Home  »  Company  »  Apollo Tyres  »  Quotes  »  Directors Report
Enter the first few characters of Company and click 'Go'

Directors Report of Apollo Tyres Ltd.

Mar 31, 2014

Dear Member,

On behalf of the Board of Directors of your Company, we share with you the Annual Report along with the audited financial statements of your Company for the financial year ended March 31, 2014.

FINANCIAL PERFORMANCE Rs. Million

Year ended Year ended

Particulars 31.03.2014 31.03.2013 31.03.2014 31.03.2013 Standalone Consolidated

Net Sales 86,101 85,075 133,103 127,946

Other Income 1,809 574 1,995 945

Operating Profit (EBIDTA) 11,781 9,556 19,734 15,511

Less: Depreciation/ Amortisation Exp. 2,480 2,201 4,109 3,966

Finance Cost 2,446 2,610 2,838 3,128

Provision for Tax 1,718 1,620 2,268 2,448

Net Profit before Exceptional Items 5,137 3,125 10,519 5,969

Add: Exceptional Items (711) - (468) 169

Less: Share of loss of associates/ minority interest - - - 12

Net Profit 4,426 3,125 10,051 6,126

OPERATIONS

It was a tough year for tyre makers and this is refl ected in sales growth numbers at Apollo Tyres Ltd which witnessed an increase of 4.03% during FY14.

On a standalone basis, your Company achieved a net turnover of Rs. 86,101 million as against Rs. 85,075 million during the previous financial year. EBIDTA was at Rs. 11,781 million as compared to Rs. 9,556 million during the previous financial year. The net profi t for the year under review was Rs. 4,426 million, as against Rs. 3,125 million in the previous fi scal, a growth of almost 41.63%.

The consolidated net turnover of your Company increased to Rs. 133,103 million during FY14, as compared to Rs. 127,946 million in FY13. The consolidated EBITDA was Rs. 19,734 million for FY14 as compared to Rs. 15,511 million for the previous financial year. On consolidated basis, Apollo Tyres earned net profi t of Rs. 10,051 million for FY14 as against Rs. 6,126 million for the previous financial year, a growth of 64.07%.

The amount available for appropriations, including surplus from previous year amounted to Rs. 12,313 million. Surplus of Rs. 10,383 million has been carried forward to the balance sheet after providing for dividend of Rs. 378 million, dividend tax of Rs. 64 million, debenture redemption reserve of Rs. 488 million and general reserve of Rs. 1,000 million.

In the year under consideration, Apollo Tyres entered new markets, launched high performing products for both the passenger and commercial vehicle categories and redesigned its R&D structure, with focus on profi tability, internal effi ciencies and customer delight.

PRODUCTION

During the year under review, your Company''s production has shown a consolidated output of 525,205 metric tonnes (MT) as against 525,062 MT in the previous year.

RAW MATERIALS

During the year, the raw material cost declined by 5% over the last year. Natural Rubber prices ruled lower in FY 14 due to weak demand. The demand supply gap of rubber in India continued to grow and imports of rubber from Thailand, Malaysia and Indonesia were necessary to offset the shortfall in domestic supplies. The customs duty on Natural Rubber was increased during the year to "Rs. 30/kg or 20% whichever is lower" from "Rs. 20/kg or 20% whichever is lower". While this led to an increase in the cost of imported natural rubber, high production and a suppressed global demand saw a fall in global natural rubber prices to around USD 2/kg by the end of the fi scal.

Economic fundamentals continued to keep the crude prices under check. The brent crude prices were in the range of USD 105 - 110 per barrel in FY 14. Synthetic Rubber prices remained subdued in the year under review, with most producers lowering their plant operating rates to match the weak demand. Other crude based raw materials such as nylon tyre cord fabric, carbon black etc. remained steady. Rubber chemicals prices rose during the year on availability concerns and plant shutdowns. The anti-dumping duty continued on imports of nylon tyre cord fabric from China and Belarus, and carbon black imports from Thailand, Russia and China.

The sharp devaluation of the rupee against the dollar from Q2 onwards has arrested the benefit of the softening in imported commodity prices. The exchange rate has weakened by around 11% on an annualised basis.

The Company''s focus on liquidity management and risk mitigation through alternate source development continued during the year.

The commodity prices are expected to remain steady in the coming quarter with economic recovery, thereafter, will lead to hardening of commodity prices. In India, the raw material prices are likely to recover in the later part of the year with improvement in automobile demand and pick up in economic activity.

DIVIDEND

Your Company has a consistent track record of dividend payment. The Directors are pleased to recommend a dividend of Rs. 0.75 (75%) per share on Equity Share Capital of the Company for FY14 for your approval. There will be no tax deduction at source on dividend payments, but your Company will have to bear tax on dividend @ 16.995 %, inclusive of surcharge.

The dividend, if approved, shall be payable to the shareholders registered in the books of the Company and to the beneficial owners as per details furnished by the depositories, determined with reference to the book closure from July 21, 2014 to August 6, 2014 (both days inclusive).

MARKETING

For Apollo Tyres'' India operations, the year began with the launch of Apollo 4G range of tyres for passenger vehicles. To further strengthen its product offering in India, the Indian operations launched its premium European brand, Vredestein, in India to cater to high-end cars and SUVs. In the Off highway tyres segment, an aggressive approach helped the Company launch a slew of products for the segment. These included a new Farm product range, Krishak Gold, product for the specialty segment row crop and sub 30 HP tractor and the new XMR with Live Bond Steer mile technology.

To tap the high potential ASEAN market, Apollo Tyres opened its sales offi ce in Bangkok, Thailand. After Dubai for the Middle East region, this was the second ''home market'' outside Company''s operations in India, The Netherlands and South Africa.

The Company continued to ramp its branding presence in India and other parts of the world. The Company tied up with global football club, Manchester United and launched a high-decibel brand –''There are no Shortcuts'' – campaign in India during the year.

During the FY14, Apollo was abuzz with activities with the launch of new products and introduction of size extensions for the passenger tyre segment in Europe. In June 2013, the Vredestein Wintrac Xtereme S was launched during a dealer event at Giugiaro Design in Turin, Italy. Before the onset of the winters for 2013-14, the Apollo Alnac Winter was introduced in the market. Multiple products were launched and size extensions were introduced at the Auto Salon Geneva in March 2014 including the Apollo Apterra (4x4/ SUV), Apollo Apterra HL, Vredestein Sportrac 5, Ultrac Vorti and Ultrac Vorti R.

New sizes in Vredestein agricultural and Apollo industrial tyres became available, including a pre-launch of Vredestein Faktor S at the Agritechnica in Germany (the new cross ply tractor rear tyre). At the Eurobike –Friedrichshafen in Germany, a complete new line of racing bike tyres, the Vredestein Fortezza Senso, was successfully introduced.

EXPORTS

Apollo Tyres exports to over 100 countries across the globe. The products, including heavy and light commercial tyres, passenger car tyres, etc. are fi nding acceptance in many markets due to the high product quality.

In FY14, the South African operations saw a healthy exports number contributing about 31% of its total revenues. While the European operations continued to focus on domestic market, their entry into various export markets has demonstrated a favourable response.

EXPANSION PROGRAMME AND FUTURE OUTLOOK

The Company seeks a higher market share in the European region. Currently, the Company is unable to meet the demand in Europe for its tyres due to capacity constraints. Further, the Company sees a huge potential in the ASEAN region. As a way forward, the Company will continue to follow its stated policy of seeking opportunities organically and inorganically. The Company will look at capacity expansion, Greenfi elds and Brownfi elds in line with its overall growth strategy.

One of the key pillars for the Company''s success will be technology. To further strengthen this, the Company has setup a commercial vehicle R&D facility in Chennai, India, as well as a passenger vehicle R&D centre in the Netherlands.

Your Board approved a Greenfi eld Project in Eastern Europe, at a project cost of approximately Euro 500 million over the next 4 years, to be funded with accruals and debt at the European subsidiary level. The planned capacity is expected to be 16,000 Passenger Car Tyres (PCR) per day and 3,000 Truck Bus Radial Tyres (TBR) per day.

ACQUISITION/RESTRUCTURING

As the Company had set its target of joining the elite league of top 10 tyre companies globally, it was looking at achieving its goal with a mix of organic and inorganic growth.

As part of this strategy, in FY14, the Company had executed a defi nitive merger agreement under which a wholly- owned subsidiary of Apollo was to acquire Cooper Tire & Rubber Company(Cooper) in an all-cash transaction valued at approximately Rs. 14,500 crores (USD 2.5bn). The strategic combination would have brought together two companies with highly complementary brands, geographic presence and technological expertise to create a global leader in tyre manufacturing and distribution.

