Mar 31, 2023
Your Directors have the pleasure in presenting the 50th Annual Report on the business and operations of Apollo Tyres Ltd (''the Company''), together with the audited financial statements for the financial year ended March 31, 2023.
The financial performance of the Company for the financial year ended March 31, 2023 is summarised below:
(? Million) |
||||
Year Ended |
Year Ended |
|||
Particulars |
March 31, 2023 |
March 31, 2022 |
March 31, 2023 |
March 31, 2022 |
Standalone |
Consolidated |
|||
Sale of products |
168,899.09 |
143,067.87 |
241,223.24 |
205,808.14 |
Other operating income |
4,111.10 |
3,426.17 |
4,458.06 |
3,667.64 |
Revenue from operations |
173,010.19 |
146,494.04 |
245,681.30 |
209,475.78 |
Operating profit (EBITDA excluding other income) |
21,109.19 |
14,307.93 |
33,136.53 |
25,741.01 |
Other income |
751.26 |
1,268.96 |
410.92 |
1,234.81 |
Less: Finance costs |
4,672.28 |
3,821.56 |
5,312.35 |
4,444.23 |
Less: Depreciation & amortization expenses |
9,070.50 |
8,239.13 |
14,191.42 |
13,996.73 |
Profit before share of profit/ (loss) in associate / joint venture, exceptional items & tax |
8,117.67 |
3,516.20 |
14,043.68 |
8,534.86 |
Share of profit / (loss) in associate / joint venture |
0.00 |
0.00 |
2.42 |
0.96 |
Exceptional items |
0.00 |
(12.68) |
225.77 |
(59.08) |
Profit before tax |
8,117.67 |
3,503.52 |
14,271.87 |
8,476.74 |
Less: Provision for tax |
2,330.29 |
892.88 |
3,225.51 |
2,090.74 |
Profit after tax |
5,787.38 |
2,610.64 |
11,046.36 |
6,386.00 |
According to a data from the Rubber Board, for a six-month period of fiscal 23, the tyre industry cumulatively produced more than 98 million units as against 90 million units in first six months in FY23. The production of PV tyres (both radial and bias) grew 16% as compared to the same period a year ago. Meanwhile, the Truck & Bus and LCV segment witnessed a modest growth of 3.4%. The production volumes of two-wheelers also increased by 5.7% in FY23.
The tyre industry in Europe witnessed a positive trend in the first six months for CY22 for the replacement consumer tyres with a 7.4% growth compared to CY21, combined with 10.3% growth for Truck and Bus tyres. However, this could not be sustained for the next six months. According to data released by the European Tyre and Rubber Manufacturers'' Association (ETRMA), the overall replacement consumer tyres segment in Europe saw a decline of 2% in CY22 compared to a year ago, with a sharp decline of 10.1% in the last six months in the 2nd half of the calendar year. The overall replacement truck and bus tyre market remained stable ( 1%), despite a sharp decline of 8.2% in the second half. Agricultural tyres also posted a decline of 22% in CY22.
The standalone revenue from operations of your Company was ?173,010.19 million during FY23 as against ?146,494.04 million during the previous financial year. EBITDA (excluding other income) was at ?21,109.19 million as compared to ?14,307.93 million during the previous financial year. The Net Profit for the year under review was ?5,787.38 million, as against ?2,610.64 million in the previous fiscal.
The consolidated revenue from operations of your Company was ?245,681.30 million during FY23, as compared to ?209,475.78 million in FY22. The consolidated EBITDA (excluding other income) was ?33,136.53 million for FY23 as compared to ?25,741.01 million for the previous financial year. On consolidated basis, the Company earned a Net Profit of ?11,046.36 million for FY23 as against ?6,386.00 million for the previous financial year.
The year under review witnessed ~10% increase in the raw material cost, touching all time new peaks. The first half of the year experienced significant raw material cost push which was partially mitigated in the later half of the year.
The year 2022 has been a year of high inflation and steep rise in interest rates by Central Banks across the world. The energy costs soared in Europe on the back of continued Russia Ukraine conflict and the sanctions on Russia. China''s Zero Covid Policy led to some moderation in economic activity.
The Rupee started the year at a level of 76 against the US Dollar and weakened to a level of 82 by the end of the year. The Ocean Freight Rates which had gone upto 10 times of pre covid levels now stands around 2 times of pre covid levels.
The year began with oil prices maintaining its strength due to geo-political factors. Thereafter it witnessed a slide due to weakness in global demand, Fed interest rate hikes and weak growth outlook in major global economies around the world. Brent Crude Oil rose by 19% on a year-on-year basis in FY23 on account of geo-political factors, supply disruptions, and rise in Natural Gas prices.
Natural Rubber availability in India continued to be deficient against the requirement of the consuming industry and the shortfall was met through imports from ASEAN countries. The port restriction on imports of natural rubber continued with imports allowed only at Nhava Sheva and Chennai ports. The inverted duty structure on natural rubber @ 25% or H30/kg whichever is lower continued during the year.
The Company has partnered with the Government of India in developing new natural rubber plantations in the Northeast region of India under the Prime Ministers'' Atma Nirbhar Bharat Scheme. The project is designed to develop 200,000 hectares of rubber plantations financially supported by major tyre companies with technical support and coordination by the Rubber Board under the Ministry of Commerce. In the first 2 years of its operations till FY23, 27,000 hectares have been planted already, and with a target of another 50,000 hectares in the FY24 under the project. This is expected to increase the natural rubber availability in the next 5 years in the country.
