than 15 inch, 15 to 20 inch, and more than 20 inch. By

distribution channel, it is bifurcated into OEM and aftermarket.

Recently, the automobile industry has been experiencing rapid growth owing to speedy

industrialization, which has led to an increase in the sale of commercial vehicles such as trucks,

tractors, and trailers. In addition, rise in disposable income of people and improvements in

standard of living are the factors that increase the sale of luxurious passenger cars and premium

segment bikes. Furthermore, electric vehicle sales are expected to increase during the forecast

period. Also, decrease in prices of electric vehicle parts such as battery, transmission, and

alternators propel the sale of electric vehicles. Thus, increase in the demand for vehicles across

all segments among consumers leads to a rise in the production of automobiles and tires

associated with it. Moreover, the global consolidation of the automotive sector that results in

mergers and acquisitions among international and domestic vehicles manufacturers boost the

growth of the automotive sector influencing the automotive tire market. . Therefore, growth of

the automobile sector is expected to increase the overall demand for tires.

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Leading automotive manufacturers continue to invest in the developing countries due to low

costs of labor, which further decrease the production costs, which will help meet the increase in

demand for vehicles. The tire industry has witnessed phenomenal growth in the last decade, also,

the automotive sector is experiencing exponential growth due to a rise in the demand for

automobiles and use of collaborative & consolidation manufacturing in tire business. This in turn

boosts the growth of the automotive tires business.

tire manufacturing companies’ new strategies for the expansion of their business across the globe

are witnessing strong competition to capture a larger automotive tire market share. In addition,

the global tire manufacturers are showing interest in Pakistan by taking an active step with

different strategies.

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 LITERATURE REVIEW

INDIAN TYRE INDUSTRY

The Indian Tyre Industry is an integral part of the Auto Sector – It contributes to ~3% of the

manufacturing GDP of India and ~0.5% of the total GDP directly. So, let’s understand the

dynamics of the Tyre Industry in India.

Indian tyre industry has almost doubled from ~Rs 30,000 crores in 2010-11 to ~Rs 59,500 crores

in 2017-18 of which 90-95% came from the domestic markets. The top three companies – MRF,

Apollo Tyres and JK Tyres have ~60% of the market share in terms of revenue. In terms of

segmentation tyres can be divided in two ways – based on the end market and based on product.

BASED ON PRODUCTS

Truck & Bus (T&B), Passenger Vehicle (PV), 2/3-Wheeler, Off-Highway Tyres (OHT) &

Others

T&B tyres in India generate the major revenue i.e. 55% of total revenue whereas globally it’s the

PCR (Passenger Car Radials) contribute the largest portion of the revenue. This is mainly

because of very low penetration of passenger vehicles in India – below 20 per 1,000 people

whereas in China the number is ~69 per 1,000 people and 786 per 1,000 people in the US. In

terms of volume (tonnage) T&B contributes around ~50% of the total volume

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The demand from OEM’s is widely spread across the segment where T&B contributed ~35% and

PVs & 2/3 Wheeler’s contributed ~25% & ~22% respectively. In terms of the replacement

segment the demand was more skewed towards the T&B tyres which contributed ~61% and PVs

& 2/3 Wheeler’s contributed ~14% & ~9% respectively.

MANUFACTURING PROCESS :

A simple round looking tyre is manufactured by a complex assembly of more than 250 raw

materials amongst which the major components include natural & synthetic rubber, nylon tire

fabric, bead wire, carbon black, reinforcing non-black fillers like silica, vulcanizing agents &

antioxidants.

The process begins with the mixing of basic rubbers with process oils, carbon black, pigments,

antioxidants, accelerators and other additives, each of which contributes certain properties to the

compound.

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These ingredients are mixed in giant blenders called Banbury machines operating under high

heat and pressure. They blend the many ingredients together into a homogenized batch of black

material with the consistency of gum. The mixing process is computer-controlled to assure

uniformity. The compounded materials are then sent to the next stage of processing for further

processing into sidewalls, treads or other parts of the tyre.

Then the task of assembling the tyre begins. The first component to go on the tyre building

machine is the inner liner, a special rubber that is resistant to air and moisture penetration and

takes the place of an inner tube. Next comes the body plies and belts, which are often made from

polyester and steel – Plies and belts give the tyre strength while also providing flexibility. The

belts are cut to the precise angle and size specified by the tyre engineer to provide the desired

ride and handling characteristics.

Bronze-coated strands of steel wire, fashioned into two hoops, are implanted into the sidewall of

the tyres to form the bead, which assures an airtight fit with the rim of the wheel. The strands are

aligned into a ribbon coated with rubber for adhesion, then wound into loops that are then

wrapped together to secure them until they are assembled with the rest of the tyre.

Radial tyres are built on one or two tyre machines. The tyre starts with a double layer of

synthetic gum rubber called an inner liner that will seal in air and make the tyre tubeless.

Then, come two layers of ply fabric, the cords – two strips called apexes stiffen the area just

above the bead. Next, a pair of chafer strips is added to resist the chafing from the wheel rim

when mounted on a car.

12
The tyre building machine pre-shapes radial tyres into a form which is very close to their final

dimension to check whether components are placed in proper position before the tyre goes into

the mold.

Now the tyre builder adds the steel belts that resist punctures and hold the tread firmly against

the road. The tread is the last part to go on the tyre and is pressed firmly together by automatic

rollers. The end result is called a “green” or uncured tyre, ready for inspection and curing.

The curing press is where tyres get their final shape and tread pattern. Hot molds like giant

waffle irons shape and vulcanize the tyre. The molds are engraved with the tread pattern, the

sidewall markings of the manufacturer.

Tyres are cured at over 300 degrees for 12 to 25 minutes, depending on their size. As the press

swings open, the tyres are ejected from their molds onto a long conveyor belt that carries them to

the final finish and inspection bay.

However, technologically there are two types of tyres one is the radial tyre and the other is

biased ply :

Radial Tyres :

To increase structural integrity, radial tyres are constructed with perpendicular polyester plies and

crisscrossing steel belts underneath the tread. This construction provides a smooth ride and

extends the life of the tyre. Radial tyres are generally used for long-haul towing, travel trailers,

toy haulers, larger boats and livestock.

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Bias Tyres :

A bias tyre’s construction consists of internally crisscrossing nylon cord plies at a 30 to

45-degree angle to the tread center line. This design gives the tire a tough and rugged build and

increases sidewall puncture resistance. Bias technology is generally used for construction,

agriculture, marine and utility applications.

Radial tyres generally cost 20-25% higher compared to Bias tyres however, as larger amounts of

steel are required the cost of manufacturing also slightly increases and it also increases the wear

and tear of the tyre.

Radialisation of T&B & LCV tyres has improved over the last two years and is expected to

improve further as commercial vehicle OEMs have started using radial technology.

COST STRUCTURE :

Tyre Industry is known for its capital-intensive structure where 60% to 65% of the revenues is

raw material cost. The other important costs involved are SG&A (selling general &

administrative) which roughly contribute from 6% to 12% of the revenues and employee costs

contributing from 7% to 14% of revenues.

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RAW MATERIAL COSTS :

As we saw above, around 250 different raw materials are put together to manufacture a tyre but

the major cost generating raw materials are natural rubber, synthetic rubber and crude derivatives

like carbon black which contribute to ~80% to 85% of the total raw material cost. Hence, rubber

and crude price are key variable to tyre company’s profitability

Historical average gross margins vs rubber & crude prices :

The Indian tyre industry has been under raw material pressure for the last two year due to an

increase in rubber and crude prices which can be clearly seen in the above comparison charts. As

per the managements the pressure on the raw materials is expected to continue in the shorter term

due to increasing crude prices

CAPACITY EXPANSION PLANS :

The Indian tyre industry is expected to see significant capacity expansion in the upcoming two to

three years. All major players in the industry have announced their plans

15
MRF :

MRF has announced to set up a new facility in Gujarat where it plans to spend ~Rs 4,500 crores

over next few years

Apollo Tyres :

Apollo tyres laid the foundation for their fifth Indian facility in Andhra Pradesh which they will

manufacture passenger vehicle tyres. The company is spending ~Rs 1800 crores in the first phase

of the project. The facility is expected to commence operation in two years from now. Apollo is

also planning to expand its T&B capacity at the Chennai plant which is expected to commence

operations in this financial year

JK Tyres :

In 2016, JK Tyres acquired the Cavendish tyre business from the BK Birla group to enter in the

two-wheeler segment. JK Tyre now plans to expand its T&B tyre capacity by ~0.6 mn units at

the Cavendish facility by investing ~Rs 275 crores

IMPORTANT FINANCIAL METRICS TO LOOK AT :

We believe the most important metric while comparing / analyzing a commodity business is its

unit level economies, well tyre is no different. As different tyre companies manufacture different

type of tyres it is very difficult to compare realizations of one tyre company with other. The

solution could be comparing them on per ton basis

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 ● Realizations per ton (Net operational sales/tons sold) : Comparing realization per

ton could help us understand which company can sell its products at premium

compared to other tyre companies. Looking at realization per ton over time could

also help us understand the pricing trend of the companies

● Cost per ton (COGS/tons sold) : Cost per ton could help us understand which

company is efficiently using its raw material

● EBITDA per ton (EBITDA/tons sold) : EBITDA per ton could help us understand

which company has been operationally more efficient (higher the better)

OPPORTUNITIES :

Auto Industry

Tyre industry is an integral part of the auto industry. OEM tyre demand is directly related to auto

production. As per automotive mission plan 2026 (AMP 2026) the Indian automotive industry is

expected to grow 3.5 to 4 times in value from its output of Rs 4.64 lakh crores in 2015 to Rs

16.16 to 18.88 lakh crores in 2026 with an average growth rate of 6%

The passenger vehicle and commercial vehicle sales are expected to grow due to increasing

vehicle penetration due to improvement of per capita income in the country

CONCERNS :

Raw Material

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As mentioned above tyre industry is raw material intensive and India majorly depends on

imports as the demand for raw materials like rubber, crude & carbon black is more than supply

by the domestic. manufactures

In FY18, India produced ~694,000 tonnes and consumed ~1,112,000 tonnes of rubber whereas

the gap was fulfilled by imports. India almost imported ~470,000 tonnes of rubber. Rubber

imports in India attract a duty of 25% or Rs 30 per KG whichever is lower increasing input costs

further

India has sufficient capacities of carbon black. However due to increasing exports of carbon

black the demand-supply gap has increased in the last two years leading to import of carbon

black.

Inability To Pass Price Rise To OEMs

The ability to pass on sharp rises in raw material prices to OEMs remains a challenge for

industry players. Generally, many tyre manufacturers are unable to pass on higher raw material

prices to OEMs, due to bulk demand fearing loss of market share.

Rising Interest Rates

As many players in the tyre industry have plans to further expand their capacities which will be

partly funded by debt. As RBI has been recently increasing interest rates due to macro issues.

The expected increase in rate could lead to increase in finance costs of the companies.