However, the deal could not go through due to the differences inter-alia between Cooper Tire and its joint venture company Cooper Chengshan (Shandong) Tire Co. Ltd. in China. The Company continues to focus on its two global brands Apollo and Vredestein. In line with this strategy, the Company closed the transaction with Sumitomo Rubber Industries (SRI), wherein SRI took over Apollo Tyres South Africa (Pty) Ltd including the Ladysmith passenger car tyre plant, the Dunlop brand rights that Apollo had in 32 countries of Africa and sales and distribution network in South Africa. Company retains the Durban plant which manufactures Truck & Bus Radial (TBR) tyres and Off Highway tyres (OHT) used in the mining and construction industries.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required by clause 49 of the listing agreement with the Stock Exchanges, a detailed Management Discussion and Analysis Report is presented in a separate section forming part of the annual report.

SUBSIDIARY COMPANIES

As the Company follows its global ambition to become a global tyre brand of choice, it had to create multiple subsidiaries for facilitating these operations in various countries. As on March 31, 2014 your Company had 38 subsidiaries including step subsidiaries.

During the year under review, Apollo Tyres BV, had incorporated Apollo Acquisition Corp. as its wholly owned subsidiary on June 7, 2013 in USA to acquire Cooper by means of merger of such subsidiary into Cooper.

Apollo (South Africa) Holdings (Pty) Ltd had incorporated subsidiary with the name of Apollo Durban (Pty) Ltd w.e.f. July 29, 2013 for the purpose of transfer of Durban Plant, Durban sales, branch, Head Offi ce (including employees of Durban plant and some specifi c employees from Head offi ce) and brands other than "Dunlop" to it, from Apollo Tyres South Africa (Pty) Ltd(ATSA) on restructuring of South Africa operations with Sumitomo Rubber Industries Ltd.

As the restructuring transaction with SRI concluded on December 2, 2013, SRI took over ATSA including the Ladysmith Plant along with DUNLOP brand rights in 32 countries in Africa and sales and distribution network in Africa including transfer of employees (except few specifi ed). ATSA ceased to be a subsidiary of the Company w.e.f. December 1, 2013.

Apollo Tyres (Lao) Co. Ltd wholly owned subsidiary of Apollo Tyres Holdings (Singapore) Pte Ltd is under winding up.

As per the provisions of section 212 of the Companies Act, 1956 your Company is required to attach the Directors'' Report, Balance Sheet, Profi t & Loss Account and other information of subsidiary companies to its Balance Sheet. However, the Ministry of Corporate Affairs, Government of India has, vide its General Circular No. 2 and 3 dated February 8, 2011 and February 21, 2011 respectively, granted a general exemption from compliance with section 212(8) of the Companies Act, 1956 from attaching the Annual Accounts of subsidiaries in the annual published accounts of the Company subject to fulfillment of conditions stipulated in the said circulars. Your Company meets all the conditions stated in the aforesaid circulars and, therefore, the standalone fi nancial statements of each subsidiary are not annexed with the annual report for the FY 14.

The consolidated financial statements of the Company and its subsidiaries are attached in the annual report. A statement containing brief financial details of all the subsidiaries of the Company for the year ended March 31, 2014 forms part of the annual report. As required, pursuant to the provisions of section 212 of the Companies Act, 1956, a statement of the holding company''s interest in subsidiary companies forms part of the annual report. The annual accounts of subsidiary companies will be made available to shareholders on request and will also be kept for inspection by any shareholder at the registered offi ce and corporate headquarters of your Company, and its subsidiaries.

In view of the ongoing economic uncertainty in Zimbabwe and the restriction on financial repatriation, the accounts of Zimbabwe based entities have not been consolidated under Accounting Standard (AS-21) ''Consolidated Financial Statements''. Please refer to Note A2.2 of the consolidated accounts.

DEBENTURES

11.5% 1250 Non Convertible Debentures of Rs. 1 million each were required to be redeemed in 3 equal annual installments of Rs. 416.67 million starting February 2, 2014.

During FY14, NCD''s amounting to Rs. 416.67 Million were redeemed on February 2, 2014.

FIXED DEPOSITS

During the year under review, your Company did not accept fi xed deposits from the public/ shareholders.

AUDITORS

M/s. Deloitte Haskins & Sells, Chennai, Chartered Accountants, Statutory Auditors of your Company, will retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment as Statutory Auditors for FY15.

Under section 139 of the Companies Act, 2013, Statutory Auditors of every listed Company who have completed a term of 10 years or more will not be eligible for re-appointment as Statutory Auditors. However, the existing companies have been allowed to comply with the new requirements of this Section within 3 years from the date of commencement of the Companies Act, 2013.

The existing Statutory Auditors of the Company have already completed a term of more than 10 years.

The Company has received a letter from the auditors confi rming that they are eligible for appointment as auditors of the Company under section 139 of Companies Act, 2013 and meet the criteria for appointment specifi ed in section 141 of the Companies Act, 2013.

Based on the recommendations of the Audit Committee, the Board of Directors of the Company proposes the re- appointment of M/s. Deloitte Haskins & Sells, Chennai, chartered accountants, as the Statutory Auditors of the Company for a period of 3 years from FY15 to FY17.

AUDITORS'' REPORT

The comments on statement of accounts referred to in the report of the auditors are self explanatory.

COST AUDIT

M/s. N P Gopalakrishnan & Co., cost accountants, were appointed with the approval of the Central Government to carry out the cost audit in respect of the Company''s facilities at Perambra, Vadodara and Chennai as well as Company''s leased operated plant at Kalamassery for the FY14. They will submit their report to the Board of Directors, before forwarding it to the Ministry of Corporate Affairs, Government of India.

Based on the recommendation of the Audit Committee, M/s. N P Gopalakrishnan & Co., cost accountants, being eligible, have also been appointed by the Board as the Cost Auditors for FY15 subject to shareholder''s approval. The Company has received a letter from them to the effect that their re-appointment would be within the limits prescribed under section 141(3)(g)of the Companies Act, 2013 and that they are not disqualifi ed for such re-appointment within the meaning of section 141 of the Companies Act, 2013.

BOARD OF DIRECTORS

The Government of Kerala withdrew the nomination of Dr V P Joy w.e.f. November 11, 2013. They also nominated Mr P H Kurian in place of Mr K S Srinivas on the Board of the Company w.e.f. December 11, 2013. The Board placed on record its appreciation for the contribution made by Dr V P Joy and Mr K S Srinivas during their tenure of directorship.

Mr M R B Punja and Mr Shardul S Shroff resigned from the directorship of the Company w.e.f. March 28, 2014 and May 15, 2014 respectively. The Board placed on record its appreciation for the contribution made by them during their tenure of directorship.

Mr Akshay Chudasama and Ms Pallavi Shroff were appointed as additional directors of the Company w.e.f. November 11, 2013 and May 15, 2014 respectively to hold the offi ce till the date of the ensuing annual general meeting. The Company has received requisite notice together with deposit of Rupees One Lakh each, as provided under section 160 of the Companies Act, 2013, from the shareholders proposing the appointment of Mr Akshay Chudasama and Ms Pallavi Shroff as Independent directors not liable to retire by rotation.

Pursuant to the provisions of section 152 of the Companies Act, 2013 and in accordance with provisions of Articles of Association of the Company, Mr P H Kurian, Director of the Company, is liable to retire by rotation and being eligible, offer himself for re-appointment.

None of the Directors are disqualifi ed under section 164(2) of the Companies Act, 2013.

AWARDS AND RECOGNITIONS

In its constant quest for growth and achievement, your Company was honoured and recognised at various forums. The prominent Awards are listed below for your reference.

CORPORATE SOCIAL RESPONSIBILITY(CSR)

Corporate responsibility of the organisation stems from its value system and vision statement. The organisation believes that positive growth should be achieved with environmental and social sustainability. Though the journey on sustainability is recent, it is already a key pillar in its next fi ve year growth journey.

The CSR strategy focuses on combining corporate goals with development goal. The strategy is to enable inclusive growth by building on key partnerships and linkages to optimize the existing resources in reaching out to more people. The organization is conscious of the sustainable triple bottom line coherence (people, planet and profi t) and thus has developed a CSR framework identifying and prioritizing its key stakeholders. This framework clearly revolves around the principle of three ''I''s i.e. Involve, Infl uence and Impact its stakeholders. To achieve this, all activities are routed through Apollo Tyres Foundation, which was registered in April 2008.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars required under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, are given in Annexure A, forming part of this report.

CORPORATE GOVERNANCE REPORT

Your Company always places major thrust on managing its affairs with diligence, transparency, responsibility and accountability thereby upholding the important dictum that an organisation''s corporate governance philosophy is directly linked to high performance.

The Company is committed to adopting and adhering to established world-class corporate governance practices. The Company understands and respects its fi duciary role and responsibility towards its stakeholders and society at large, and strives to serve their interests, resulting in creation of value and wealth for all stakeholders.

