Tire Industry – India November 2014
Executive Summary Market Overview
Global tire market is expected to grow at a CAGR of p% through 20-- to 20-- to reach INR yy bn in 20- Huge demand from Asia Pacific region will boost the industry’s growth Indian tire industry is expected to reach INR xx bn in 20--, growing at a CAGR of q%
Drivers & Challenges
Drivers: Replacement Demand Rising Automobile Sales Scope in Radialization Increasing Exports Increasing Investment in Road Construction
Key Trends
Retreading of Tires Emergence of Tubeless Tire Market Advent of Green Tires Focus on Radial Tires
Challenges: Price Volatility in Rubber Prices Absence of Raw Materials Inappropriate Duty Structure for Natural Rubber
Key Players
Competitive Landscape
Company A
Company B
Company C
Company D
Company E
Company F
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•Macroeconomic Indicators
•Introduction •Market Overview •Export-Import
•Drivers & Challenges •Government Initiatives •Trends
•Competitive Landscape •Opportunities •Strategic Recommendations
•Appendix TIRE INDUSTRY IN INDIA 2014.PPT
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Rising automobile demand from Asia Pacific region to boost global tire market Market Overview – Global (1/2) • Global tire market is expected to grow at a CAGR of p% through 20-- to 20-- to reach INR xx bn in 20-• Huge demand from the replacement tire segment and increasing commercial and passenger vehicles sales in developing countries is expected to drive growth in the world market • Asia Pacific region is expected to show the strongest growth fuelled by huge demand from India and China • Further, new construction and infrastructural projects and increase in middle class population as well as rise in disposable income of this section in developing countries will boost the global tire industry’s growth • However, unstable prices of raw materials and increasing dependency of tire manufacturers on OEMs for sales are some of the challenges faced by the global tire industry
Global Tire Industry – Size and Growth (Value) INR bn y4 y3
p% x1
x2
x3
20--e
20--e
x4
x5
20--e
20--e
x6
y2 y1 0 20--
20--e
Note: OEM refers to Original Equipment Manufacturer TIRE INDUSTRY IN INDIA 2014.PPT
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Growth in automobile sales and advent of new vehicle models has been the key driving force to the tire industry Market Overview – India (1/2) • Indian tire industry is expected to grow at a CAGR of p% through FY 20-- to FY 20-- to reach INR x6 bn in 20--. • It manufactures a diversified range of tires catering to the various Indian transport vehicles However, specialized tires such as aero tires are not manufactured in India
• Organized sector accounts for a major share in the overall tire sector while the unorganized sector is dominant in the bicycles segment • Performance of the tire industry is closely related to that of the automotive sector. • There has been a significant increase in the tire supplies to OEMs across all segments
Indian Tire Industry – Size and Growth (Value) INR bn y4 y3
p% x1
x2
x3
x4
FY 20--
FY 20--e
FY 20--e
FY 20--e
x5
x6
FY 20--e
FY 20--e
y2 y1 0
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SAMPLE
Exports of New Rubber Pneumatic Tires (1/2)
Export of New Rubber Pneumatic Tires (Value-Wise) INR mn a4 P% a3
x3
x4
x2 x1
a2
a1 FY 20--
FY 20--
FY 20--
FY 20--
Export of New Rubber Pneumatic Tires (Volume-Wise) mn
Q%
b5 b4
y3 y1
y2
FY 20--
FY 20--
y4
b3 b2 b1
TIRE INDUSTRY IN INDIA 2014.PPT
FY 20--
FY 20-6
SAMPLE
Exports of New Rubber Pneumatic Tires (2/2) Export Based on Value – Country-Wise FY20--
FY20-a1 x1 x2
x7 x6
x5
x3 x4
a1
y1
b1 c1
y2
d1
y3
y7
e1
y4
f1 g1
y6
Exports Based on Value – Product-Wise FY20--
y5
b1 c1 d1 e1 f1 g1
Exports Based on Volume – Product-Wise FY20--
z1 z2
a2
d1 d2
c2
b2
a2
c2
b2
d3
z3
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Drivers & Challenges – Summary
Drivers
Challenges
Replacement Demand
Price Volatility in Rubber Prices
Rising Automobile Sales
Absence of Raw Materials
Scope in Radialization
Inappropriate Duty Structure for Natural Rubber
Increasing Exports Increasing Investment in Road Construction
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Order books of the players is growing owing to strong demand from replacement of tires Replacement Demand
Impact
• Replacement demand for tires accounts for more than xx% of the total demand for tires • Increasing replacement demand is generating strong order books for the players in the industry • Business catering to the replacement of tires is a high margin business generating strong revenues • Replacement market is dominated by widespread dealer distribution network including exclusive dealer of the companies as well as multi company dealers