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COMPANY PROFILE
OF TYRES

ABOUT

Madras Rubber Factory (MRF) is an Indian Multinational tyre manufacturing company and

the largest manufacturer of tyres in India, also the sixth largest manufacturer in the world. It is

headquartered in Chennai, Tamil Nadu, India. The company manufactures rubber products

including tyres, treads, tubes and conveyor belts, paints and toys.MRF also runs the MRF Pace

Foundation, Chennai and MRF Challenge in motorsport.

LEGACY

The MRF story is a truly fascinating one. What started as a rubber balloon factory with a funding

of Rs.14, 000 way back in the 40’s is now a multibillion legacy that produces quality tyres used

all around India & internationally along with a presence in paints & coats, toys, motorsports and

cricket training.

ORIGIN

MRF’s origin traces back to the humble shack in Madras that housed its first makeshift toy

balloon manufacturing unit set up by KM Mammen Mappillai in 1946. It was not until 1952

19
when it changed course and turned to tread rubber manufacturing. Thus began its glorious reign

as the undisputed leader in the tread rubber industry.

INTERNATIONAL

By the early 60’s, MRF was exporting its quality tyres to multiple countries and soon its

presence was known globally in 65 different countries - with tyres rolling out of 10 facilities

built across 450 acres, 5000 plus strong dealer networks and 130 different offices.

RECOGNITION

MRF is recognized for its drive towards continuous quality improvement and customer

satisfaction. It has won the JD Power award not once but 13 times till date. It has also won the

TNS and CAPEXIL awards for being voted as the most trusted tyre company in India.

MOTOR SPORTS

MRF’s passion for motorsports is seen through its involvement in racing, karting, rallying and

various other motorsport events. Its rallying team has won the prestigious FIA Asia Pacific Rally

Championship twice and even in international championships, MRF karting tyres homologated

by FIA, is the preferred choice.

DESIGN PROCESS

The Design process at MRF starts from the customer - inputs from individual customers are

compiled by marketing and given to Corporate Technical MRF's R&D and Product Development

Division or vehicle specific requirements are received from the OE customer.

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MRF's team of 300 engineers and scientists gives MRF its enormous strength in product design.

Requirements received, a team now works on converting the customer input into a Design

Concept.

MRF uses cutting - edge technologies in predictive testing and design validation before it leaves

the drawing board. These advances have significantly brought down the time to market for new

designs.

Advanced raw materials are tested and approved in our NABL accredited laboratories. MRF

works closely with global suppliers in using the latest developments in materials across the

globe. Our laboratories which have the very latest in testing equipment closely monitor the

quality of the material going into our tyres at the time of approval and regularly after that.

The prototypes for verification and validation testing are manufactured in one of MRF's 9

factories all of which are TS 16949/ISO 9001 certified. The tyres then go through testing for

confirming the architecture and a series of indoor testing to ensure that they meet MRF's tight

standards and also those required by the OEM or by any of the national standards like

BIS/JIS/ETRTO/T&RA.

Tyres are now handed over to the Vehicle Dynamics Group, who now validates the design on the

vehicle. These tests are done at the test track in a series of manoeuvres at various speeds, pushing

the tyres to the limits of its capabilities.

MRF also tests tyres on fleets across the country to ensure that the tyres have endured

successfully all the types of roads on which our customers travel daily. Race Tracks and Indian

Roads are our laboratories.

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Only after this do we give any tyres to the customer - all global players manufacturing a global

class of vehicles. MRF has been designing tyres this class of vehicles for more than a decade

now. MRF tyres have met the demanding requirements of these vehicles, backed by an R&D

team which is completely in-house and self reliant.

PRODUCTS

● Tyres manufactures various tyres for passenger cars, two–wheelers, trucks, buses,

tractors, light commercial vehicles, off–the–road tyres and aeroplane tyres, MRF

ZVTS ]and MRF Wanderers for cars and SUVs, MRF Meteor all terrain tyres, MRF

Steel Muscle for trucks and buses. MRF ZLX is the latest one which is well known

for its comfort in passenger segment

● Conveyor Belting – manufacturers its in-house brand of Muscleflex conveyor belt

Pretreads – MRF has the most advanced precured retreading system in India. MRF

forayed into retreading in 1970 and manufactures pre treads for tyres. Paints -

manufacturers polyurethane paint formulations and coats used in automotive,

decorative and industrial applications.

MANUFACTURING PLANTS

1. Kottayam Plant in Kerala

2. Puducherry Plant

3. Goa Plant

4. Trichi Radial Plant in Tiruchirappalli, Tamil Nadu

5. Trichi Bias Plant in Tiruchirappalli, Tamil Nadu

6. Arakonam Plant in Tamil Nadu

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 7. Tiruvottiyur Plant in Chennai, Tamil Nadu

8. Medak Plant in Telangana

9. Ankenpally Plant in Telangana

10. Dahej Plant in Gujarat

SHAREHOLDING PATTERN

There are 107 promoter entities holding 27.54%. Mutual Funds hold 9.75%. Financial

Institutions hold 0.11%. Insurance companies Hold 3.45. Foreign investors hold 8%. Remaining

around 18.5% held by the public.

FUTURE PROSPECTUS

Till we will keep using automobiles, we need tyres. India is one leading manufacturer of

automobiles and so the demand for Tyre will not stop. The company fundamentals are good and

there is no big risk of bankruptcy for the company.

COMPETITIVE ADVANTAGE OF MRF TYRES

MRF's strong presence in the replacement tyre market has allowed it to cope better than rivals

with the slowdown in the Indian automotive industry. Demand has been sluggish for over a year

now with both passenger cars and commercial vehicles reporting a substantial dip in sales for the

January-November period over previous years. Apart from replacement demand, MRF has also

been helped by a wide product range that caters to medium and heavy commercial vehicles

(MHCV), passenger cars, motorcycles and light commercial vehicles (LCVs). Sales during the

year have held steady. MRF's strength lies in brand loyalty and an extensive distribution network

with more than 9,000 dealers, apart from its strong presence in the replacement market. As

23
much as 76 per cent of the company's top line is attributable to the replacement market, which is

likely to see a steady rate of growth due to a sustained rise in the absolute number of vehicles on

the road with each passing year. Also, since margins are better for tyre makers in the replacement

segment than the original equipment manufacturer (OEM) market, investors are optimistic about

MRF as a long-term investment bet. Given the diversified product portfolio and market

recognition, MRF will benefit from a revival in the automobile sector, especially in the MHCV

and LCV segments. Also,

● MRF has a long track record, strong brand name, stable relationships with OEMs, and

wide distribution network.

● MRF continues to dominate the Indian tyre industry with an estimated market share of

~28%.

● MRF has a well-balanced product mix and diversified segmental mix with over

two-thirds of revenue from replacements. The relatively stable replacement segment

continues to support its revenues.

● MRF is India’s most preferred brand due to its relentless focus on quality.

● MRF is the only Indian tyre manufacturer to have won the JD Power award for a record

13 times.

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MARKET ANALYSIS
OF TYRES
MRF SWOT ANALYSIS

STRENGTHS

● Reaching milestone of Rs 5,000 crores: MRF was the first company in India, who

managed to reach a level, where the turnover of the company reached an amount of Rs.

5,000 crores, thus being named as the number one company when it comes to the

industry of tyres.

● Building a strong network: MRF possesses a network of distribution which is very

strong and developed.

● Having a strong portfolio: There is a complete portfolio which is available with MRF

when it comes to the manufacturing of different tyres made for different vehicles and

their use.

● Brand value: MRF not only consists of a very strong value for the brand, but it also has

the trust and the faith of the customers.

● Making varieties of tyres: MRF has always taken different measure to suit themselves

with tyres which can take on different terrain conditions

● Financial condition: MRF stands in a very strong position in terms of financial

condition.

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 ● Reaching out with strong advertisements: A company which advertises itself to be a

tyre making company in India, which is eco-friendly in nature.

WEAKNESSES

● Lack of volatility: MRF still lacks a lot of volatility, when it comes to the consideration

of relations based on industries, for example, the unrest of the laborers of MRF.

● Being in a very strong competition: MRF has a lot of competition in the market, which

is very intense and does somewhere affect the good going of MRF, especially after the

presence of some of the worldly renowned global brands of the industry of tyres.

OPPORTUNITIES

● Going through a fast growth: Markets emerging at a fast rate with the growth in the

automobile industry.

● Maintaining good relations: Having a relatively good amount of tie-ups with certain

companies and maintaining a good B2B market.

● Having a lot of diversity: Possessing a diversification of concentric and horizontal type.

THREATS

● An on-going strike: An on-going internal strike in MRF along with the entire

automobile industry in Chennai has traumatized the company to a great extent. It has

hampered the manufacturing badly, and production is almost dead in Chennai.

26
 ● Constantly increasing the price of Raw Materials: The price of essential raw materials

for manufacturing the goods like natural rubber and crude oil is constantly increasing,

both nationally and internationally.

● Availability of cheaper goods: In a comparison of MRF, cheaper goods are available in

markets imported from China.

MRF PESTLE ANALYSIS

PESTLE Analysis of MRF analyses the brand on its business tactics. MRF PESTLE Analysis

examines the various external factors like political, economic, social, technological (PEST)

which impacts its business along with legal & environmental factors. The PESTLE Analysis

highlights the different extrinsic scenarios which impact the business of the brand.

POLITICAL FACTORS

● To establish the plant and maintain the plant needs a lot of political support since the

company has manufacturing plants all over the country.

● The company should maintain cordial relationships with both national and state political

parties.

● The government will change frequently and the industrial policies change according to

the wishes of the political parties.

● The company should also observe keenly on the trade policies of India with the nations

where the company operates.

● It also should observe the industrial policies, trade policies of the host country.

27
ECONOMIC FACTORS

● Due to the pandemic, there is an impact on the exports of the products between the

countries. It also impacts on the cash flows of the company.

● The income of the people also decreased and the family expenditure on the automobiles

has decreased which impacts on the tyre industry.

● But the latter half has seen an increase in the economy. The people started to improve

their economy and spend the disposable income to buy automobiles.

● The foreign exchange returns also impact on the profits of the company. Due to

pandemic, the fixed costs also increased. Now the company has to implement the policies

to reduce costs and boost the production also.

SOCIAL FACTORS

● The change in demographics and increase in disposable incomes are the reason for the

increase in the purchase of the automobiles which indeed increase the purchase of tyres.

● The millennials and baby boomers are interested in buying sports vehicles. MRF should

manufacture according to the needs of the consumers.

● The consumers are also very keen on the safety factor, the tyres also play a key role in

avoiding accidents.

● The company should be more concerned about the research and development which

improves the efficiency of the tyres and reduces the accidents and improves the

automobile speed.

● The company also focuses on the trends of the consumers towards the speed as the

percentage of vehicles on the roads has increased rigorously.

TECHNOLOGICAL FACTORS

28
 ● Since, MRF is the largest manufacturer in the tyre industry of India, it adopts various new

technologies to reduce cost and to improve the process.