The compliance report on corporate governance and a certificate from M/s. Deloitte Haskins & Sells, Chennai, chartered accountants, Statutory Auditors of the Company, regarding compliance of the conditions of corporate governance, as stipulated under clause 49 of the listing agreement with the stock exchanges, is attached herewith as Annexure B to this report.

PARTICULARS OF EMPLOYEES

Particulars of employees as required in terms of the provisions of section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, are set out in Annexure C to the Directors'' Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required by section 217 (2AA) of the Companies Act, 1956, your Directors state that:

i) In preparation of the annual accounts for the year ended March 31, 2014, the applicable accounting standards have been followed and there has been no material departure;

ii) The selected accounting policies were applied consistently and the Directors made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as of March 31, 2014, and of the profi t of the Company for the year ended as on date;

iii) Proper and suffi cient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) The annual accounts have been prepared on a ''going concern'' basis.

ACKNOWLEDGEMENT

Your Company''s organisational culture upholds professionalism, integrity and continuous improvement across all functions, as well as effi cient utilisation of the Company''s resources for sustainable and profi table growth.

Your Directors wish to place on record their appreciation to the respective State Governments of Kerala, Gujarat, Haryana and Tamil Nadu, and the National Governments of India, South Africa and the Netherlands. We also thank our customers, business partners, members, bankers and other stakeholders for their continued support during the year. We place on record our appreciation for the contribution made by all employees towards the growth of your Company.

For and on behalf of the Board of Directors

Place: Gurgaon (Onkar S Kanwar)

Date : May 15, 2014 Chairman & Managing Director


Mar 31, 2013

Dear Member,

The behalf of the Board of Directors of your Company, we share with you the Annual Report along with the audited financial statements of your Company for the financial year ended March 31, 2013.

FINANCIAL PERFORMANCE Rs Million

Year ended Year ended Particulars 31.03.2013 31.03.2012 31.03.2013 31.03.2012

Standalone Consolidated

Net Sales 85,075 81,579 1,27,946 1,21,533

Other Income 574 182 944 326

Operating Profit (EBIDTA) 9,555 6,845 15,511 11,987

Less: Depreciation/ Amortisation Exp. 2,200 1,857 3,966 3,256

Finance Cost 2,610 2,413 3,128 2,873

Provision for Tax 1,620 762 2,448 1,443

Net Profit before Exceptional Items 3,125 1,813 5,969 4,415

Add: Exceptional Items - - 169 (294)

Less: Share of loss of associates/ minority interest - - 12 22

Net Profit 3,125 1,813 6,126 4,099

OPERATIONS

Apollo Tyres Ltd witnessed revenue growth to the tune of 5.28% during FY13, despite pressures on the bottom line due to an industry-wide slowdown.

On a standalone basis, your Company achieved a net turnover of Rs 85,075 million as against Rs 81,579 million during the previous financial year. EBIDTA was at Rs 9,555 million as compared to Rs 6,845 million during the previous financial year. The net profit for the year under review was Rs 3,125 million, as against Rs 1,813 million in the previous fiscal, a growth of almost 72.4%.

The consolidated net turnover of your Company increased to Rs 127,946 million during FY13, as compared to Rs 1,21,533 million in FY12. The consolidated EBITDA was Rs 15,511 million for FY13 as compared to Rs 11,987 million for the previous financial year. On consolidated basis, Apollo Tyres earned net profit of Rs 6126 million for FY13 as against Rs 4,099 million for the previous financial year, a growth of 49.4%.

The amount available for appropriations, including surplus from previous year amounted to Rs 9,836 million. Surplus of Rs 7,887 million has been carried forward to the balance sheet after providing for dividend of Rs 252 million, dividend distribution tax of Rs 43 million, debenture redemption reserve of Rs 654 million and general reserve of Rs 1,000 million.

In the year under consideration, Apollo Tyres entered new markets, launched high performing products for both the passenger and commercial vehicle categories and redesigned its R&D structure, with a focus on profitability, internal efficiencies and customer delight.

PRODUCTION

During the year under review, your Company''s production has shown a consolidated growth of 2.85%, in production tonnage, by generating an output of 525,062 metric tonnes (MT) as against 510,537 metric tonnes in the previous year.

RAW MATERIALS

The raw material cost for the year under review was down by approximately 5% compared to the previous fiscal. The weakness in the global economy including China and India had a sobering impact on commodity prices in the second half of the year. The Brent Crude price was marginally lower in FY13 averaging USD 110/barrel as against USD 114/barrel in FY12. The rupee weakened against the US dollar by 12% during the year, which partially offset the impact of fall in raw material prices.

The global natural rubber prices softened during the year on low consumption demand from the developed and emerging economies. The major natural rubber producing countries - Thailand, Malaysia and Indonesia - worked on reduced export quotas and building their stocks through buying from farmers to support the prices. Natural rubber from India was supplemented by imports from Thailand, Malaysia and Indonesia to bridge the demand-supply gap and meet the quality requirements for truck and bus radial tyres.

The crude based raw materials showed a mixed trend. Synthetic rubber prices ruled lower during the year, carbon black prices rose during the year on account of an increase in feedstock cost and weakening of the rupee against the dollar. Safeguard duty was levied on imports of carbon black from China in August 2012. The antidumping duty continues on imports of carbon black from Russia, China and Thailand. Nylon tyre cord fabric also continues to attract antidumping duty on imports from China and Belarus.

The Commerce Ministry has recommended increase in natural rubber customs duty to 20% or Rs 34/kg whichever is lower from the current level of 20% or Rs 20/kg whichever is lower.

The Company continued its focus on efficient current asset management, vendor quality management and new vendor development.

DIVIDEND

Your Company has a consistent track record of dividend payment. The Directors are pleased to recommend a dividend of Re 0.50 (50%) per share on Equity Share Capital of the Company for FY13 for your approval. There will be no tax deduction at source on dividend payments, but your Company will have to bear tax on dividend @ 16.995 %, inclusive of surcharge.

The dividend, if approved, shall be payable to the shareholders registered in the books of the Company and to the beneficial owners as per details furnished by the depositories, determined with reference to the book closure from July 22, 2013 to August 7, 2013 (both days inclusive).

WARRANTS

During the year, your Company has allotted 5 (Five) million warrants to Sacred Heart Investment Co. Pvt. Ltd., an entity belonging to Promoter Group in accordance with the provisions of Chaper VII of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. Each warrant is convertible into one equity share of Re 1 each at a premium of Rs 85.20 per share, at the option of the warrant holder. The last date of this conversion option is June 20, 2014.

MARKETING

The Company, as always, brought forth a slew of sales and marketing initiatives, in FY13, aimed at creating customer delight. To begin with, the Company launched concept retail outlet in Dubai, UAE, with the first ever Apollo Super Zone outside India; an important step in the regional growth strategy.

On the new product development front, the Company introduced products across different categories. In December 2012, Apollo launched XTRAX 40.00-57, the largest tyre produced in India, at the 11th International Mining and Machinery Exhibition (IMME) 2012 in Kolkata, India. To boost consumer sentiment in the truck-bus cross ply segment, the Company introduced a new Steer Axle tyre ''XMR'', designed for superior mileage and structural durability. On March 18, 2013, Mahindra and Mahindra launched their 1st electric car e2o, with Apollo Amazer 3G as the standard fitment tyre.

In April 2012, Apollo Vredestein presented its Ultimate High Performance tyre to visitors at Top Marques Monaco, fitted on the Concept One electric supercar developed by RimacAutomobili. In August 2012, the Company introduced its best winter soft tyre - the Nord-Trac 2 specifically designed for extreme Nordic winter weather, and safe and reliable throughout the winter season - in Stockholm. In March 2013, the Company launched two new high performing passenger vehicle tyres at the Geneva Motor Show - the Apollo Alnac 4G and Vredestein Ultrac Vorti R. Brand Apollo products continued to perform well in the tough European market.

Introduction of brand Vredestein tyres afforded Apollo Tyres South Africa an opportunity to bring a premium Ultra High Performance (UHP) tyre into the African market. The Company intensified its efforts to increase presence in the African and Latin American markets by appointing new distributors.

EXPORTS

The India operations exported to over 100 countries primarily under heavy and light commercial vehicle and passenger vehicle tyre categories; with the latter contributing significantly to the export revenue. In FY13, your Company''s European operations largely focused on demand fulfillment in domestic replacement market and there wasn''t much remaining for exports. South African operations saw export contribute a healthy 33% to the revenue pie, almost the same as last fiscal.

EXPANSION PROGRAMME AND FUTURE OUTLOOK

In FY13, India operations'' Kalamassery facility ramped up to its expanded capacity. Apollo Tyres'' most recent greenfield facility in Chennai, India is complete and is poised to produce 6000 truck bus radial and 16000 passenger vehicle radial tyres per day.