Replacement Demand in T&B Segment x
y
Replacement Demand in PV Segment
z
a
b
c
q3%
p3% p2%
q2%
q1% p1%
Apr-Dec FY 20--
Apr-Dec FY 20--
Note: T&B refers to Trucks and Buses, PV refers to Passenger Vehicles TIRE INDUSTRY IN INDIA 2014.PPT
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Trends – Summary
Emergence of Tubeless Tire Market
Retreading of Tires
Key Trends Focus on Radial Tires
Advent of Green Tires
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Competitive Benchmarking (1/5) Public Trading Comparables (FY 2014) Company A
Company B
Company C
Market Capitalization (INR mn) Share Price (INR)
EV/EBITDA (x)
EV/Revenue (x)
PE Ratio
Note: Top 3 Public companies based on the Market Capitalization; Market Capitalization is as on 30/10/2014, Share Price is as on 29/10/2014 and PE ratio is as on 30/10/2014 TIRE INDUSTRY IN INDIA 2014.PPT
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Competitive Benchmarking (2/5)
SAMPLE
Key Ratios of Top 3 Companies – Operational Basis (FY 2014) (1/4) Gross Margin
%
Net Margin
x2
a4 a3
y2 x1
a2
Operating Margin
z2 y1
x3 y3
z1
z3
a1 Company A
Company B
Company C
• Company B recorded gross margin of x2%, higher than that of Company A and Company C which recorded gross margin of x1% and x3% respectively • Company B recorded highest operating margin of y2%, followed by Company C and Company A which recorded operating margin of y3% and y1% respectively • Company B recorded a net margin of z2%, higher than that of Company C and Company A which recorded net margin of z3% and z2%
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SAMPLE
Public: Domestic Company – Company A (1/4) Company Information
Offices and Centres – India
Corporate Address Tel No. Noida
Fax No. Website Year of Incorporation Ticker Symbol Stock Exchange
Headquarters
Products and Services Category
Products/Services
Key People Name
Designation
Person 1 Person 2 Person 3 Person 4 TIRE INDUSTRY IN INDIA 2014.PPT
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SAMPLE
Public: Domestic Company – Company A (2/4) Financial Snapshot Total Income
INR mn
a4
Key Ratios
y1
y2
Net Profit/Loss
INR mn
y4
y3
b4
a3 a2
b3 x1
x2
x4
x3
a1
b2 b1
20--
20--
20--
20--
Financial Summary • The company reported total income of INR x4 mn in FY 20--, registering an increase of p% over FY 20-• The company earned an operating margin of z1% in FY 20--, an increase of z2 percentage points over FY 20-• The company reported debt to equity ratio of d1 in FY 20--, an increase of d2% over FY 20--
Key Financial Performance Indicators Indicators Total Enterprise Value (INR mn) EPS (INR) PE Ratio (Absolute)
y-o-y change (2014-13)
2014
2013
2012
2011
Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
Cost Ratios
• The company earned a net profit of INR y4 mn in FY 20--, as compared to net profit of INR y3 mn in FY 20--
Market Capitalization (INR mn)
Particulars
Value
Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
Liquidity Ratios Current Ratio Cash Ratio
Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover Improved
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Decline
14
SAMPLE
Public: Domestic Company – Company A (3/4) Key Business Segments
Key Geographic Segments
q
a1
a3
a4
b3
s3 s2
a2
p1%
p2%
p3%
p4%
s1 20--
20--
x2
x3
x4
y1 z1
y2 z2 r1
y3 z3 r2
9%y4 z4 r3
2011
2012
2013
2014
b2 b1
20--
x1
20--
Business Highlights Description
News
Overview
• Company A is engaged in the manufacture and sales of tires for more than 40 years
Manufacturing Facilities
• Manufacturing presence in Asia, Europe and Africa • Recently in Sep 2014, confirmed Hungary as the location for the first greenfield manufacturing facility outside India
New Ventures and Product Launch
• In Feb 2014, announced entry in Qatar to tap the potential market for truck-bus radials and high performing passenger car tires • In May 2014, introduced two new tires Apollo Alnac 4G All Season and Apollo Alnac 4G Winter tires at the international tire exhibition in Germany • Opened its first branded retail outlet in Kuwait in Aug 2014
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SAMPLE
Public: Domestic Company – Company A (4/4)
S
W
O
T
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Opportunity Areas – Summary
Opportunity Areas
Gujarat
Tamil Nadu and Andhra Pradesh
Maharashtra
NCR and Surrounding
Tire manufacturing plants should be built near the major automobile production or assembly facilities to capitalize on the growing opportunities provided by the existing as well as the emerging auto hubs in India
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Strategic Recommendations
SAMPLE
X
Y
Z
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