● It also should keenly observe new end technologies like robotics, IOT, ML to produce

tyres efficiently and effectively.

● The company should also focus on the research and development to design next gen tyres

which improves the efficiency and also safe to avoid accidents occurring with poor

friction.

● The company also focuses on the tyre designing process and imply new industrial

revolution methods.

● The company should also adopt the flexible technologies in the global supply chains and

improve its logistics.

LEGAL FACTORS

● MRF has its manufacturing plants in many states. The laws to establish a plant are

different from one state to another state.

● The company should ensure to follow the rules and regulations to manufacture the

products, follow all the safe measures for the safety of the employees, follow the

environmental laws in using the rubber and it follows all the required laws in trade with

other countries.

● The company should also ensure It also should ensure to protect its design process and

shouldn’t include in any patent issues with other manufacturers.

ENVIRONMENTAL FACTORS

● MRF is a manufacturer company which uses most of the non-renewable sources.

29
 ● It increases the carbon footprint which impacts on climate change though the company

also has taken some key steps to reduce the carbon footprint.

● The company also ensures global diversity where it gets rubber resources from the

plantations. It has to take many permissions and should ensure not to cut the plantations

and also should aid for environmental protection.

● The company should also take risk management steps for the smooth operations and

supply chain of the resources.

PORTERS FIVE FORCE MODEL ANALYSIS

Porter's five forces analysis is the model framework of industry analysis. This analysis helps to

find the position of a particular company by its market rivalry and major four threats like its

bargaining power of supplier, bargaining power of buyer, threats of substitutes, and threat of new

entrants. With the help of Porter's five forces analysis, the MRF Company is going to be

analyzed below:

RIVALRY OF MRF

● Indian tyre industry like MRF has the higher rivalry today due to the increase in tyre

companies like APOLLO, CEAT, JK TYRES, etc. MRF has the greater rivalry by

accounting for more than 80% of market share by competing with the top 8 companies.

● Nowadays every company is intending to keep the automated technologies by

implementing new technology like electronic resource planning (ERP) and supply chain

management (SCM).

30
 ● Taking into consideration the OEM (i.e.) Original Equipment Management, due to the

low OEM the manufacture of vehicles are not ready to take the troubles of tyre firms and

the replacement process is taking away continuously by the retreading sector which is

slowly rising his head.

● Apart from the branded competitors the unrecognized sector has been the head ache to

the MRF Company. The point to be considered is MRF and the existing players in the

same industry have similar strategies, and obviously manufacture the same products so

MRF has to keep its way towards the innovating side like radials, tubeless tyres.

BARGAINING POWER OF SUPPLIERS

● The competition between the suppliers is high and its effect the intensity of bargaining

power of suppliers. Bargaining power of suppliers can be divided into different parts with

demand to the industry like rubber and other petrochemical based material e.g. Carbon

black and nylon cord etc.

● The MRF has a low level of supplier and as well as the availability of materials is very

low and it leads to the higher price. MRF has a high level of switching cost and the threat

of forward integration is also very high.

● The 50 percent of the tyre industry that consumes nearly rubber has been produced in our

country. Rubber control boards have the right to control the price of the natural rubber.

● Supplier power is high in the case of petro raw materials and the chemicals are shorting

and limping back in India so that generates the cost of price. JMK international is the

preferred supplier to MRF manufacture of tyres and tubes.

BARGAINING POWER OF BUYERS

31
 ● The bargaining power of buyers to MRF is very high due to the higher bargaining power

of OEM and the brand choice is widely spread in the replacement market. The buyers of

MRF are fully concentrated on the market share, MRF has a significant increase in

market share. To buyers perspective MRF is one of the standardized products, and MRF

brand name is widely spread in all over the world.

OEM- Original Equipment Manufacturer :

The OEM is very high and it leads to the strong position in MRF and as well as strong for the

bargaining of buyers concerned. The secret at the back is many of the tyre manufacturers are

relative and having the contract like keeping tyre price remains stable and for this market price of

OEM is irrespective. MRF giving the certain benefits as they are goods has been buying in bulk

and its giving him the good relation and as the tyre firm they said the brand association.

Replacement:

The thing which is in the replacement segment is quite different as the reversed segment of

replacement power of bargaining is used and that is moderated that the buyers are . The company

MRF has the standardized product. The bargaining power of MRF is very high because they are

the huge suppliers and manufacturers of tyres, tubes and conveyor belts. MRF has also

introduced the material recovery facility. MRF enforced to manufacture more amounts of tyres,

tubes, and conveyor belts and place their brand name and logo in the product. MRF and its

competitors like CEAT, APOLLO, Bridgestone etc are implementing their terms and conditions

to the buyers.

THREAT TO SUBSTITUTES

32
 ● The threat of substitutes in MRF concerns is very low but it is on the increasing side. For

MRF in the market lots of substitutes in how the MRF is differentiated from other

products like improving his standards by introducing the new products.

● Like other substitutes MRF doesn't have any threat because it has its own brand name and

keeps its loyalty to the customer. MRF has a good customer relationship and MRF has a

low switching to the customer.

● The other threat of substitutes is alternative products with low price and with better

performance means MRF has to face some problems with the buyer. And at the same

time lots of radials have been imported from China and it is one of the major threats to

the MRF.

● MRF has also faced threats like the retreading sector and other non-branded products.

And as of this major threat concern MRF has to keep his low production cost. Because of

the substitutes product MRF can be ready to follow the current trends.

● The other threat of substitutes is quality in that MRF is manufacturing the better quality

product compared to other substitutes. By comparing other substitute products buyers are

willing to purchase the MRF product.

THREAT OF NEW ENTRANTS

● The threat of new entering companies can create competition to MRF. Customer

switching cost is important to the new entrants.

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 ● The main term of demand, the company like MRF, depends on the types of product and

market. The types of the products are the types of tyres that they produce comparatively

with other companies and the market.

● On the basis of these two types mainly the competitors of MRF tyres are JK tyres, Apollo

tyres and CEAT tyres. The main threat for new entrants is entry barriers, the entry

barriers are very high in the tyre industry.

● And as well the main four threats in new entrants of tyre industry are Capital intensive,

Distribution network, Low operating margin & Branding.

i) Capital intensive:

Before entering into the tyre industry the company should have more capital because the capital

intensive is very high in the tyre industry. MRF has no problem with the threat of the new

entrants of the company because MRF has the brand name as the newly entered company takes

some time and it will create the competition. Tax usage is also high in the tyre industry. Tyre

industry is mainly capital intensive and also it is highly raw material intensive.

ii) Distribution network:

Distribution network is one of the important networks in all industries. In India MRF has more

than 2,500 outlets of distribution network. MRF has offices in many countries like U.A.E,

Vietnam and Bangladesh. And exporting his product over seventy five countries worldwide.

Distribution network is one of the major threats for new entrants.

iii) Low operating margins:

The threat of new entrants has the low operating margin because the tyre industry is now facing

the turbulent times and has a lot of challenging decades like increase in price of natural rubber

because it is a key part of tyre industry. For MRF, rising in input prices may cut the margins.

34
iv) Branding:

Branding is one of the main threats of new entrants. Like MRF and other substitute products

have a good brand name like MRF limited, CEAT tyres, JK tyres, etc. The new entrants company

should have a good brand name by reaching out to the customers. Branding also needs good

quality, low production cost and innovation in tyre industry then only the new entrants can

compete with their substitutes. Advertising is the major part in branding the product to the

buyers.

35
COMPANY PROFILE
OF
ABOUT

Apollo Tyres Limited is an Indian tyre manufacturing company headquartered in Gurugram,

Haryana. It was incorporated in 1972, and its first plant was commissioned in Perambra,
Thrissur, Kerala, India. The company now has four manufacturing units in India, one in
Netherlands and one in Hungary. It has a network of nearly 5,000 dealerships in India, of which
over 2,500 are exclusive outlets. The company generates 69% of its revenues from India, 26%
from Europe and 5% from other countries. Apollo announced its entry into the two-wheeler tyre
segment with contract manufacturing in March 2016. In November 2016, the company signed a
Memorandum of understanding with the Government of Andhra Pradesh to set up a new factory
in Andhra Pradesh to manufacture tyres for two-wheelers and pick-up trucks.

ORIGIN

The company was incorporated on September 28 1972. They started their production in the year
1977 at Perambra in Kerala. In 1991 the company commissioned their second plant at Limda in
Gujarat. In 1995 they acquired Premier Tyres at Kalamassery in Kerala. In the year 1996
exclusive tubes plant commissioned in Ranjangaon in Maharashtra and in the year 2000 they
established exclusive radial capacity in Limda.On November 17 2003 the company entered into
an strategic alliance Michelin France for setting up a joint venture company namely Michelin
Apollo Tyres Pvt Ltd for producing dual branded truck & bus radial tyres in India. In the year
2004 they produced India's first H-speed rated tubeless passenger car radial tyres.

36
INTERNATIONAL

The company markets its products under its two global brands – Apollo and Vredestein, and its
products are available in over 100 countries through a vast network of branded, exclusive and
multi-product outlets.

Headquartered in Gurgaon, India, the company has a turnover of US$ 2.3 billion and ranks
among the global top 20 tyre makers. Apollo Tyres has been recognised as the ‘Best Company
To Work For’ both in Asia and Europe in the recent past, and has won several accolades for its
HIV-AIDS awareness and prevention initiative for the trucking and allied communities, and for
its Waste Management initiatives in the community.

ACQUIRED ENTITIES
In November 2015, Apollo Tyres acquired Reifencom GmbH, one of the largest tyre distributors
in Germany, with both online and offline presence. In May 2009, the company acquired Apollo
Vredestein BV(originally Vredestein Banden BV) in the Netherlands, producer of niche high end
passenger car and specialty tyres, and with an extensive distribution network across Europe.

PRODUCTS

The product portfolio of the company includes the entire range of passenger car, SUV, MUV,
light truck, truck-bus, two-wheeler, agriculture, industrial, specialty, bicycle and off-the-road
tyres, and retreading material and tyres.

TYPES:

● Car, SUV & Vans

● Bike Tyre

● Tubeless Car Tyre

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 ● Tubeless Bike Tyre

● Sports Bike Tyres

● Bike Tyres for City

● Cruiser Bike Tyres

● Scooty Tyres

● Street Bike Tyres

BRANDS:

● BMW

● TATA

● HONDA

● TOYOTA

● MARUTI

● CHEVROLET

● KIA

● FORD

● HYUNDAI

● DATSUN

● FIAT

38
MANUFACTURING PLANTS

Chinnapandur Village, Andhra Pradesh

Sipcot Industrial Growth Centre, Sriperumbudur, Tamil Nadu

Kalamassery, Ernakulam, Kerala

Limda, Waghodia, Baroda, Gujarat

P.O. Perambra , Thrissur, Kerala

SEGMENT-WISE PERFORMANCE

The Company continued to focus on its key regions, APMEA (Asia Pacific, Middle East and
Africa) including India and Europe. While Apollo Tyres has a small presence in the Americas, it
further added new territories in its key regions and offered an expanded product range in these
markets. In FY2019, the APMEA operation continued its focus on key themes for the Indian
market: consolidating leadership position and expanding market share by introducing new
products across segments. The Vision 2020 for the India business aims at building leadership in
multiple industry segments. Committed investments in R&D and brand building continued to
fuel the growth journey of the region to attain its vision. The region has seen continued OEMs
approvals with high satisfaction, as well as increased customer acknowledgements. For other
countries in the APMEA region, the Company continued seeding the markets with
country-specific products, building brand salience and expanding distribution networks.