At your Company''s European operations, an expansion project is being rolled out to expand the Enschede unit''s manufacturing capacity from 6 million to 7.5 million passenger vehicle tyres per year.

In terms of new markets, ASEAN is the key area of focus, while in product categories, the emphasis is on building a wholesome off highway tyre range.

In the future, R&D is set to emerge as one of the key areas of improvement with state-of-the-art centres being established in Enschede, the Netherlands and Chennai, India, for passenger vehicle and commercial vehicle tyres respectively.

ACQUISITION/RESTRUCTURING

Your Company has been regularly looking at opportunities to improve its position in the Tyre Industry with innovative strategies through alliances, mergers and acquisitions globally. In line with its overall growth plan of strengthening its position in both the Passenger Car Tyres ("PCR") and Truck Bus Radial Tyres ("TBR"), the Directors have approved the execution of definitive merger agreement under which a wholly-owned step subsidiary of the Company i.e. Apollo Acquisition Corp. in USA will acquire Cooper Tire & Rubber Company ("Cooper") by means of a merger of such subsidiary into Cooper in an all-cash transaction valued at approximately USD 2.5 billion. Out of the total financing, USD 2.1 Billion representing 85% of the debt shall be raised at Apollo Acquisition Corp. and shall primarily be serviced by operations of Cooper. The balance USD 450 million shall be raised at Mauritius level to be serviced by Indian operations of your Company.

This strategic combination will bring together two companies with highly complementary brands, geographic presence, and technological expertise to create a global leader in tyre manufacturing and distribution.

Cooper is the 11th largest tyre company in the world by revenue and presently supplies premium and mid-tier tyres worldwide through renowned brands such as Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon.

The combined company will be the seventh-largest tyre company in the world and will have a strong presence in high-growth end-markets across four continents. With a combined total sales of USD 6.6 billion in 2012, the combined company will have a comprehensive portfolio of signature brands and greater ability to cross-sell products in diverse countries with negligible overlap.

Your company has also initiated the process of reorganizing its African business, which is expected to contribute towards improving its operating margins at the consolidated level. Your company has entered into an agreement with Sumitomo Rubber Industries (SRI), by which Sumitomo will take over the operations of Apollo Tyre South Africa (Pty) Ltd. (ATSA) including the Ladysmith plant (manufacturing passenger car tyres) and Dunlop brand in 32 countries in Africa, employees of the head office and sales & distribution set-up. Apollo retains its Durban plant and continues to manufacture - Apollo and Vredestein brands.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required by clause 49 of the listing agreement with the stock exchanges, a detailed Management Discussion and Analysis Report is presented in a separate section forming part of the annual report.

SUBSIDIARY COMPANIES

Driven by prudent operational stratagem and aimed at facilitating operations, your Company has put in place a network of subsidiaries. As on March 31, 2013, your Company had 37 subsidiaries including step subsidiaries.

During the year under review, a new step subsidiary with the name of Apollo Tyres Global R & D B V has been incorporated w.e.f. January 2, 2013 by Apollo Vredestein B V in order to centralise the passenger vehicle R & D activities of the entire Apollo Group. During the year, Apollo Vredestein B V has transferred its entire shareholding in the aforesaid R&D Company to Apollo Tyres Co-operatief UA.

Apollo Tyres Co-operatief UA, has incorporated Apollo Tyres (Thailand) Ltd. as its wholly owned subsidiary in Thailand w.e.f. January 22, 2013 to further strengthen Company''s presence in the ASEAN market for expanding global business operations.

During the year, Apollo Tyres Co-operatief U A has transferred its entire shareholding in its wholly owned subsidiary Company, i.e., Apollo Vredestein B V to Apollo Tyres B V for alignment with future growth plans.

As per the provisions of Section 212 of the Companies Act 1956 (Act), your Company is required to attach the Directors'' Report, Balance Sheet, Profit & Loss Account and other information of subsidiary companies to its Balance Sheet. However, the Ministry of Corporate Affairs, Government of India has, vide its General Circular No. 2 and 3 dated February 8, 2011 and February 21, 2011 respectively, granted a general exemption from compliance with section 212(8) of the Act, from attaching the Annual Accounts of subsidiaries in the annual published accounts of the Company subject to fulfilment of conditions stipulated in the said circulars. Your Company meets all the conditions stated in the aforesaid circulars and, therefore, the standalone financial statements of each subsidiary are not annexed with the annual report for the FY13.

The consolidated financial statements of the Company and its subsidiaries are attached in the Annual Report. A statement containing brief financial details of all the subsidiaries of the Company for the year ended March 31, 2013 forms part of the annual report. As required, pursuant to the provisions of section 212 of the Act, a statement of the holding company''s interest in subsidiary companies forms part of the Annual Report. The annual accounts of subsidiary companies will be made available to shareholders on request and will also be kept for inspection by any shareholder at the registered office and corporate headquarters of your Company, and its subsidiaries.

In view of the ongoing economic uncertainty in Zimbabwe and the restriction on financial repatriation, the accounts of Zimbabwe based entities have not been consolidated under Accounting Standard (AS-21) ''Consolidated Financial Statements''. Please refer to note A2.2(x) of the consolidated accounts.

FIXED DEPOSITS

During the year under review, your Company did not accept fixed deposits from the public/ shareholders.

AUDITORS

M/s. Deloitte Haskins & Sells, Chennai, Chartered Accountants, Statutory Auditors of your Company, will retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment as Statutory Auditors for FY14. The Company has received a letter from them to the effect that their re-appointment, if made, would be within the limits prescribed under section 224(1B) of the Companies Act, 1956 and that they are not disqualified for such re-appointment within the meaning of section 226 of the Act.

Based on the recommendations of the Audit Committee, the Board of Directors of the Company proposes the re- appointment of M/s. Deloitte Haskins & Sells, Chennai, chartered accountants, as the Statutory Auditors of the Company.

AUDITORS'' REPORT

The comments on statement of accounts referred to in the report of the auditors are self explanatory.

COST AUDIT

M/s. N P Gopalakrishnan & Co., cost accountants, were appointed with the approval of the Central Government to carry out the cost audit in respect of the Company''s facilities at Perambra, Vadodara and Chennai as well as Company''s leased-in operations at PTL Enterprises Ltd''s unit at Kalamassery for the FY13. They will submit their report to the Board of Directors, before forwarding it to the Ministry of Corporate Affairs, Government of India.

Based on the recommendation of the Audit Committee, M/s. N P Gopalakrishnan & Co., cost accountants, being eligible, have also been appointed by the Board as the Cost Auditors for FY14. The Company has received a letter from them to the effect that their re-appointment would be within the limits prescribed under section 224(1B) of the Companies Act, 1956 and that they are not disqualified for such re-appointment within the meaning of section 226 of the Act.

BOARD OF DIRECTORS

The Government of Kerala nominated Mr K S Srinivas in place of Mr Alkesh Kumar Sharma on the Board of the Company w.e.f. February 6, 2013. The Board places on record its appreciation for the contribution made by Mr Alkesh Kumar Sharma during his tenure of directorship.

Mr Vikram S Mehta has been appointed as an additional director of the Company w.e.f. February 6, 2013. He holds office till the date of the ensuing annual general meeting. The Company has received requisite notice together with deposit, as provided under section 257 of the Companies Act, 1956, from a shareholder proposing the appointment of Mr Mehta as a director liable to retire by rotation.

Pursuant to the provisions of section 255 and 256 of the Companies Act, 1956 and in accordance with the provisions of Articles of Association of the Company, Mr Nimesh N Kampani, Dr S Narayan and Mr A K Purwar, Directors of the Company, are liable to retire by rotation and being eligible, offer themselves for re-appointment.

None of the Directors are disqualified under Section 274(1)(g) of the Companies Act, 1956.

AWARDS AND RECOGNITIONS

In its constant quest for growth and achievement, your Company was honoured and recognised at various forums. The prominent Awards are listed below for your reference.

Name of the Award Category Awarded By

Sustainability Award Farm Division Mahindra & Mahindra

General Motors Supplier Quality Excellence Top Performing Suppliers General Motors Award 2012 Economic Times India Manu- Process Sector, Mega Large Gold Award facturing Excellence Awards Business 2012

Tire Technology International Tire Manufacturer of the Year Awards for Innovation and Tire Technology International Excellence 2013

R K Swamy BBDO in collabora- AIMA R K Swamy High Performance Brand High Performance Brand tion with the All India Manage- Award 2012 ment Association Council

FICCI Quality System Excel- Platinum Prize Large Category lence Awards 2012

CORPORATE SOCIAL RESPONSIBILITY

Apollo Tyres continued its efforts in areas of HIV-AIDS awareness and prevention, community empowerment and development, and environment awareness and conservation. In recognition of these efforts, Apollo Tyres was conferred with Asia Responsible Entrepreneurship Awards (AREA) 2012 South Asia, in the Health Promotion category for its HIV- AIDS initiative.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars required under section 217(1)(e) of the Act, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, are given in Annexure A, forming part of this report.

