APOLLO & CEAT:

A COMPARATIVE ANALYSIS

AGENDA
1. 2.

3.
4. 5. 6. 7. 8.

Indian Automobile Industry Indian Tyre Industry Global Trends Balance sheet: Comparison Income statement: Comparison Ratio Analysis SWOT Analysis Bibliography

INDIAN AUTOMOBILE INDUSTRY

Contributes

about 4 per cent in India's (GDP) Generates direct and indirect employment Well developed & globally competitive support

Auto Ancillary Industry Established Automobile Testing R&D Centers

Lowest cost producers of steel in the world

INDIAN AUTOMOBILE INDUSTRY

GROSS TUNROVER OF THE AUTOMOBILE INDUSTRY IN INDIA Year 2004-05 (IN USD MILLION) 20,896

2005-06
2006-07 2007-08

27,011
34,285 36,612

2008-09

38,238

INDIAN TYRE INDUSTRY

Rs. 25000 Crores
Turnover of Indian Tyre Industry Tyre Production All Categories

971 Lakhs

Tyre Export from India

Number of tyre companies

Rs. 3625 Crores

36

GLOBAL TRENDS
Focus

on energy efficient vehicles

Environmentally conscious consumers

Consumers

are increasingly sophisticated and educated Competition between international & domestic car manufacturers Companies preferring contract employees

GLOBAL TRENDS IN AUTOMOTIVE INDUSTRY

Production of passenger and commercial vehicles has reached to more than 80 million units in 2010 There has been an addition of 25 million vehicle production since 1997 A majority of this growth is coming from the AsiaPacific region The production in Western Europe, NAFTA and Japan stand still

GLOBAL TRENDS IN AUTOMOTIVE INDUSTRY

This increase in come from China, India and Thailand Global Motorcycle production has increased from 40 million in 2005 to more than 75 million in 2010 Asia is major producer of two wheeler in the world with 90 percent share

GLOBAL TRENDS IN AUTOMOTIVE INDUSTRY

The industry has became highly capital intensive It has entry barriers to small players The constant pressure for cost reduction on OEMs forcing players to outsource The changing scenario has open up opportunities for Indian Automotive industry

DRIVERS FOR INDIAN AUTOMOBILE INDUSTRY

Huge domestic market Rapidly growing purchasing power Well established financial market Stable governance framework and its policies The rapid improvement in infrastructure Availability of trained man power

DRIVERS FOR INDIAN AUTOMOTIVE INDUSTRY

Potential vehicle sales in 2015

Vehicle Type
Two wheelers
Passenger vehicles Three wheelers CV TOTAL

Number sold (In million units)

27.80
2.65 0.87 0.64 31.96

CEAT TYRES LTD. AND APOLLO TYRES LTD.:

COMPARISON
Ceat Tyres Ltd.

Apollo Tyres Ltd.

Incorporated in 1958; Flagship company of RPG Enterprises Market Share: 11% Net Sales: Rs. 2816.50 Cr Net Profit: 161.04 cr Book value per share: 183.6 Market value per share: 97.1

Registered as a company in 1976 Market Share: Around 22% Net Sales: Rs. 5044.99 Cr Net Profit: 412 cr Book value per share: 34.26 Market value per share: 56.4

SHAREHOLDING PATTERN

Ceat
Corporate Bodies & Public 17%

Apollo

Corporate Bodies & Public 30%

Mutual Funds and Banks 14% Promoters 48%

Promoters 40%

Mutual Funds and Banks 18%

FIIs 4%

FIIs 29%

BALANCE SHEET: COMPARISON

Liabilities
Ceat: Liabilities
Apollo Tyres: Liabilities

Net worth 50% 30% 20% Current Liabilities Total Debt 36% 25% 39%

Net Worth Total Debt Current Liabilities

Total Liabilities: Rs. 1,058.08 Cr

Total Liabilities: Rs. 2,859.57 Cr.

BALANCE SHEET: COMPARISON

Assets
Ceat: Assets Apollo Tyres: Assets

Net Block 19% 6% 2% 73% Capital WIP 62% Investment s Current Assets 23% 7% 8%

Net Block Capital WIP Investment s Current Assets

Total Assets: Rs. 1,058.11 Cr

Total Assets: Rs. 2,859.55 Cr

INCOME STATEMENT: COMPARISON

Income
Ceat Tyres Apollo Tyres

1% 1%

Net Sales 0% 1% Other income 99%

Net Sales

Other Income Stock Adjustment

98%

Stock adjustment

Total Income: Rs. 2,869.60 Cr

Total Income: Rs. 5,089.45 Cr

INCOME STATEMENT: COMPARISON

Expenses
Ceat Tyres
Raw materials 8% 4% 8% Employee cost Selling and Admin expenses Miscellaneo us expenses 10% 3% 7%