COMMERCIAL VEHICLES

In the CV tyre segment, the Company continued its leadership position. It further built on its
dominant position in the overall TBR market. In the TBR replacement market, the Company
posted strong growth as it increased its market share significantly over the last financial year.
Improved product portfolio, network expansion and creating high visibility were the key themes

39
to the Company’s success during the year. Apollo Tyres became the first tyre company in India
to introduce a range of fuel-efficient tyres in the later part of the FY2019, which highlights the
role played by its R&D team in creating first-to-market products. Furthermore, the Company saw
a lot of action in the light commercial vehicle (LCV) segment as it expanded its 17.5” portfolio
in the LCV radial segment with the launch of trailer tyres. Based on the market feedback from
the LCV bias segment, R&D helped the team introduce a new and improved rib tyre to further
strengthen the Company’s position in the segment.

OUTLOOK

According to IMF estimates, India’s growth is expected to accelerate moderately to 7.5% in

FY2020, driven by continued investment, improved export performance and resilient
consumption. However, Society of Indian Automobile Manufacturers (SIAM) estimates that the
automobile sector in FY2020 will continue to be muted for PV sales and the year will end with
5% growth over FY2019. While the first half of FY2020 is expected to remain tepid due to the
general elections, the industry can expect a rise in demand in the second half of the year. With
BS-VI coming into play in FY2021, the industry is gearing for a jump in prices by ~10-15% for
petrol vehicles and ~20-25% for diesel variants. It is expected that customers will prepone
buying, thereby bolstering demand in the second half of FY2020.

SUSTAINABILITY

The Company has developed its own Sustainability Management Framework (SMF), aligned to
the global standard of ISO 26000 on social responsibility. It has also commenced on its roadmap
to undertake external assurance on the framework according to ISO 26000. As a part of that
roadmap, the procedures for core subjects of environment and community development have
been externally assured. The sustainability performance reporting draws elements from globally
available and accepted guidelines like the Global Reporting Initiative.

40
COMPETITIVE ADVANTAGE OF APOLLO TYRES
Apollo Tyres' proposed acquisition of Cooper Tires is in rough waters, but if it does happen, it
will mark the climax of a globalisation drive that began with the purchase of Dunlop South
Africa in 2006. Apollo followed it by acquiring Dutch speciality tyre maker Vredestein BV in
2009 for an undisclosed sum.

The result has been India's largest and most globalised tyre company. During the year ended
March this year, international operations accounted for 35 per cent of Apollo Tyres' revenue, a
rare distinction in an industry where globalisation still means bulk exports that at best contributes
10 per cent to industry's revenues.

For Apollo Tyres' management, being global is a matter of achievement and the company flaunts
this in its brand campaigns asking consumers to buy tyres that are manufactured and tested in
three continents. This way it hopes to attract top-end customers who increasingly drive global
brands that have set up shops in India in recent years. This has surely raised the profile of Apollo
Tyres, but has not set the cash registers ringing as yet. Rather it seems to be losing the battle for
the supremacy of the lucrative domestic market to an unlikely competitor MRF. Apollo wants to
be among the world's top-10 tyre makers in the next three years. MRF is not willing to share its
plans for next year and refused to talk despite repeated phone calls and emails.

The reticence, however, betrays its aggression on ground. The Chennai-based tyre maker is now
India's fastest growing and most profitable tyre maker, beating its peers on almost all financial
parameters. In the last five years, MRF revenues have grown at a compounded annual rate of
20.2 per cent, faster than closest rival Apollo Tyres, which grew at 17 per during the period on a
standalone basis. MRF's profit growth has been even faster. From FY08 to FY13, MRF's
operating profit (on a standalone basis) expanded at an annualised rate of 26 per cent, against
15.7 per cent growth reported by Apollo Tyres during the period. MRF's net profit during the
period expanded at a rate of 29.6 percent against 8.4 per cent growth recorded by Apollo Tyres.
MRF is not only growing faster but widening its lead over Apollo Tyres. Apollo, however,

41
dismisses this. "In the last four years, we had a healthy CAGR of 20 percent and in the past two
years, aligned to our growth strategy, we have set-up our base in the Middle East and ASEAN
region, which is being serviced out of India. We have also been consolidating our product market
strategy that will pay rich dividends in future," says Satish Sharma, Chief, India Operations,
Apollo Tyres.

He also highlights the difference in their product portfolio. "(Unlike MRF) we are not present
in the two and three-wheeler category, which is a sizable chunk of the market; hence this
comparison would be unjustified. In many other categories, we have a leadership position,
which we are looking at consolidating further," says Satish.

For analysts however MRF's diversified product portfolio with presence across the vehicle
category is one of its biggest competitive strengths besides its brand equity in the replacement
market. "MRF has a strong brand loyalty in the replacement market that enables it to charge a
premium over peers. It gets nearly three-fourth of its revenues from the replacement market that
is more profitable," says G Chokkalingam, managing director & chief investment officer,
Centrum Wealth Management.

A strong foothold in the aftermarket helped MRF to make the most of the automotive boom in
India. A passenger car requires a new set of tyres every three to four years while commercial
vehicles sales need a new set almost every year. A boom in new vehicle sales translates into a
boom in the aftermarket with a lag of few quarters. MRF made the most of it with its calibrated
investment in branding and sales & distribution. "MRF is one the most recognised brands in the
industry and has one the widest distribution network in the industry," says Devang Mehta, senior
vice president and head equity sales at Anand Rathi Financial Services.

In the last three years, MRF has steadily stepped its brand spend and is now the biggest
advertiser in the industry. During its latest fiscal year ending September 2012, MRF spent Rs 120
crore on advertisements, two and half times jump over three years. In contrast, Apollo's
advertising budget shrunk to Rs 95 crore in FY13 from Rs 154 crore in FY09. It complemented

42
this by stepping up brand visibility on the ground by opening a chain of exclusive MRF T&S
(tyre and sales) stores across all cities. Designed like a modern store with all creature comforts,
T&S stocks the entire range of MRF tyres and employs company trained technicians to provide
the entire gamut of tyre and wheel related services that the owners of modern cars require. Set-up
under the franchisee model, the company now has nearly 400 T&S nationally and over
two-dozen in Delhi NCR region itself, the country's largest passenger car market.

Competitors are finding it tough to copy the MRF model given its diverse product portfolio.
"MRF can assure higher volumes and revenues as it has a strong presence in the two and
three-wheeler segment besides its large presence in cars and commercial vehicle tyres," says a
senior executive at a competing tyre company.

"The two and three-wheeler segment has grown the fastest in the last three years and MRF
controls over a quarter of that market. This provides it with steady revenues and profits," says
Chokkalingam. Strong presence in the two-wheeler market also enables MRF to lock-in
customers for life. "If a customer likes the brand and the service, she may start by using MRF
two-wheeler tyres and stick with the brand when she upgrades to cars and SUVs. This luxury is
not there for many of its competitors such as Apollo, JK and Bridgestone who only make
four-wheeler tyres," says a tyre dealer who runs a multi-brand outlet in Delhi.

MRF's biggest competitive edge however seems to be its superior balance sheet and the best
credit rating in the industry. Apollo however doesn't find this to be of any significance to its
growth plans in India. "Apollo is comfortably placed, in terms of capacity, to service the
demands from all three market segments - OEs, replacement market and exports. We have added
market shares consecutively for the last three quarters," says Apollo's Satish.

But the stock market seems to be more bullish on MRF, with its market capitalisation nearly
twice that of Apollo despite the latter having a larger revenue globally.

43
MARKET ANALYSIS
OF
SWOT ANALYSIS

STRENGTHS

● Apollo Tyres has the advantage of a diversified market base across geographies and
therefore, it is not dependent on the Indian market alone. Further, the Company is
working towards establishing and growing operations in other large markets.

● With its entry in the two-wheeler segment, the Company is now a full-range tyre player
in India and can service the large and growing two-wheeler tyre segment in India and
Europe.

● The Company is powered by strong product brands in its key markets – Apollo and
Vredestein.

● Apollo Tyres enjoys an extensive distribution network for its products across its two key
markets.

● In Europe, the Company’s brand, Vredestein, has a heritage of over 110 years and an
established presence. It enjoys a reasonable premium positioning, especially in Winter
and All Season segments.

● In India, the Company is a leading brand in the CV segment, which accounts for the bulk
of the industry’s revenue.

44
 ● The Company is best positioned to maintain its leadership position in the truck radial
segment and drive growth through the same.

● The Company has a global and culturally-diversified management team driving growth
across geographies.

● The Company’s Research & Development (R&D) facilities for PV and CV tyres will play
a key role in bringing cutting-edge technology and innovation to drive growth for the
Company.

● Increased spends on building the corporate brand, including Apollo Tyres’ association
with Manchester United and its association with football in India, is starting to make
Apollo a stronger brand in India and a recognised one globally.

● The Company has long established relationships with global OEMs present in India and
has forayed into the premium Original Equipment (OE) segments in India.

● The Company is aggressively pursuing its strategy of building OE relationships in Europe

and has seen few initial wins.

● In the premium Winter segment, we successfully introduced the new Wintrac Pro that
was awarded test winner in a major German specialised press magazine.

WEAKNESSES

● In a rapidly-rising raw material cost scenario, the Company is unable to pass on cost
escalations to consumers, in a timely fashion, due to intense competition and various
market dynamics resulting in pressure on margins.

● The necessary improvement of our footprint in Europe

will need special focus on the Summer segment, which is needed to supersede
competition in a non-growing market. OE homologations are needed to develop the

45
 necessary acceptance in the markets, accompanied by good test results compared to other
premium manufacturers. Summer tyres are the pinnacle of the UHP strategy, as summer
sizes lead the conversion into higher dimensions in Winter and All Season.

● Europe operations have been under strain with a weak market scenario coupled with
pricing pressures and our own internal situation of a large investment and a ramping up
plant.

OPPORTUNITIES

● In India, the Company has a healthy lead over its competition in terms of capacity and
market share in the Truck Bus Radial (TBR) segment. This implies healthy growth
prospects with increasing ‘radialisation’.

● In India, the Company’s two-wheeler tyre product has been widely accepted by the
market and there are prospects of scaling the market share in a fast-growing and
profitable segment. There are also plans to introduce the products in Europe and other
parts of the world.

● The Company’s highly automated state-of-the-art greenfield plant in Hungary is now

operational and it is well-positioned to grow in the European market due to its
cost-competitive manufacturing.