CORPORATE GOVERNANCE REPORT

Your Company always places major thrust on managing its affairs with diligence, transparency, responsibility and accountability thereby upholding the important dictum that an organisation''s corporate governance philosophy is directly linked to high performance.

The Company is committed to adopting and adhering to established world-class corporate governance practices. The Company understands and respects its fiduciary role and responsibility towards its stakeholders and society at large, and strives to serve their interests, resulting in creation of value and wealth for all stakeholders.

The compliance report on corporate governance and a certificate from M/s. Deloitte Haskins & Sells, Chennai, chartered accountants, Statutory Auditors of the Company, regarding compliance of the conditions of corporate governance, as stipulated under clause 49 of the listing agreement with the stock exchanges, is attached herewith as Annexure B to this report.

PARTICULARS OF EMPLOYEES

Particulars of employees as required in terms of the provisions of section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, are set out in Annexure C to this report.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required by section 217 (2AA) of the Companies Act, 1956, your directors state that:

i) In preparation of the annual accounts for the year ended March 31, 2013, the applicable accounting standards have been followed and there has been no material departure;

ii) The selected accounting policies were applied consistently and the Directors made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as of March 31, 2013, and of the profit of the Company for the year ended as on date;

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) The annual accounts have been prepared on a ''going concern'' basis.

ACKNOWLEDGEMENT

Your Company''s organisational culture upholds professionalism, integrity and continuous improvement across all functions, as well as efficient utilisation of the Company''s resources for sustainable and profitable growth.

Your Directors wish to place on record their appreciation to the respective State Governments of Kerala, Gujarat, Haryana and Tamil Nadu, and the National Governments of India, South Africa and the Netherlands. We also thank our customers, business partners, members, bankers and other stakeholders for their continued support during the year. We place on record our appreciation for the contribution made by all employees towards the growth of your Company.

For and on behalf of the Board of Directors

Place: Gurgaon (Onkar S Kanwar)

Date : June 12, 2013 Chairman & Managing Director


Mar 31, 2012

The behalf of the Board of Directors of your Company, I am delighted to present the annual report along with the audited financial statements of your Company for the financial year ended March 31,2012.

FINANCIALPERFORMANCE

Rs Million Year ended Year ended 31.03.2012 31.03.201 31.03.2012 31.03.2011 Standalone Consolidated

Net Sales 81,579 54,905 1,21,533 88,677

Other Income 182 485 326 509

Operating Profit (EBIDTA) 6,845 5,699 11,987 10,160

Less: Depreciation/ Amortisation Exp. 1,857 1,473 3,256 2,719

Finance Cost 2,413 1,590 2,873 1,970

Provision for Tax 762 653 1,443 1,063

Net Profit before Exceptional Items 1,813 1,983 4,415 4,408

Less: Exceptional Items - - 294 -

Less: Share of loss of associates/ - - 22 6

minority interest

Net Profit 1,813 1,983 4,099 4,402

OPERATIONS

Apollo Tyres Ltd registered revenue growth of 37% during FY12.

On a standalone basis, your Company saw a net turnover of Rs 81,579 million as against Rs 54,905 million during the previous financial year. EBIDTA was at Rs 6,845 million as compared to Rs 5,699 million during the previous financial year. The net profit for the year under review was Rs 1,813 million, as against Rs 1,983 million in the previous fiscal. The raw material cost push continued to pose a challenge.

The consolidated net turnover of your Company increased to Rs 1,21,533 million during FY12, as compared to Rs 88,677 million in FY11. The consolidated EBITDA was Rs 11,987 million for FY12 as compared to Rs 10,160 million for the previous financial year. On consolidated basis, Apollo Tyres earned net profit of Rs 4,099 million for FY12 as against Rs 4,402 million for the previous financial year.

The amount available for appropriations, including surplus from previous year amounted to Rs 8,282 million. Surplus of Rs 6,710 million has been carried forward to the balance sheet after providing for dividend of Rs 252 million, dividend tax of Rs 41 million, debenture redemption reserve of Rs 279 million and general reserve of Rs 1,000 million.

Your Company entered new markets and consolidated its operations in existing ones, with focus on profitability and internal efficiencies.

PRODUCTION

During the year under review, your Company's production has shown a consolidated growth of 16%, in production tonnage, by generating an output of 510,537 metric tonnes (MT) as against 438,524 metric tonnes in the previous year.

RAWMATERIALS

Raw material prices continued their upward march in the first half of the year on back of rising commodity prices. The Euro Zone economic issues and relatively lower GDP growth rates in China and India had a moderating effect on demand for major commodities. This in turn acted as a check on soaring prices of major commodities in the second half of the year with prices stabilizing at high levels. However, the impact of stabilization in major commodities prices in the second half of the year in India was partially offset by the weakening of the rupee against the US Dollar.

The natural rubber consumption in India has overtaken production leading to a deficit in the country. The price intervention scheme announced by the Government of Thailand led to firming up of international prices in latter part of the year.

Crude oil prices breached the US$ 100 per barrel level, despite decelerating rate of growth in the wake of a global slump. There was an increase of 18% in the prices of crude over previous year. Derivatives of crude, which are used as raw materials, surpassed the crude trend line and registered a disproportionate increase leading to a steep increase in the prices of synthetic rubber and carbon black.

In India, the antidumping duty continued on import of nylon tyre cord fabric, carbon black and rubber chemicals. Further a safeguard duty recommendation was also made on carbon black imports from China.

For FY12, Apollo Tyres continued its focus on vendor relationship management, procurement from low cost sources, raw material substitution and efficient current asset management.

DIVIDEND

Your Company has a consistent track record of dividend payment. The Directors are pleased to recommend a dividend of Re 0.50 (50%) per share on Equity Share Capital of the Company for FY12 for your approval. There will be no tax deduction at source on dividend payments, but your Company will have to bear tax on dividend @ 16.22%, inclusive of surcharge.

The dividend, if approved, shall be payable to the Shareholders registered in the books of the Company and to the beneficial owners as per details furnished by the depositories, determined with reference to the book closure from August 1, 2012 to August9,2012 (both days inclusive).

MARKETING

FY12 was a year of new markets for your Company's operations which commenced exports to Japan, Malaysia, Sri Lanka, Taiwan, Thailand, Uzbekistan and Vietnam. However, the area of focus was the Middle East, where Apollo opened its largest office outside its 3 geographical manufacturing operations.

For the passenger car tyre category, emphasis was on service and delivery. To begin with, Apollo Direct tyre helpline, which enables customers to select and buy the appropriate Apollo tyre for their vehicle by calling on a toll free number, was launched. Apollo Super Zone, large branded retail outlets with a host of facilities like wireless internet, lounges and entertainment centres, were opened in cities like Delhi, Dubai and Mumbai to ensure that consumers have a pleasant tyre buying experience. The company sponsored the ET Zigwheels Awards 2012 to recognise and facilitate the achievers in the automobile space. Safe Drive campaigns to create awareness amongst consumers regarding tyre maintenance and care continued unabated, much like previous year.

In the commercial vehicle category, while service and delivery continued to be important, the focus was on empowering customers to derive most out of their tyres. To this end, Indian operations announced the 1st Apollo Fleet of the Year Awards which recognised and upheld best practice in the transport sector; while the Apollo Radial Service Assistance programme looked at improving operational efficiencies of fleet owners. The concept of branded retail outlets was introduced for the said category as well, with 2 such outlets being opened in transhipment hubs in Delhi and Tamil Nadu. Trust built on Millions of Miles, the all-India customer connect programme, was launched to understand consumer opinions regarding Apollo tyres and, identify and address their concerns.

In your company's Europe operations, in FY12, the focus area was new product development and it was led by ultra high performance and high performance passenger car tyres for both Apollo and Vredestein brand. Europe operations successfully organised two major product launches. Apollo Aspire 4G was the first and was unveiled at Geneva Motor Show. This was closely followed by Vredestein Ultrac Vorti & Sportrac 5, a new range of ultra high performance & high performance tyres, being showcased in Budapest.

EXPORTS

India operation's exports grew the most in the light truck cross ply category by almost 29%. The other major export categories were truck-bus cross ply and passenger car radials, with a growth of 17% and 19% respectively. Once again, passenger car tyres emerged as the highest revenue earners in the export basket. A highlight of the past year was the introduction of truck bus radial tyres in South East Asian and Middle Eastern markets.

Like the previous year, in FY12, your company's European operations largely focused on demand fulfillment in domestic replacement market and there wasn't much remaining for exports. South African operations saw export contribute a healthy 32% to the revenue pie, an increase of almost 8% over last year.