Apollo Tyres
Raw materials

Employee cost
Selling and Admin expenses Miscellaneo us expenses

80%

80%

Total Expenses: Rs. 2,415.07 Cr

Total Expenses: Rs. 4,255.05 Cr

INCOME STATEMENT: COMPARISON

6,000.00 5,000.00 4,000.00 3,000.00 2,000.00 1,000.00 0.00 Ceat Tyres Apollo Tyres Income Operating expenses Non-operating expenses

RATIO ANALYSIS

LIQUIDITY RATIOS
1.4 1.2 1 0.8 0.6 0.4 Ceat CR Apollo CR Ceat Quick Ratio Apollo Quick Ratio

0.2
0 08-Mar 09-Mar 10-Mar

1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 08-Mar 09-Mar 10-Mar

Ceat D/E Ratio Apollo D/E Ratio

EFFICIENCY RATIO

ASSETS AND SALES

Assets
3000 2859

Sales
6000 5046

2500 2051 2000 1694 1500 944.54 1058.11

5000 4090 4000 3711 2816.5 2336.1 2000 2529.46

3000

1000

843.27

500

1000

0 08-Mar Ceat Total Assets 09-Mar 10-Mar

0 08-Mar 09-Mar 10-Mar

Apollo Total Assets

Ceat Sales

Apollo sales

2.5

1.5 Ceat Asset T/O Ratio 1 Apollo Asset T/o Ratio

Ceat: Increased from 1.95 to 2.15 Apollo: Declining trend

0.5

0 08-Mar 09-Mar 10-Mar 14 12 10 8 Ceat Inventory T/O Ratio Apollo Inventory T/O Ratio

More or less same inventory turnover ratio in the range of 8 to 9

6 4 2 0 08-Mar 09-Mar 10-Mar

No. of Days in Working Capital

35
30 No. of Days 25 20 15 10 5 0 -5 Ceat Apollo

08-Mar

09-Mar Fin. Year

10-Mar

50

Selling Distribution Cost composition

14 12 10 Ceat Debtor T/O Ratio Apollo Debtor T/O Ratio % Ceat, 11.8

45
40 35 30 25 20 15 10 5 0 08-Mar 09-Mar 10-Mar

8
6 4 2 0 08-Mar 09-Mar 10-Mar Apollo, 5.3

INVESTMENT VALUATION RATIO

INVESTMENT VALUATION RATIOS

March 08 March 09 March 10

EPS

Ceat Apollo

43.4 4.49

-4.71 2.15

47.1 8.23

Equity Dividend

Ceat Apollo

40 50

0 45

40 75

Book Value

Ceat Apollo

145.96 25.1

141.25 26.84

183.6 34.9

PROFITABILITY RATIO

PROFITABILITY RATIO
Operating Profit Margin Net Profit Margin

18 16 14 12

9 8 7 6 Ceat Operating Profit margin % Apollo Operating Profit Margin% 5 4 3 Ceat Net Profit Margin % Apollo Net Profit Margin %

10
8 6 4 2 0

2
1 0 08-Mar -1 09-Mar 10-Mar

08-Mar

09-Mar

10-Mar

PROFITABILITY RATIO (CONTD)

Year

Return on Capital Employed

Return on Net Worth

Return on Assets

Ceat March 10 30.1

Apollo 25

Ceat 25.61

Apollo 24.1

Ceat 183.6

Apollo 34.26

March 09

4.29

13.2

-3.33

7.99

141.25

26.89

March 08

22.2

24.6

29.73

17.89

145.96

25.15

SWOT ANALYSIS

SWOT ANALYSIS: CEAT TYRES

Strengths Weaknesses Opportunities Threats

Good brand image Seeking to working close to customers through CEAT Shoppe, and CEAT Hubs

Cost of raw material higher, due to octroi Capital intensive business

Improve operating efficiency Could seek better supplier deals Growth in overseas markets

Imports from neighbouring countries at competitive prices Raw material price volatility

SWOT ANALYSIS: APOLLO TYRES

Strengths Weaknesses Opportunities Threats

Dominant player in the industry segment of truck and bus tyres Economies of transportation cost, because of closeness to natural rubber growing belt Global sourcing of raw materials

No presence in two and three-wheeler segments Capital intensive business

Tap the commercial vehicle segment Growth in overseas markets Imports from neighbouring countries at competitive prices Raw material price volatility

BIBLIOGRAPHY
http://www.atmaindia.org http://www.cci.gov.in http://www.moneycontrol.com http://www.apollotyres.com http://www.ceattyres.in