● The Company is continuously working towards building OE capability in Europe. With

enhanced capacity and a state-of- the-art plant, it is well positioned to win more OE
business, which in turn will generate replacement demand and enhance brand positioning.

● With the premium positioning of the Vredestein brand in Europe and the new
state-of-the-art plant in Hungary, the Company has good prospects for improving its
product mix towards a more profitable premium car tyre segment.

46
 ● The Company continues to increase its focus on new geographies such as North America
and in geographies where it has already made some inroads, such as in the Association of
Southeast Asian Nations (ASEAN) and the Middle East. These geographies will be the
growth avenues for the future.

● The Company has launched truck radial tyres in Europe, which will further enhance
revenue and market presence.

● The Company continues to have a focussed approach on increasing its sales channels and
distribution expansion.

● The Company has started its deliveries to European OEMs, endorsing the premium
position of its Vredestein brand and further strengthening its position in the Summer
segment.

● Growth in premium segment of PV (17” and above) in all product segments (Summer/All
Season/Winter).

● Anti-dumping measures in the EU against Chinese imports will expand Apollo’s TBR
footprint.

● The Company still needs to establish a larger presence in new growing geographies to
reach economic-sized operations.

THREATS

● Economic downturn or slowdown in key markets (India and Europe) can lead to
decreased volumes and capacity utilisation.

● The coming year will have one large investment on stream. There would be pressure on
margins as the utilisations ramp up gradually.

47
● Increased competition from global players in India could impact the Company’s growth
plans and/or profitability.

● Tight labour market in Europe and low levels of unemployment can make talent
acquisition challenging in Hungary.

● There is a continued threat of raw material price volatility and this translates into pressure
on margins in case of a rapid rise in raw material prices.

● A weak Indian currency can result in pressure on margins, since the Company is a net
importer.

● A growing influence of budget tyres, mainly Tier 2 and 3 brands from established
manufacturers, could further impact business, particularly in Europe.
IN THE CV TYRE SEGMENT, THE COMPANY CONTINUED ITS LEADERSHIP
POSITION AND FURTHER BUILT ON ITS DOMINANT POSITION IN THE
OVERALL TBR MARKET.

● Economic and political instability factors like Brexit and the trade war between China
and the US can impact business in Europe.

● Consolidation in the distribution landscape as independent dealers disappear and

wholesalers and company-owned networks grow may affect the Company’s market reach.
The Internet is playing a major role in the change (vertical and horizontal integration).

● High capital intensity resulting in regular need of large capex for growth puts pressure on
free cash flow.

48
PESTLE ANALYSIS

POLITICAL FACTORS

● The truth that Pestel Analysis of Apollo Tyres Ltd has actually expanded its services in
numerous countries exposes it to the respective political environments of countries.

● It ought to be noted that laws may differ from country to nation as apparent by the truth
that there has been prohibition of Pestel Analysis of Apollo Tyres Ltd case study vehicles
in some areas which had been affected by dry spell.

● This can be a challenging element for Pestel Analysis of Apollo Tyres Ltd particularly as
it needs to preserve standardization throughout operations.

ECONOMIC FACTORS

● The reality that all kinds of vehicle Pestel Analysis of Apollo Tyres Ltd case study
basically lead to a financial expense to the consumer must be kept in mind that the
concept depends on increasing purchasing powers of the economy.

● Additionally it must be noted that while other vehicle Pestel Analysis of Apollo Tyres Ltd
case study principles consist of monetary cost along with taking the customer's time,
Pestel Analysis of Apollo Tyres Ltd does not use any extra time and relies on monetary
cost just.

SOCIAL FACTORS

● Pestel Analysis of Apollo Tyres Ltd case study services may be doing not have demand
in certain nations due to the truth that in some areas lack of client loyalty exists due to the
fact that of making use of unprofessional and illegal practices such as tax evasion being
associated with cars and truck washes and comparable organisation ideas.

49
 ● The market is fragmented for this particular reason and is made up of various little
providers.

TECHNOLOGICAL FACTORS

● The technology being used for case solution services currently concentrates on innovative
procedures for decreasing the wastage of water during car Pestel Analysis of Apollo
Tyres Ltd case study services.

● In addition, the use of automated sprays of water has been an included benefit offered by
expert case solution services in contrast to manual case solutions.

ENVIRONMENTAL FACTORS

● Over the years scientists and environmental activists have revealed issues over the
damaging chemicals utilized in car soaps which can be a threat to aquatic life.

● Additionally the waste of water involved in professional cars and truck washes and
manual washes at home has actually been slammed by these pressure groups.

LEGAL FACTORS

There is no such effect of legal elements of Apollo Tyres Ltd as it is more worried over its laws
and regulations.

PORTERS FIVE FORCE MODEL ANALYSIS

Apollo Tyres Ltd Porter five forces reflects the competitive environment of an industry. It is a
strategic tool that is used to avoid or minimize the risk of losing the competitive edge that the
organization has and to ensure the profitability of the products in the long run. The company
holds its vision closely as it allows them to orientate its innovation in terms of choices regarding
the investment and strategies. Within the industry the businesses profitability is dependent upon
the following forces:

50
 ● Competitive rivalry
● Threats of new entrants
● Threats of substitute
● Bargaining power of suppliers
● Bargaining power of customers

APOLLO TYRES LTD COMPETITIVE RIVALRY

The competition among the firms help in identifying the lucrativeness of an industry where
companies are competing hard in order to maintain their power within the industry. The Apollo
Tyres Ltd competition is moreover on the basis of diversity, the development within the sector
and the barriers related to entrance in the market. The competitive rivalry is the analysis of the
brands and the product, its strengths and weaknesses along with the strategies, competitors and
the share in the market.

THREAT OF NEW APOLLO TYRES LTD ENTRANTS

It is in the favor of the companies that exist in the market to create barriers for the new entrants
to prevent them from entering into the industry. The organizations could be the new companies
or the companies that are planning to diversify itself in the market. The barriers can be both
industrial and legal. Apart from this the size and the reputation of the companies that are already
operating in the market also play an important role. Furthermore the cost related to the entry,
access to raw materials, barriers related to culture and technical standards also play a major role
and can affect the decision of the new entrants in the market.

THREAT OF SUBSTITUTE PRODUCTS

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The Apollo Tyres Ltd substitute products are alternatives that are available in the market at
comparatively better prices. Such products prevail due to the technological and innovative
advancement. Due to which the products being produced by the companies that are already
existing in the market and are using the same technology are then replaced by the other
company’s products that are comparatively better in terms of price and quality and are being
produced from sectors with significant profits. The substitute products are dangerous as the
companies are under constant threat of being replaced.

High threat of substitutes leads to low profitability as it limits the industry profits by placing a
price ceiling due to the fear of being substituted by other products. Apart from this it also affects
the growth potentials of the industry as a whole but reducing the profitability margins.

BARGAINING POWER OF SUPPLIERS APOLLO TYRES LTD

Powerful suppliers possess more power to capture significant value for themselves by demanding
high prices while limiting the quality and the quantity of the product or services or by
transferring the cost on the participant of the industry. Many conditions imposed by the suppliers
generally include the increase in price while compromising the quality and quantity.

A bargaining power of a supplier in the market is strong if:

● It is more concentrated than the industry it is selling to.

● It is not heavily relying on the industry for its profits
● If the participants in the industry have to incur high cost for switching suppliers or the
firms are located adjacent to the suppliers manufacturing facilities.
● The products being offered by the suppliers are highly differentiated.
● And when there is no close substitute available for the products being supplied by the
suppliers.

APOLLO TYRES LTD BARGAINING POWER OF CUSTOMERS

The buyers having strong bargaining power can highly influence the profitability of the suppliers
operating in the market by imposing conditions that are not much favorable for the suppliers in

52
terms of price, quality or service. Therefore choosing clients often become crucial for the
organizations as to avoid the situation of being highly dependent on the buyers. The level of
interest and concentration of buyers toward the product gives them more or less power.

Powerful buyers could flip the side of the powerful supplies by forcing the prices to move
downwards and by demanding high quality and services by creating a competition between the
participants in the industry on the basis of price and quantity. Apollo Tyres Ltd customers are
deemed strong if they contain negotiating leverage specifically if the industry is sensitive to
price, the buyers can pressure suppliers for further price reductions.

The customer are assumed to have strong buying power in case:

● If the number of buyers are limited or each of the buyers purchases large quantities
relative to the size of the suppliers.
● The products in the industry are standardized or are undifferentiated.
● The cost of switching is comparatively low.
● Limitations of Apollo Tyres Ltd Porter’s five forces

Though the model from a strategic point of view is an important tool there are certain limitations
associated with the application of the porter five forces model. The framework uses a classic
perfect market and relatively a static structure of market i.e. it only incorporates the aspects of
the present day and only incorporates the events that took place within the short term period.
Apollo Tyres Ltd Apart from the model only provides the overview of the environment and does
not define the industry clearly. As it can be difficult to group the companies having similar
business lines and to call it an industry. Therefore Porter framework due to its limitation is too
inert to be depending upon outside the short term to medium, term objectives. It emphasizes
more on external factors and ignores the specific factors that are more specially related with the
firm. The model doesn’t incorporate new business models and the changing dynamics of the
market and the impact of globalization. Moreover it does not consider non-market forces.

53
COMPANY PROFILE
OF
ABOUT

The flagship company of JK Organisation, JK Tyre & Industries Ltd is one of India’s foremost
tyre manufacturers and is also amongst the top 25 manufacturers in the world. For the past four
decades, JK Tyre has been at the forefront in driving innovation and excellence in the tyre
industry through introduction of ground-breaking technologies and products that cater to diverse
business segments in the automobile industry. Pioneers of radial technology, the Company
produced the first radial tyre in 1977 and is currently the market leader in the Truck Bus Radial
segment. In 2019, the Company achieved a remarkable feat by entering the coveted Limca Book
of Records with the country’s largest off-the-road tyre - VEM 045.The Company provides
end-to-end solutions across segments of passenger vehicles, commercial vehicles, farming,
Off-the-Road and two & three-wheelers. It collectively produces around 35 million tyres
annually. The Company also has a strong network of over 4000 dealers and 500+ dedicated
Brand shops called as Steel Wheels and Xpress Wheels.

ORIGIN

JK Tyre & Industries Ltd was incorporated in the year February 14 1951as a private limited
under the name JK Industries Pvt. Ltd. Until March 31 1970 the company was engaged in the

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managing agency business. Thereafter the company decided to undertake manufacturing
activities and obtained a letter of intent in February 1972 for the manufacture of automobile tyres
and tubes. The company name was changed into JK Industries Ltd. with effect from May 24
1974 consequent upon conversion of the company into a public limited company.In the year
1974 the company entered into a technical collaboration with General Tire International Co USA
a subsidiary of General Tire & Rubber Co USA for technical services and sales agreement for
the supply of technical know how engineering and documentation for operational facilities.