EXPANSION PROGRAMMEAND FUTURE OUTLOOK

In FY12, your company, at its India operations, successfully completed a 20 MT/day expansion for production of off- highway tyres at its Kalamassery unit in Kerala with an investment of Rs 400 million.

Apollo Tyres' most recent greenfield facility in Chennai, India is quickly reaching its planned capacity. Currently, Chennai unit manufactures 8,100 passenger car tyres per day and 4,200 truck-bus radial tyres per day; production levels are expected to achieve 16,000 passenger car and 6000 truck-bus radial tyres per day by Q3 FY13.

At Europe operations, a state-of-the-art mixer was installed at the Company's facility in Enschede, the Netherlands. This will make the Company self-sufficient in compound mixing capacity.

To improve product quality, Apollo Tyres South Africa decided to invest in a world class Steel Cord Calendaring facility at its manufacturing unit in Ladysmith; it's expected to go on line by end of Q2 FY13.

Considering the current economic and business environment, prevailing sentiments in the industry and consumer expectations, the company is working on various proposals to augment production capacities to meet the challenges of a rising market demand.

MANAGEMENT DISCUSSION ANDANALYSIS REPORT

As required by clause 49 of the listing agreement with the stock exchanges, a detailed Management Discussion and Analysis Report is presented in a separate section forming part of the annual report.

SUBSIDIARY COMPANIES

Driven by prudent operational stratagem and aimed at facilitating operations, your Company has put in place a network of subsidiaries. As on March 31,2012, your Company had 37 subsidiaries including step subsidiaries.

During the year under review, a new step subsidiary with the name of Apollo Tyres (Brasil) Ltda. has been incorporated w.e.f. September 15,2011. Apollo Tyres Co-operatief U.A. and Apollo (South Africa) Holdings (Pty) Ltd. collectively hold the entire paid-up share capital of the said subsidiary.

Apollo Tyres Co-operatief U.A., has also incorporated Apollo Tyres B.V. as its wholly owned subsidiary in The Netherlands w.e.f. March 2,2012 for expanding global business operations. Apollo Tyres B.V. has set up Apollo Tyres (UK) Pvt. Ltd. w.e.f. March 16,2012 as a wholly owned subsidiary in United Kingdom (UK).

During the year, Pollock & Aitken (Pty) Ltd. ceased to be the subsidiary of the Company w.e.f April 17,2011 due to voluntary liquidation. Apollo Tyres (Nigeria) Ltd. made an application to Corporate Affairs Commission for voluntary winding up of the company. The Commission has approved and registered the final accounts for the winding up of the company. The company shall be deemed dissolved in 3 months with effect from the March 26,2012.

As per the provisions of Section 212 of the Companies Act, 1956 (Act), your Company is required to attach the Directors' Report, Balance Sheet, Profit & Loss Account and other information of subsidiary companies to its Balance Sheet. However, the Ministry of Corporate Affairs, Government of India has, vide its General Circular No. 2 and 3 dated February 8,2011 and February 21,2011 respectively, granted a general exemption from compliance with section 212(8) of the Act, from attaching the Annual Accounts of subsidiaries in the annual published accounts of the Company subject to fulfilment of conditions stipulated in the said circulars. Your Company meets all the conditions stated in the aforesaid circular and, therefore, the standalone financial statements of each subsidiary are not annexed with the annual report for the FY12.

The consolidated financial statements of the Company and its subsidiaries are attached in the annual report. A statement containing brief financial details of all the subsidiaries of the Company for the year ended March 31, 2012 forms part of the annual report. As required, pursuant to the provisions of section 212 of the Act, a statement of the holding Company's interest in subsidiary companies forms part of the annual report. The annual accounts of subsidiary companies will be made available to shareholders on request and will also be kept for inspection by any shareholder at the registered office and corporate headquarters of your Company, and its subsidiaries.

In view of the ongoing economic uncertainty in Zimbabwe and the restriction on financial repatriation, the accounts of Zimbabwe based entities have not been consolidated under Accounting Standard (AS-21) 'Consolidated Financial Statements'. Please refer to note A 2.4 (c) of the consolidated accounts.

FIXED DEPOSITS

During the year under review, your Company did not accept fixed deposits from the public/ shareholders.

Pursuant to the provisions of section 205C of the Companies Act, 1956 an amount of Rs 1.31 million lying unclaimed for a period of more than 7 years has been duly deposited by the Company in the Central Government's Investor Education and Protection Fund on August4,2011.

AUDITORS

M/s. Deloitte Haskins & Sells, Chennai, Chartered Accountants, Statutory Auditors of your Company, will retire at the conclusion of the ensuing annual general meeting and being eligible, offer themselves for reappointment as Statutory Auditors for FY13. The Company has received a letter from them to the effect that their re-appointment, if made, would be within the limits prescribed under section 224(1B) of the Companies Act, 1956 and that they are not disqualified for such re- appointment within the meaning of section 226 of the Act.

Based on the recommendations of the Audit Committee, the Board of Directors of the Company proposes the re- appointment of M/s. Deloitte Haskins & Sells, Chennai, chartered accountants, as the Statutory Auditors of the Company.

AUDITORS' REPORT

The comments on statement of accounts referred to in the report of the auditors are self explanatory.

COSTAUDIT

M/s. N P Gopalakrishnan & Co., cost accountants, were appointed with the approval of the Central Government to carry out the cost audit in respect of the Company's facilities at Perambra, Vadodara and Chennai as well as Company's leased-in operations at PTL Enterprises Ltd's unit at Kalamassery for the FY12. They will submit their report to the Board of Directors, before forwarding it to the Ministry of Corporate Affairs, Government of India.

Based on the recommendation of the audit committee, M/s. N P Gopalakrishnan & Co., cost accountants, being eligible, have also been appointed by the Board as the Cost Auditors for FY13. The Company has received a letter from them to the effect that their re-appointment would be within the limits prescribed under section 224(1B) of the Companies Act, 1956 and that they are not disqualified for such re-appointment within the meaning of section 226 of the Act.

BOARDOFDIRECTORS

The Government of Kerala nominated Mr Alkesh Kumar Sharma and Mr V P Joy in place of Mr T Balakrishnan and Dr A K Dubey respectively on the Board of the Company w.e.f. February 9,2012. The Board places on record its appreciation for the contribution made by Mr T Balakrishnan and Dr A K Dubey during their tenure of directorship.

Pursuant to the provisions of section 255 and 256 of the Companies Act, 1956 and in accordance with provisions of Articles of Association of the Company, MrV P Joy, Mr K Jacob Thomas and MrMRB Punja, Directors of the Company, are liable to retire by rotation and being eligible, offer themselves for re-appointment.

None of the Directors are disqualified under Section 274(1)(g) of the Companies Act, 1956.

AWARDSAND RECOGNITIONS

In its constant quest for growth and achievement, your Company was honoured and recognised at various forums. The prominent Awards are listed below for your reference.

Name of the Award Category Awarded By

Top Company of the Year Award Tyre Sector Dun & Bradstreet - Rolta Corporate Awards 2010

Best Innovative HR Practices for Perambra Plant Management Annual Management Convention of Kerala Management Association Best Innovative Cost Management System Management Annual Management Convention of Perambra Plant Kerala Management Association GBC Commendation Community Investment Global Business Coalition, Health State Pollution Control Award Large Factories Kerala State Pollution Control Board 2010 for Perambra Plant

2nd Largest Importer in the Vadodara Region Annual Awards Container Corporation of India Ltd

CORPORATE SOCIAL RESPONSIBILITY

Your Company as a responsible corporate citizen strives to create value for the communities it operates in. Your Company's strategy is to integrate the social, economic and environmental agenda in the fabric of its business and operations.

Your Company undertook various initiatives in the area of community and stakeholder welfare, HIV-AIDS awareness and prevention, environment conservation, community health and empowerment, across its operations.

In India, the Company's emphasis was on the HIV-AIDS Workplace Programme, through which peer educators and master trainers reached out to employees. The Apollo Tyres Health Care Centres have treated and counselled thousands from the trucking community on issues related to sexual health and HIV-AIDS. The Company also commenced a programme focusing on skill upgradation and job placement for the youth at all its manufacturing locations in India. Apollo's umbrella environment programme- HabitAt Apollo, continues to be a primary focus area.

Apollo Vredestein BV successfully passed the re-certification for the Environmental Assurance System ISO 14001 re- affirming its commitment towards ensuring safety, health and well being of employees. Preventive medical examinations were carried out for employees, along with promotion of physical therapy.

At Apollo Tyres South Africa, in addition to the HIV-AIDS Workplace Programme, the company worked extensively towards community development resulting in company achieving Level 5 status on the Broad Based Black Economic Empowerment (BBBEE) Balanced Scorecard from the Codes of Good Practice.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars required under Section 217(1)(e) of the Act, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, are given in Annexure A, forming part of this report.

CORPORATE GOVERNANCE REPORT

Your Company always places major thrust on managing its affairs with diligence, transparency, responsibility and accountability thereby upholding the important dictum that an organisation's corporate governance philosophy is directly linked to high performance.

The Company is committed to adopting and adhering to established world-class corporate governance practices. The Company understands and respects its fiduciary role and responsibility towards its stakeholders and society at large, and strives to serve their interests, resulting in creation of value and wealth for all stakeholders.

The compliance report on corporate governance and a certificate from M/s. Deloitte Haskins & Sells, Chennai, chartered accountants, Statutory Auditors of the Company, regarding compliance of the conditions of corporate governance, as stipulated under clause 49 of the listing agreement with the stock exchanges, is attached herewith as Annexure B to this report.

PARTICULARS OF EMPLOYEES

Particulars of employees as required in terms of the provisions of section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, are set out in Annexure C to the Directors' Report.

DIRECTORS'RESPONSIBILITYSTATEMENT

As required by section 217 (2AA) of the Companies Act, 1956, your Directors state that:

i) In preparation of the annual accounts for the year ended March 31, 2012, the applicable accounting standards have been followed and there has been no material departure;

ii) The selected accounting policies were applied consistently and the Directors made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as of March 31, 2012, and of the profit of the Company for the year ended as on date;

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) The annual accounts have been prepared on a 'going concern' basis.

ACKNOWLEDGEMENT

Your Company's organisational culture upholds professionalism, integrity and continuous improvement across all functions, as well as efficient utilisation of the Company's resources for sustainable and profitable growth.

Your Directors wish to place on record their appreciation to the respective State Governments of Kerala, Gujarat, Haryana and Tamil Nadu, and the National Governments of India, South Africa and the Netherlands. We also thank our customers, business partners, members, bankers and other stakeholders for their continued support during the year. We place on record our appreciation of the contribution made by all employees towards the growth of your Company.

For and on behalf of the Board of Directors

Place: Gurgaon (Onkar S Kanwar)

Date : May 10, 2012 Chairman & Managing Director


Mar 31, 2010

The Directors have pleasure in presenting the Annual Report along with the audited statement of accounts of your Company for the financial year ended March 31, 2010.





FINANCIAL PERFORMANCE Rs/Million

Year Ended Year Ended

31.03.2010 31.03.2009 31.03.2010 31.03.2009

Standalone Consolidated*

Net Sales 50,36 40,704 81,207 49,841

Other Income & Exceptional Items 112 113 1,088 230

Operating Profit (EBIDTA) 7,950 3,360 12,836 4,392

Less: Depreciation 1,228 980 2,542 1,285

Interest 740 668 1,154 973

Provision for Tax 1,832 631 2,606 742

Net Profit 4,150 1,081 6,534 1,392





"The consolidated figures for the year ended March 31, 2009 do not include Apollo Vredestein BV, a tyre company in the Netherlands, Europe, acquired on May 15, 2009.

OPERATIONS

During the financial year ended March 31, 2010, your Company has scaled new heights and set benchmarks in terms of sales and profitability. The Net Sales of India Operations increased from Rs 40,704 millions during the previous year to Rs 50,366 millions in the year under review, registering a growth of 23.7%.

Operating Profit, before interest and depreciation, amounted to Rs 7,950 millions as against Rs 3,360 millions during the previous year. Net Profit, after providing for interest, depreciation and tax amounted to Rs 4,150 millions as against Rs 1,081 millions during the previous year, registering an increase of 284%.

The amount available for appropriations, including surplus from previous year amounted to Rs 7,395 millions. Surplus of Rs 5,892 millions has been carried forward to the Balance Sheet after providing for Dividend of Rs 378 millions, Dividend Tax of Rs 63 millions, Debenture Redemption Reserve worth Rs 62 millions and General Reserve of Rs 1,000 millions.

The consolidated figures of sales from operations in India, South Africa and Europe (post the recent acquisition of Apollo Vredestein BV based out of the Netherlands), amounted to Rs 81,207 millions and Net Profit, after providing for interest, depreciation and tax amounted to Rs 6,534 millions re cording a growth of63%insalesand369%inNe Profit respectively.

On a consolidated level, the break up of revenues across the three geographies is as follows: India 62%, Europe 24% and South Africa 14%.

Your Company has recorded commendable growth during the year under review. Consistency across operations has strengthened Apollos position as a leading global tyre manufacturing organisation headquartered in India.

PRODUCTION

During the year, your Company has achieved 19.4 % growth in production tonnage by registering production of 326,739 MT as against 273,575 MT in the previous year.

DIVIDEND

Your Directors recommend a dividend of Re 0.75 per equity share for FY2009-10 for your approval. There will be no tax deduction at source on Dividend Payments, but your Company will have to bear tax on dividend @ 16.6%, inclusive of surcharge.

The Dividend, if approved, shall be payable to the shareholders registered in the books of the Company and the beneficial owners as per details furnished by the depositories, determined with reference to the book closure from July 16, 2010 to July 29, 2010 (both days inclusive).

BUY BACK OF SHARES

The Board of Directors at the meeting held on March 19, 2009 had approved buy back of equity shares at a price not exceeding Rs 25 per share upto an amount not exceeding Rs 1220 millions, representing approximately 10% of the Companys paid up equity share capital and free reserves as per last audited accounts.

The Company could not buy back any shares because of the run-up in the market price of your Companys shares immediately afterthe commencement of buy back beyond Rs 25 persha re i.e. maximum price fixed for buyback. Therefore, the Company closed its buy-back offer on the due date for the closure i.e. March 18, 2010.

RAW MATERIALS

Natural Rubber continued its upward trend during the year as the prices moved from a level of Rs 100/kg in June, 2009 to Rs 140/kg in December, 2009. It recorded a new peak of around Rs 150/kg in March, 2010. The demand and supply gap in the India industry widened to 1,00,000 MT due to production shortfall and increased demand on the back of economic recovery. Natural Rubber imports continue to attract customs duty of 20% as against 10% duty on tyres. The production in Malaysia and Indonesia has been lower due to erratic weather conditions and the has also been impacted by the unrest in Thailand. International prices reached their all time high of US$ 3.5/kg.

Crude oil remained steady in the band of US$ 70-80/barrel but crude-based raw materials, like synthetic rubber, carbon black, and nylon tyre cord fabric, remained firm due to adverse demand-supply gap caused by plant shutdowns in high- cost countries and revival of demand from emerging economies.

The anti-dumping duty continued on nylon tyre cord fabric and rubber chemicals while during the year, anti-dumping duty was imposed on carbon black imported from Australia, China, Russia and Thailand. Your Company continued its approach of developing cost effective sources, renewed focus on global sourcing and vendor relationship management, while working capital management remained an area of focus throughout the year.

DOMESTIC MARKETING

The year under review has been a record year for the Company with the demand increasing in both the commercial vehicle and passenger vehicle tyre categories. India Operations achieved a new benchmark in sales turnover at Rs 50 billion. During the year, the company recorded a very healthy growth of 23.7% in overall sales value over the previous year. Seen category wise this translates to a number growth of 16% in heavy commercial vehicles, 26% in passenger car radials, 18% in light commercial vehicles, and maintaining sales volumes in tractor rear.

The triumvirate of our marketing strategy, namely, Product Leadership, Customer Intimacy, and Operations Excellence, were pursued even more vigorously to create better differentiators in the market and gain consumer preference and market share.

In the realm of passenger vehicle tyres, the year was witness to the launch of a new range of tubeless radials in the economy segment with the introduction of Amazer 3G and Amazer 3G Maxx. A new advertising and communication campaign was released on television with the central creative thought on Apollo tubeless radials The Road is a Friend.

Branded tyre outlets Apollo Zones are also extending their footprint across major cities in the country and being very well received by our business partners who are coming forward to participate under this programme. The Zones, which display Apollos high-performance, technology-driven tyres and alloy wheels in a friendly and interactive fashion, are aimed at capturing the customers share of mind and heart. Their unique appeal lies in the visual dispaly, an in-store experience which promises comfort, convenience and best-in-class service.

In the area of commercial vehicles tyres, your Company was able to gain market share and further consolidate its leadership position in truck-bus tyres. Our priority is to maintain the dominant leadership position in cross ply tyres, whilst leading radialisation in India. Apollo Tyres, in association with CV magazine, also announced the first set of dedicated awards for the commercial vehicle segment in India - Apollo CV Awards 2010. These awards recognise the best fleets in India and are aimed at creating engagement value with commercial customers.

India has emerged as a major OEM hub for passenger car tyres in view of a strong domestic market and also as a competitive export base with heavy order booking by Maruti Suzuki, Hyundai and Tata Motors. Our growth in the OE segment has also been consistent and we have now started supplying tyres to the Chevrolet Beat, Hyundai i20, Volkswagen Polo, Ford Figo, Tata Sumo Grande and Indigo Manza, in addition to the vast number of existing models where Apollo is a force to reckon with.