LEGACY

JK Tyre’s unwavering commitment towards innovation is reflected through the concerted efforts
at its state-of-the-art global research and technology centre – the Raghupati Singhania Centre of
Excellence - in Mysore. The Centre houses some of the world’s finest technologies and
techniques, thereby, adding to the larger efforts of the Company to put India on the global
innovation map. The Hari Shankar Singhania Elastomer and Tyre Research Institute (HASETRI)
- which fulfils need for globally competitive technologies for tyres and polymers and the JK Tyre
Tech Centre, a hub for new product development catering to current and emerging needs of
customers.

INNOVATION

JK Tyre & Industries Ltd. has many firsts to its credit in the industry; this includes pioneering
radial technology in India way back in 1977, leading it to be the Radial Leader in the country. It
is the first Indian tyre manufacturer to make Radial tyres for an entire range of vehicles–
Truck/Bus, LCV, Passenger Cars, MUV and Tractors. JK Tyre launched India’s first ever ‘Smart
Tyre’ technology-and introduced Tyre Pressure Monitoring Systems (TPMS) by offering TREEL
Sensors, which monitors the tyre’s vital statistics, including pressure and temperature.

55
INTERNATIONAL

JK Tyres & Industries is a publicly owned tyre maker headquartered in New Delhi India. The
company manufactures tyres and flaps for two-wheelers, cars, farm equipment, commercial
vehicles and off-road tyres. Though the company primarily targets the Indian tyre market it also
has operations in around 80 countries in Asia, North America, Latin America, Europe, Africa
and Australia. A global force, JK Tyre is present in 105 countries with over 180 Global
distributors. The Company has 12 globally-benchmarked ‘sustainable’ manufacturing facilities -
9 in India and 3 in Mexico.

MOTOR SPORTS

JK Tyre is also synonymous with motorsport in the country. For over three decades, the
Company has relentlessly worked towards shaping India’s positioning as the motorsport hub of
Asia, developing the right infrastructure for the sport and promoting young talent in the arena.
The Company has been actively promoting various disciplines of motorsport in India and has
invested over Rs. 100 crores towards building infrastructure. The Racing and Karting
programmes are the breeding ground for the country's young motorsport talent. JK Tyre
prodigies like Narain Karthikeyan, Armaan Ebrahim and Karun Chandhok have done India
proud in the global arena.

RECOGNITION

It is the only Indian tyre manufacturer to be included in the list of Superbrands India in 2019 for
the seventh consecutive year. Additionally, JK Tyre was featured among India’s Best Companies
to Work For in 2019 by Great Place to Work. JK Tyre recently was awarded the most coveted

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Safety award in the world -the Sword of Honour for Safety across its plants by the British Safety
Council, UK.

VISION AND MISSION

Vision
To be amongst the most trusted companies with a global tyre brand.
Mission
Be a Customer Obsessed Company - Customer First 24x7
Most profitable tyre company in india - deliver enhanced value to all stakeholders
No. 1 tyre brand in india and amongst leading tyre brands globally
Lead with premium products through technological edge
Enhance global presence through acquisitions/JV/strategic partnerships
Be a socially responsible corporate citizen
Be a learning & innovative organisation with a motivated team
CORE VALUES
Excellence comes not from mere words or procedures. It comes from an urge to strive and
deliver the best. A mindset that says, when it is good enough, improve it. It is a way of thinking
that comes only from a power within.
● Caring for people
● Integrity including intellectual honesty, openness, fairness and trust
● Commitment to excellence

ENVIRONMENTAL QUOTIENT

JK Tyre is a green citizen and all its plants are ISO 14001-certified for environmental
conservation. It has taken many green initiatives and launched the ‘Soles with Souls’
programme, an eco-friendly initiative to use discarded tyres as a lifestyle accessory, which has

57
been acclaimed internationally. JK Tyre Mysore Plant is a recipient of the ‘Golden Peacock
Environment Award’.

MANUFACTURING PLANTS
Mysore, Karnataka -3
Banmore, Madhya Pradesh
Kankroli, Rajasthan
Chennai, Tamil Nadu
Haridwar, Uttarakhand - 3

PRODUCTS

The company manufactures tyres from 9 facilities located all across India. The company has
registered an annual turnover of INR 8838 crores in the year 2016 and is currently the market
leader in the truck and heavy vehicles tyres segment in India.The company is also preferred
OEM supplier to leading automobile companies such as Maruti Suzuki, Tata Motors, Hyundai,
Honda etc. The company is also highly committed to the environment and has been always
sensitive about keeping its carbon footprint to the minimum.

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ACQUIRED ENTITIES

JK Tyre has also enhanced its global reach by taking over Tornel, a renowned Mexican company,
which has 3 plants in Mexico. All of these plants are equipped with the world’s most advanced
manufacturing and testing machines. JK Tyre started manufacturing tyres in 1977 with a capacity
of 0.5 million tyres per annum. It has grown multi-fold over the years, and currently has a
capacity of more than 16.6 million tyres per annum from its 12 plants in India and Mexico. With
the commissioning of the Greenfield Project in Chennai, the capacity across 12 plants has
crossed the milestone of 20 million tyres per annum. JK Tyre ,in April 2016, acquired Cavendish
Industries Limited in Haridwar, UKD. While the acquisition added three modern plants to its
portfolio taking the total count to 12, it helped the tyre major foray into the two/three wheeler
segment as well.

CORPORATE SOCIAL RESPONSIBILITY IN JK TYRE

JK Tyre is a responsible corporate and giving back to the community is central to the culture of
the Company. JK Tyre is not only driven by the need to make the world a better place through
the manufacturing of a safer and technology advanced product, but also by widening its
prosperity circle. Our community development initiatives may largely be categorized into
Education, Health, Livelihoods and Water Conservation. Through these initiatives, we try to
bring about empowerment of local communities and get them to the mainstream of development.

“Most of our projects were started in underdeveloped rural areas of India. In fact we are proud
that our initiatives changed the socio-economic structures of communities in many backward
pockets of India." - Dr. Raghupati Singhania (CHAIRMAN AND MD)

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SEGMENT-WISE PERFORMANCE

TRUCK/BUS RADIALS

JK Tyre having a wide range of Truck/Bus Radials crossed yet another milestone by putting over
nine million Truck/ Bus radials on the road globally, out of which, over seven million are on
Indian roads. In order to meet customer needs, two new value added products were introduced,
they include -10.00-R- 20 16 PR Jet Way JUH3+ and 10.00-R- 20 16 PR Jet Steel JDH3. With
the objective of encouraging its customers, a National Fleet Conference was organized which is a
dedicated interactive business platform for fleet owners, where amongst others, best practices are
shared to strengthen the business relationship. The network of ‘JK Tyre Truck Wheels’,
providing services for maintenance and repair of tyres, is rapidly expanding. The initiative of
‘Radial Baadshah’ CRM, was recognised at the Asian Customer Engagement Awards.

TRUCK/BUS BIAS

This segment, which although has declined, still remains a high-value segment. Riding on the
success of earlier rib tyres, a super-premium mileage tyre 10.00-20 JET R Xtra Miles, was
introduced. Various promotional as well as customer centric activities were pursued at select
locations, which received an encouraging customer response.

PASSENGER CAR RADIAL

Brand building, retail network expansion, customer engagement were the key elements of the
passenger car radial strategy during the year. JK Tyre brand campaign was built around
passenger tyres. JK Tyre’s domestic passenger radial sales grew by 11% as against a single digit
industry growth. In order to expand geographical reach a large number of new ‘JK Tyre Steel
Wheels’ were opened. In addition, multi-brand dealerships were awarded, thereby enabling
dedicated displays and counter shares for JK Tyre. The concept was well received and a large
number of such channel partners have been designated as ‘Preferred Trade Partners’.

60
As much as it is important to communicate to customers, it is equally important to engage and
reward loyal customers. Two major consumer offers of car and UV radials - ‘Drive in Style’ and
‘Celebration on Wheels’ were made during the year. Customers in Delhi NCR took part in the
‘JK Tyre Experience Zone’ at the prestigious Buddh International Circuit during successive
rounds of JK Racing Championship.

LCV AND SCV

During the year, the Company connected with LCV/SCV customers through various attractive
offers including a national campaign held in Delhi-NCR and other high potential markets.

FARM VEHICLES

In line with JK Tyre’s ‘Customer First’ approach, the ‘Kisan Mitra’ campaign was undertaken
for the welfare of customers in the rural markets. This campaign which facilitates them with
agricultural services (soil testing, tractor tyre check-up and agri-counseling services) was
organised across several States in the country. Through the campaign, several hundred villages
were covered and a large number of mechanics were reached.

JK Tyre also participated in numerous kisan melas. The kisan melas were organised in the
high-yielding agricultural states of India like Punjab, Uttar Pradesh, Haryana, Maharashtra,
Madhya Pradesh, Rajasthan and Karnataka.

To improve the brand recall and develop positive perception among the tractor OEM franchise,
visibility enhancing campaigns were organised in the top-11 agricultural states of India. This
campaign enhanced customer awareness about the premium range of tractor rear tyres and
strengthened relationships with our tractor dealerships as well as our OEM partners. More than
3,700 villages were covered and ties were forged with more than 35,000 customers.

OTR

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The OTR segment was affected by the slowdown in mining and construction activities. New

product introduction and customer education were thrust areas during the year. JK Tyre evolved

as one of the preferred suppliers for world’s largest off-the-road OEM, Caterpillar, for supply of

ultra large OTR tyres in size 27.00 49 for their 100 tonne rear dump trucks in India. India’s

largest OTR tyre size 40.00 57 VEM045 68PR E4 TL was commercially launched at the 12th

International Mining & Machinery Exhibition(IMME) in Kolkata. This, India’s largest tyre, is

yet another example of JK Tyre’s undisputed leadership in R&D and Technology. Standing 12

feet high and weighing 3.7 tonnes, this tyre is specifically built for Country’s biggest rigid

dump-truck, having a payload capacity of 240 tonnes. The JK Tyre stall at IMME was awarded

for the best display. Several new special application products were launched, for improving the

life and productivity of reach-stackers, which promises massive tread design to optimize tread

wear ensuring longevity and mobility. Specially developed cranes for Indian Navy rolled-out

exclusively on specially developed JK Tyre, meeting their exacting standards.

RETREAD BUSINESS

The Company provides end-to-end retreading solutions to customers through a wide product

range including, pre-cured rubber treads and allied materials. JK Treads expanded its franchisee

network within India and Nepal. Its personnel have been trained to retread bias and radial tyres

as per international standards. JK Treads now services various State Transport Corporation in

India.

OEM AND INSTITUTIONAL BUSINESS

JK Tyre has grown substantially in the OEM and STU segments during the year. Many new tyres

have been approved at TATA, Escorts, New Holland, Ashok Leyland and Maruti Suzuki. Vendor

62
recognition awards have been bestowed upon the Company by General Motors and Maruti

Suzuki. International commercial vehicle manufacturer, Scania, which established a

manufacturing facility in India has also approved JK Tyre products. It is a matter of pride that JK

Tyre has garnered a large share in the Bus radials segment purchased by State Transport

Undertakings across India.