Truly 2009-10 has concluded on a resounding note for the Company and the spirit remains unstoppable as ever.

EXPORTS

The demand outlook in international markets saw a revival at the start of year 2009-10, from the lows of the previous years closing. The severe dip in all-around demand had put considerable strain in despatches out of India, however the Companys exports ended on a satisfactory note.

Exports of passenger car radial tyres continued to be the highest amongst the Indian tyre producers. The exports of truck and bus tyres were better than the previous year, though enhanced focus on exploiting surging demand in the domestic market led to controlled despatches for exports.

On the marketing front, efforts were made for enhancing brand Apollo, across geographies, by conducting successful programmes like Apollo Vista, Safe Drive and technical training sessions for tyre specialists and dealers.

The year also witnessed the coming together of high-performing business partners for two conclaves - one in China for the passenger car radial partners and the other in India for the truck and bus tyre partners, where they were felicitated and their bonds with Apollo strengthened further.

EXPANSION PROGRAMME/FUTURE OUTLOOK

State of the art radial facility at Chennai went on stream as per schedule. After the initial trial production, in September 2009, regular marketable product ion of passenger carra dials (PCR) commenced on March 11, 2010. Whereas on successful completion of trial production of truck-bus radials (TBR) in March 2010, their regular marketable production commenced on May 11, 2010. Further expansion of TBR and PCR capacity is in progress to meet projected market requirements.

Cross ply and radial farm tyre capacity augmentation was done in Perambra thereby increasing the plant capacity by approximately 48,000 units/year in rear tractor and 34,000 units/year in front tractor on an annualised basis.

ACQUISITION OFVREDESTEIN BANDEN BV, NETHERLANDS

On May 15 2009, your Company completed its second international acquisition of Vredestein Banden BV, an European tyre manufacturing Company, headquartered in the Netherlands, with a production capacity of 5.5 million tyres per annum, thus taking another step towards realising its goal of becoming a global player. The acquisition was done through a Special Purpose Vehicle and was funded through internal accruals and external debt.

The acquisition has benefited your Company by providing access to the high-end passenger car radial technology and a well-established distribution network for entry into Europe. The acquisition would also benefit our combined operations through reduced raw material costs as a result of consolidated purchase and access to cost competitive manufacturing base in the future. The integration efforts have started and your Company has finalised its plan of launching the brand "Apollo" tyres in Europe.

These integration initiatives will favourably position the Company for growth and improved profitability in the coming years.

SUBSIDIARY COMPANIES

During the year under review, Apollo (Mauritius) Holdings Pvt. Ltd., your Companys subsidiary has incorporated Apollo Tyres Co-operatief U.A. w.e.f. May 1, 2009 and Apollo Tyres (Cyprus) Pvt. Ltd. w.e.f August 14, 2009 as its wholly owned subsidiaries.

Apollo Tyres Co-operatief U.A acquired Vredestein Banden BV, a company based in the Netherlands w.e.f. May 15, 2009 along with its various subsidiaries, which are primarily marketing and sales offices, in Europe. The name of Vredestein Banden BV was subsequently changed to Apollo Vredestein BV in order to synergise the corporate name with Apollo Group.

Apollo Tyres South Africa (Pty.) Ltd., your Companys subsidiary, has acquired Pollock & Aitken (Pty) Ltd, a Company owning property in Durban, on February 8, 2010 from the old Dunlop Staff Provident Fund, which went into voluntary liquidation.

For operational purposes, the Board has made certain restructuring changes in respect of the following subsidiaries:

- The shares of Apollo Tyres AG (Switzerland) held by Apollo Tyres Ltd. have been transferred in favour of Apollo Tyres (Cyprus) Pvt. Ltd, as on 31,3.2010.

- Apollo Tyres Zrt (Hungary), a wholly owned subsidiary of Apollo Tyres AG (Switzerland) has applied for reduction of capital and voluntary dissolution during the year. The reduction of capital was approved vide order of the Court dated January 4, 2010.

- Apollo Tyres GmbH (Germany), a wholly owned subsidiary of Apollo Tyres AG (Switzerland) has been merged with Vredestein GmbH (Germany). The merger has been registered on April 7, 2010 effective from October 1, 2009.

The members may refer to the statement under Section 212(3) of the Companies Act, 1956, forming part of accounts, for further information on the Companys subsidiaries.

The Company has applied to the Central Government for its approval under Section 212 (8) of the Companies Act, 1956, exempting the Company from attaching the accounts of the subsidiary companies. The information regarding subsidiaries in terms of the order of Central Government u/s 212(8) shall be made part of the Annual Report. The consolidated accounts are attached along with accounts of your Company.

In view of the ongoing economic uncertainty in Zimbabwe and the long term restriction on financial repatriation, the accounts of Zimbabwe based entities have not been consolidated under accounting standard (AS 21) "Consolidated Financial Statements", Please refer to note 2 (c) of schedule 12 of consolidated accounts.

The copy of the Annual Report of the subsidiary companies will be made available to shareholders on request and will also be kept for inspection by any shareholder at the Registered Office and Corporate Office of your Company, and its subsidiary companies.

You may refer to the Management Discussion and Analysis report and other sections for a more detailed analysis of Europe and South Africa operations.

FIXED DEPOSITS

Your Company is not accepting fixed deposits from the public/shareholders. In respect of fixed deposit issued earlier, cheques had been issued for the deposit amount and interest thereon amounting to Rs 1.31 millions, which remained unencashed as on March 31, 2010. Out of this amount, no amount has remained unclaimed for more than 7 years, and no amount has been transferred to Investor Education and Protection Fund on March 31, 2010.

AUDITORS REPORT

The comments on the statement of accounts referred to in the report of the auditors are self explanatory. COST AUDIT

M/s N P Gopalakrishnan & Co,, cost accountants, has been appointed to conduct cost audit for the year ended March 31, 2010. They will submit their report to the Board of Directors before forwarding it to the Ministry of Corporate Affairs, Government of India,

BOARD OF DIRECTORS

The Government of Kerala nominated Mr P Prabakaran in place of Mr L C Goya I on the Board of the Company w.e.f. January 29, 2010. The Board places on record its appreciation for the contribution made by Mr L C Goyal during his tenure of Directorship.

Mr Shardul S Shroff resigned from the Directorship of the Company w.e.f. March 25, 2010. The Board places on record its appreciation for the contribution made by Mr Shardul S Shroff during his tenure of Directorship.

Mr Raaja Kanwar resigned from the Directorship of the Company w.e.f. May 17, 2010. The Board places on record its appreciation for the contribution made by Mr Raaja Kanwar during his tenure of Directorship.

Mr M J Hankinson, Dr S Narayan and Mr Nimesh N Kampani retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment.

None of the Directors are disqualified under Section 274 (1) (g) of the Companies Act, 1956.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS tftO OUTGO

The information as required u/s 217(l)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars jji the Reportof Board of Directors) Rules, 1988, regarding conservation of energy, technology absorption, foreign exchange garnjngs and outgo are given in

CORPORATE GOVERNANCE REPORT

A detailed report on corporate governance, duly certified by the auditors, is given in Annexure-B to this report.

Ministry of Corporate Affairs has proposed "Corporate Governance - Voluntary Guidelines 2009" and "Corporate Social Responsibility Voluntary Guidelines 2009" during December, 2009 for voluntary adoption by all listed companies. Your Company is committed to the highest standards of compliance and in all feasible cases, action is being instituted to ensure we remain benchmarked in these areas.

AUDITORS

M/s Deloitte Haskins & Sells, Chartered Accountants, the auditors of your Company, will retire at the ensuing Annual

General Meeting and are eligible for reappointment.

PARTICULARS OF EMPLOYEES

Information as, per Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given in Annexure C of this report.

DIRECTORS RESPONSIBILITY STATEMENT

As required by Section 217 (2AA) of the Companies Act, 1956, your Directors state that:

U) In preparation of the annual accounts for the year ended March 31, 2010, the applicable accounting standards have been followed and there has been no material departure:

ii) The selected accounting policies were applied consistently and the Directors made judgements and estimates that are .reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as of March 31, 2010, and of the profit of the company for the year ended as on date;

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) The annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENT

Your Directors would like to express their appreciation to the State Governments of Kerala, Gujarat, Haryana, Tamil Nadu, and the national Governments of India, the Netherlands and South Africa as also all the bankers, financial institutions, consuners Yendors, vendors, members and other stakeholders for their valuable support and patronage during the year under review The Board further wishes to place on record their deep sense of appreciation for the committed services and contriqtition made by employees towards the growth of the Company.



For and on behalf of the Board of Directors



Place: Gurgan (Onkar S Kanwar)

Date:May 28.2010 Chairman & Managing Director

 
Subscribe now to get personal finance updates in your inbox!