GROWTH STRATEGIES

RISKS AND CONCERNS

A continuously changing environment - external and internal - enhances business uncertainty.

These risks can be of different types - regulatory uncertainties, changing competitive landscapes,

technological obsolescence, talent hiring and retention, availability of raw material - and prudent

risk management involves the proactive identification of risks, evaluation, quantification and

63
preparedness with the objective of comprehensive mitigation. The company invested in an

established structure for risk management. This comprises a Risk Management Committee,

which reviews the overall risk management exercise in the company. All functions were covered

in the risk identification; these risks are quantified to ascertain their potential to impact business.

Detailed planning was carried out to avert risks through the development of a detailed risk

mitigation action plan.

KEY BUSINESS RISKS:

Economic risks

During the last financial year, there was considerable uncertainty related to trade treaties

(US-China) leading to a slowdown in the global economy. Uncertainty over Brexit increased.

Few European economies reported economic concerns which impacted overall global demand

and Indian GDP growth. To reduce the impact of this risk leading to an uncertain demand

outlook, the company identified new markets, wider product range to market there and

deployment of teams.The Indian market is also witnessing increased competition with the arrival

of some new entrants in the market and existing multinational companies expanding their

operations. However, the Company has been working on product and channel development to

remain on the first choice of customers.Low-cost Chinese imports have reduced in the market

due to the imposition of anti-dumping duty. However, low-cost imports from few other countries

have started taking their place, resulting in an almost similar situation as it was earlier.

Raw material availability and cost risks

The industry faces risks of raw material availability and cost continuously. Natural rubber, a key

raw material in tyre production, falls severely short in terms of production compared to the

64
overall Indian tyre industries demand. The share of domestic natural rubber in tyre

manufacturing has dropped continuously, leading to a higher reliance on imports. This increases

the risks faced by the Company and the tyre industry when it comes to linkages with the foreign

exchange position, which has been quite volatile during last year. Crude oil prices are also

strengthening, impacting the prices of almost all major raw materials required for tyre

manufacturing. The Company has been venturing into non-traditional areas to source higher

levels of natural rubber locally to reduce the aforementioned dependence on imports.

Operational risks

Operational risks arise in the day-to-day functioning of business and include risks like equipment

obsolescence, power and water shortages, among others. The Company has well-established

processes to regularly monitor the health of operating capacities and undertake timely

interventions to maintain a high level of equipment availability. The Company is also investing

in modernisation and technologies such as IoT and Industry 4.0 to improve operational

efficiencies and equipment health.Water is also a big area of concern for sustenance of

operations. The Company has been making continuous progress in terms of reducing water

consumption and using rainwater harvesting and recycling to ensure sustainable operations.

Technology risks

The Company continually tracks changing customer needs, preferences and accordingly plans for

future market requirements. The Company inaugurated a world-class R&D centre, the Raghupati

Singhania Centre of Excellence (RPSCOE), at Mysore, during FY19. This centre will help the

Company in leading the industry on the technological front. The Company also invests in

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continuous skill upgradation of its employees through knowledge-sharing with various national

and international experts and networks.Risk management is an integral part of the strategic

business planning and review cycle at the Company. The plan so formed to mitigate risks is

continuously tracked for timely implementation. The Company takes a lot of care to safeguard

the interests of its stakeholders. The Company ensures compliance with all legal and statutory

requirements as well as maintains complete transparency in financial reporting and disclosures.

Internal Control Systems

The Company has since its inception, laid down a system of internal control system, which is

commensurate with the size and nature of the business. Adequate and effective checks have been

put in place to ensure that the financial data is accurate and reliable. The internal control systems

also ensure that the assets and the interest of the Company are well-protected.The internal audit

is carried out throughout the year based on a systematic plan covering all functions and aspects

of the business. The internal audit reports are reviewed by the senior management and are placed

before the audit committee of the Board of Directors along with the actions taken. The Audit

Committee undertakes a detailed review of the audit observations and actions, in order to ensure

that the internal audit system is effectively functioning. The recommended actions by the audit

team are monitored and improvements are implemented that are regularly reviewed by the senior

management. The IT framework of the Company is based on a robust ERP system, ensuring

seamless connectivity of plants, sales offices and head office and facilitating faster and more

reliable processing of transactions as well as generating reports for rapid decision-making. The

Company also has strong control and management reporting systems, which help ensure that

business results are achieved and continuous improvement projects are undertaken.

66
 MARKET ANALYSIS
OF
SWOT ANALYSIS
STRENGTHS

Strengths are defined as what each business does best in its gamut of operations which can give
it an upper hand over its competitors. The following are the strengths of JK Tyres :

● Strong distribution channel: JK tyres are backed by a very strong network of

distributors with almost 141 outlets just in India. The company is also known to engage
its dealers and has a relationship programme which ensures high incentives, rewards for
superior performance and other value-added initiatives. This relationship that it shares
with its dealers is one of its biggest strengths.

● Market Leadership: JK Tyres are the market leader in the radial tyres market for trucks
and heavy vehicles and this is a segment which is expected to have steep growth
prospects in the future.

● Standards and certifications: JK tyres is the first company in Asia to be awarded an

ISO: 50001 certifications. It also has an ISO 9001 and ISO 14001 certification.

● Cavendish: The move to takeover cavendish has helped JK tyres expand their product
since it currently owns 1.2 million units of truck radials. The move has also helped to
improve the production capacity of farm tyres and off-road tyres.

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 ● Presence in all segments: JK Tyres has the presence in all three price segments in the
India market. The premium segment is sold under the label JK tyres, the mid-tier under
Vikrant Tyres and the value segment is sold under the label Challenger.

● Exclusive channels: JK Tyres sells their truck tyres through Truck wheels whereas the
Xpress Wheels chain is for the suburban and local markets. The company uses the chain
Steel Wheels for dealing exclusively with passenger cars and two and three –wheelers.
This ensures that customers get exclusive and specialist services in each category.

WEAKNESSES

Weaknesses are used to refer to areas where the business or the brand needs improvement. Some
of the key weaknesses of JK TYRE are:

● Cost control: With fluctuation in the prices of synthetic rubber which is the main raw
material for tyres it is becoming increasingly difficult to control costs of manufacturing.

● Focus on radial tyres: The excessive importance given to the radial tyres segment for
trucks has diluted the focus on other lucrative areas such as farm tyres and passenger
cars. The company needs to look at areas other than truck tyres.

● Pricing: As competition increases in the tubeless tyres from foreign players and
multinational companies JK tyres will need to focus on keeping its prices intact since that
will be its core differentiator. This will be a huge challenge for the company

OPPORTUNITIES

Opportunities refer to those avenues in the environment that surrounds the business on which it
can capitalize to increase its returns. Some of the opportunities include:

● High market potential for tyres: The market potential for tyres is expected to grow at a
CAGR of 9.9 % between the years 2017 and 2022. The prime reasons for this are the new

68
 vehicle launches which have grown in frequency in both passenger cars and two-wheelers
and the growth in spendable income.

● Growth in two-wheeler market: The number of two-wheeler purchases is expected to

be at an incline in the next decade and the two-wheeler tyres market is expected to hold
the highest market share in the Indian market. This will be a potential opportunity for JK
tyres to look at since it will mean more frequent replacements as well.

THREATS

Threats are those factors in the environment which can be detrimental to the growth of the
business. Some of the threats include:

● Competition: The company faces stiff competition from Bridgestone, Michelin, and
Cooper as well as local players in each regional market like PRF and Apollo Tyres in
India.
● Dumping from China: Tyre manufacturers in India are facing severe challenges from
the dumping of tyres from countries like China and other regions with whom India has
entered into free trade agreements. This is eating into the market share of most of the
Indian companies primarily because of their pricing mechanisms. Other threats include
GST and demonetization.

PORTER’S FIVE FORCE MODEL

Porter's five forces analysis is the model framework of industry analysis. This analysis helps to
find the position of a particular company by its market rivalry and major four threats like its
bargaining power of supplier, bargaining power of buyer, threats of substitutes, and threat of new
entrants. With the help of Porter's five forces analysis, JK TYRE is going to be analyzed below.

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INTER FIRM RIVALRY: LOW
The tyre industry in India is fairly concentrated, with the top eight companies accounting for
more than 80% of the total production of tyres

ENTRY BARRIERS: HIGH

The entry barriers are high for the tyre industry. It is a highly capital intensive industry. A plant
with an annual capacity of 1.5 million cross-ply tyres costs between Rs. 4,000 and Rs. 5,000
million. A similar plant producing radial tyres costs Rs. 8,000 Million.

BARGAINING POWER OF THE SUPPLIERS: HIGH

The tyre industry consumes nearly 50% of the natural rubber produced in the country. The price
of natural rubber is controlled by Rubber Control Board and the
domestic prices of natural rubber have registered a significant increase in recent times.

BARGAINING POWER OF THE BUYERS: HIGH

The OEMs have total control over prices. In fact, the OEMs faced with declining profitability
have also reduced the number of component suppliers to make the supply chain more efficient.

THREAT OF SUBSTITUTES: LOW BUT INCREASING

During the FY2002, over 1,10,000 passenger car tyres were imported. This constitutes over 2%
of total radial passenger car tyre production in the country. However, with the reduction of peak
custom duty, the import of tyres is likely to increase.

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FINANCIAL COMPARATIVE
ANALYSIS OF MRF TYRES,
APOLLO TYRES AND JK
TYRES
I attach the balance sheet and statement of profit and loss of MRF TYRES, APOLLO TYRES
AND JK TYRE for the financial year 2019 - 2020 respectively, herewith.

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MRF TYRES

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APOLLO TYRES:

74
75
JK TYRES:

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77
CONSUMER SURVEY

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RECOMMENDATIONS
MARKETING STRATEGIES

The tyre industry has a unique and balanced mix of both B2B (business to business) and B2C

(business to consumer) market segments. OEM ( original equipment manufacturer) represents

the B2B segment where the customers are the automobile manufacturers. This segment does not

require detailed marketing strategies. The replacement category on the other hand is more of a

B2C segment and hence requires extensive marketing strategies.

MARKET SHARE

Now there are about 40 companies in India producing 70 million tires. The main competition is

in four major companies which are MRF, APOLLO, JK TIRES, and CEAT. But among all these

MRF is the market leader with 21% market share and APOLLO is on second number with 20.5%

share, JK TIRES on third number with 20.3% and CEAT with 14% market share. The growth in

the tire industry of India is positive as in 2005 growth was 5% in tire industry and 3% in

commercial tires and predicted to increase in future.

The tyre industry in India is a highly competitive sector with a very cut throat competition

among the leading players. Top players in different categories of tyre industry

Historical performance of tyre industry:

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Business Models – The companies involved in the tyre industry indulge into fierce competition

with each other for better market share and profits. But still some of the manufacturers manage

to have a unique business model which strengthens its market presence.

JK Tyre & Industries caters majorly to the Passenger Car and Truck & Bus segment whereas

Balkrishna Industries have discovered and mastered a niche market segment of OTR or Off the

Road tyres for themselves. The company focuses on manufacturing and supplying tyres for the

earthmoving instruments.

Revenue and Sales – MRF seems to be the market leader in the Indian Tyre Industry across all

the segments. Although the company is followed by Apollo Tyres and JK Tyres, it enjoys a

massive difference in the figures when compared to its nearest competitors.

The industry seems to be less crowded at the top but the competition among the participating

firms seems fierce.

END USERS

Based on the customer segments, the tyre market can be broadly divided into 2 categories –

Original Equipment Manufacturers (OEM), and Replacement Market.

1) Original Equipment Manufacturers – This includes automobile manufacturers like Hyundai,

Maruti Suzuki, Hero etc. The demand from the OEM market fluctuates directly in line with

end-use demand for the automobile/construction equipment segment; it is thus prone to a high

degree of cyclicality. The total tyre sales to OEMs are on an average 40-45% of the total sales.

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2) Replacement Market – Customers who replace old tyres of their vehicles constitute the

Replacement Market. Replacement demand for tyres depends on on-road vehicle population,

road conditions, vehicle scrappage rules, overloading norms, retreading intensity and miles

driven. It is less cyclical than OEM demand and is generally a higher-margin business for tyre

manufacturers. On an average, the replacement market accounts for 45-50% of the total sales.

Although exports contribute very less to the revenue but with each passing day , companies are

focusing more and more on exports. MRF and JK Tyres are leaders in exports from India.

ANALYSIS OF THE INDUSTRY

The five force analysis of the industry reveals the following facts.

Bargaining power of Buyers – The Industry has more than 40 manufacturers which gives the

buyers a wide range of choice. Also the market is fragmented so Manufacturer penetration is

quite less. This gives high bargaining powers to the buyers.

Bargaining power of Suppliers – As the industry is highly Raw Material driven where the main

raw material is natural rubber. The production of rubber doesn’t increase proportional to its

demand and hence the bargaining power of suppliers is very high.

Competitive Rivalry – While the number of players in the industry is 40, the market share seems

to be quite concentrated at the hands of the top 10 players. Also in each product category like

two wheeler, T&B etc the market share of lead players approximates to 80%.

Availability of Substitutes – The major concern for the Indian manufacturers is the price of the

tyres in the overseas market like China. The price of rubber is the driving factor for price and

when it increases in the domestic market, the Indian manufacturers are bound to increase the

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price. The automobile manufacturers then may switch to the option of importing tyres from the

international market.

Entry Barriers – The industry is highly capital intensive and margins are very low. This makes it

difficult to sustain for new entrants. Automobile makers although resort to backward integration.

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 FINDINGS
HERE IS THE LIST OF DEMOGRAPHIC DATA OF THE CONSUMERS WHO

TOOK PART IN THE SURVEY AND HELPED ME COMPLETE MY

RESEARCH

1. GENDER:

MALE - 52.70%

FEMALE - 47.30%

2. MARITAL STATUS:

UNMARRIED - 78.20%

MARRIED - 20%

OTHERS - 1.80%

3. AGE GROUP:

18 - 30 - 70.90%

31 - 40 - 14.50%

41 - 50 - 7.30%

51 - 60 - 7.30%

ABOVE 60 - NILL

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 4. OCCUPATION:

PUBLIC SECTOR EMPLOYEE - 5.50%

PRIVATE SECTOR EMPLOYEE - 14.50%

SELF - EMPLOYED - 18.20%

STUDENT - 60%

UNEMPLOYED - 1.80%

5. MONTHLY INCOME:

LESS THAN 20,000 - 58.20%

20,000 - 40,000 - 10.90%

40,000 - 60,000 - 16.40%

60,000 ABOVE - 14.50%

HERE IS THE ANALYSIS OF THE QUESTIONNAIRE DEPENDING UPON

THE DATA COLLECTED THROUGH THE SURVEY.

5. DO YOU OWN/ USE A 4 WHEELER?

The survey reveals that 81.80% of respondents own a 4 wheeler and 18.20% do not own a 4

wheeler but few of them use it anyway.

6. HOW DO YOU USE THE VEHICLE?

The survey reveals that 92.70% of the owners use the 4 wheeler for personal use and 7.30% use

it for commercial use.

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 7. WHICH COMPANY'S TYRE IS FITTED IN YOUR VEHICLE?

The survey reveals that 40% respondents have MRF TYRES fitted to their vehicle, whereas,

18.20% respondents have APOLLO TYRES and 20% respondents have JK TYRE fitted to their

4 wheelers.

8. LEVEL OF SATISFACTION.

The survey reveals that 34.50% respondents are extremely satisfied with the tyres fitted in their

vehicles, whereas, 36.40% respondents are moderately satisfied, 23.60% respondents are

satisfied but their satisfaction level is subject to change in case of availability of better

substitutes, 3.60% respondents are merely using the products procured by them but they aspire to

increase their satisfaction level and the remaining 1.80% respondents are dissatisfied with their

procurement.

9. LIKELIHOOD OF PURCHASE REPETITION ?

The survey reveals that 41.80% respondents are extremely likely to repeat their purchase, 40%

respondents are moderately likely to repeat their purchase, 10.90% respondents are unlikely and

7.30% respondents are least likely to repeat their purchase.

10. IF NOT, WHICH BRAND WOULD YOU PREFER?

The survey reveals that, from amongst the respondents 21.80% would prefer MRF TYRES,

41.8% would prefer APOLLO TYRES, 10.9% would prefer JK TYRE, whereas, 12.7%

respondents choose other tyre companies while thinking of replacement of the tyres of their

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vehicles and for 12.70 % respondents replacement is not an option as they do not intend to shift

to another brand.

11. AVERAGE KMS RUN OF THE VEHICLE PER MONTH?

The survey reveals that 56.40% respondent’s have an average run of 500 kms of the vehicle per

month, 34.50% respondent’s vehicle runs for about 1000 - 2000 kms per month, whereas, 9.10%

respondents run their vehicles for 5000 kms and more per month.

12. WHICH COMPANY'S NAME STRIKES YOUR MIND WHEN YOU HEAR THE

TERM "VEHICLE TYRE"?

The survey reveals that MRF TYRES is in the leading position with 52.70% of the respondents

opting for it as soon as the term “vehicle tyre” hits their ears, while, APOLLO TYRES stands

2nd with 23.60% of respondents in their favour, JK TYRES stands 3rd with 12.70 % respondents

and the remaining 10.90% respondents think of other prevalent tyre companies in the market.

13. HAVE YOU EVER CHANGED THE TYRES OF YOUR VEHICLE?

The survey reveals that 60% respondents have changed the tyres of their vehicles whereas 40%

respondents haven’t.

14. HOW OFTEN DO YOU CHANGE YOUR VEHICLE TYRES?

The survey reveals that 36.40% respondents change their tyres after the tyre gets bald, 23.60%

respondents change the tyres after every 40,000 km run of the vehicle, 20% respondents do it

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once in two years and the remaining 20% respondents rarely change the tyres fitted in their

vehicle.

15. WHAT ARE YOUR TOP 3 PRIORITIES WHILE BUYING A TYRE?

The survey reveals that from among the given choices of - mileage, comfort, noise level, steering

freeness, puncture resistance, grip and durability, respondents majorly vote for grip, puncture

resistance and comfort as their top priorities.

16. WHICH COMPANY FULFILS YOUR NEEDS BEST?

The survey reveals that MRF TYRES are in a win - win situation with 41.8% respondents voting

for them, while, respondents have also voted APOLLO TYRES with 29.19%, JK TYRE with

14.50% and remaining 14.50% opts for other tyre companies in the market.

17. WHICH PROMOTIONAL ACTIVITY INFLUENCES YOUR BUYING

DECISION?

The survey reveals that 65.50% respondents get influenced by the after sales facilities provided

by the tyre companies whereas, 25.50% respondents get influenced by discounts and 9.10%

respondents by gift vouchers.

18. WHAT IS YOUR REQUIREMENT FROM THE COMPANY?

The survey reveals that 49.10% respondents seek to meet the requirement of value for price,

21.80% respondents opt for after sales services, 14.50% respondents choose customer

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relationship management, 9.10% respondents choose product range and the remaining 5.50%

respondents are happy with the basic facilities provided by the company.

19. HOW DID YOU COME ACROSS THE NAMES OF THE TYRE COMPANIES?

The survey reveals that 43.60% respondents have come through the names of the tyre companies

through advertisements, 29.1% through observation, 12.70% through friends and relatives,

9.10% through company image and the remaining 5.50% through publicity.

20. THROUGH WHICH ADVERTISING MEDIA DID YOU COME TO KNOW

ABOUT THESE COMPANIES?

The survey reveals that television has played a major role in advertising these brands to the end

users and the layman while newspapers, radio and magazines also have a minor role in the play.

21. WHAT DO YOU EXPECT FROM THE COMPANY?

The survey reveals that 61.80% respondents expect professional quality services from the tyre

companies, 18.27% respondents opt for trust and care by the company, 12.70% respondents

expect immediate response from the company when contacted and the remaining 7.30%

respondents expect the minimum from the company i.e. the basic facilities provided by the

company.

22. HOW LIKELY WOULD YOU RECOMMEND MRF TYRES?

The survey reveals that MRF TYRES are at the top most position with respondents majorly

allotting 7 points to them when asked to rate on a scale of 10.

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 23. HOW LIKELY WOULD YOU RECOMMEND APOLLO TYRES?

The survey reveals that respondents recommend APOLLO TYRES moderately by majorly

voting for 5 in a scale of 10.

24. HOW LIKELY WOULD YOU RECOMMEND JK TYRES?

The survey reveals that JK tyres has also secured its place in the market by being one of the top

tyre companies and is at par with APOLLO TYRES as far as recommendation from the survey

respondents is concerned.

100
 CONCLUSION
India tyre market exhibited moderate growth during 2015-2020. India represents the fourth

largest market for tyres in the world after China, Europe and the United States. In India, the

market is currently being driven by increasing radialization of tyres especially in buses and

trucks. Moreover, the tyre industry consists of a vast consumer base, they are used in all types of

vehicles which include passenger cars, buses, military vehicles, motorcycles, trucks, etc. The

demand of tyres is primarily catalyzed from two end-user segments - OEMs and the replacement

segment. The Replacement market currently dominates the tire market accounting for most of the

total sales. Demand by the OEM segment is driven by a new automobile sales trend, whereas, the

replacement market is linked to the usage patterns and replacement cycles. The market for tyres

is quite concentrated in India with the top 10 manufacturers accounting for around 80 per cent of

the total market. MRF, Apollo Tyres and JK Tyres currently represent the top players in this

market. Looking forward, it is highly expected that the India tyre market will reach a volume of

211 Million Units by 2026.

The contents of the above report ranges from macro overview of the market to micro details of

the industry performance, recent trends, key market drivers and challenges, SWOT analysis,

Porter’s five forces analysis, etc.

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