The Crude based raw materials - Carbon Black, Synthetic Rubber, Fabric and Chemicals also experienced high input cost inflation during the fiscal.
The Company held its virtual Global Partners Summit 2022 for its raw material business partners with over 700 participants. During the summit, it shared its vision FY26. The Company used the platform to stress the importance of technology and the use of sustainable materials for the Company.
The Company maintained the agility and resilience in the supply chain amidst uncertain geo-political environment and volatile markets globally to efficiently supply the raw materials to the plants as per requirements while optimizing the inventory with a continued focus on near sourcing and leveraging raw material business partner relationships.
DIVIDEND
Your Company has a consistent track record of dividend payment. The Directors are pleased to recommend the Final Dividend of H4.00 per Equity Share and a Special Dividend of H0.50 per Equity Share on occasion of 50th AGM of the Company, aggregating to H4.50 (i.e. 450%) per Equity Share having face value of H1 each for FY23 for your approval.
The dividend, if approved, shall be payable to the Members holding shares as on cut-off date i.e. July 14, 2023.
RESERVES
The amount available for appropriations, including surplus from previous year amounted to ?98,363.93 million. Surplus of ?3,814.29 million has been carried forward to the balance sheet. A general reserve of ?17,006.63 million has been provided.
BOARD OF DIRECTORS
A) Appointment/ Re-appointment of Directors
Dr. Jaimini Bhagwati (DIN:07274047) was appointed as an Independent Director of the Company, not liable to retire by rotation, to hold office for a term of 5 consecutive years with effect from February 2, 2023 to February 1, 2028 by the Members on March 31, 2023 through Postal Ballot.
In line with the succession planning of the Company & to separate the roles of Chairman and Managing Director, Mr. Onkar Kanwar (DIN:00058921) has stepped down from the position of Managing Director and will continue to act as Non-Executive Director designated as ''Chairman'' with effect from February 1, 2023. The same was approved by the Members of the Company at the Annual General Meeting held on July 11, 2022.
Pursuant to the provisions of Section 152(6) of the Companies Act, 2013, Mr. Robert Steinmetz (DIN:00178792) and Mr. Sunam Sarkar (DIN:00058859), Directors of the Company, who retired by rotation, were re-appointed by the Members of the Company at the Annual General Meeting held during the year under review. Further, Mr. Vishal Mahadevia (DIN:01035771) and Mr. Francesco Gori (DIN:07413105), Directors of the Company, are liable to retire by rotation and being eligible offers themselves for re-appointment at the 50th Annual General Meeting of the Company.
None of the aforesaid Directors are disqualified under Section 164(2) of the Companies Act, 2013. Further, they are not debarred from holding the office of Director pursuant to order of SEBI or any other authority.
The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise and hold highest standards of integrity.
B) Changes in Directors and Key Managerial Personnel
During the year under review and between the end of the financial year and on the date of this report, apart from aforementioned appointment/ re-appointment/ continuation of Directors, there were no changes in Directors/ Key Managerial Personnel of the Company.
C) Declaration by Independent Directors
In terms with Section 149(7) of the Companies Act, 2013, Independent Directors of the Company have submitted declarations that they meet the criteria of Independence as provided in Section 149(6) of the Companies Act, 2013 and also Regulation 16(I)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Independent Directors have also complied with the Code for Independent Directors as per Schedule IV of the Companies Act, 2013. All our Independent Directors are registered on the Independent Directors Databank.
D) Formal Annual Evaluation
Pursuant to the provisions of the Companies Act, 2013, the Board is required to carry out annual evaluation of its own performance and that of its Committees and individual Directors. The Nomination and Remuneration Committee (NRC) of the Board also carries out evaluation of every Director''s performance. Accordingly, the Board and NRC of your Company have carried out the performance evaluation during the year under review.
For annual performance evaluation of the Board as a whole, it''s Committee(s) and individual Directors including the Chairman of the Board, the Company has formulated a questionnaire to assist in evaluation of the performance. Every Director has to fill the questionnaire related to the performance of the Board, its Committees and individual Directors except himself by rating the performance on each question on the scale of 1 to 5, 1 being Unacceptable and 5 being Exceptionally Good.
On the basis of the response to the questionnaire, a matrix reflecting the ratings was formulated and placed before the Board for formal annual evaluation by the Board of its own performance and that of its Committees and individual Directors. The Board was satisfied with the evaluation results.
E) Separate Meeting of Independent Directors
In terms of requirements under Schedule IV of the Companies Act, 2013 and Regulation 25(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate meeting of the Independent Directors was held on March 30, 2023.
The Independent Directors at the meeting, inter alia, reviewed the following:-
⢠Performance of Non-Independent Directors and Board as a whole.
⢠Performance of the Chairman of the Company, taking into account the views of Executive Directors and Non-Executive Directors.
⢠Assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
F) Remuneration Policy
The Board has, on the recommendation of the Nomination & Remuneration Committee, laid down a Nomination & Remuneration Policy for selection and appointment of the Directors, Key Managerial Personnel and Senior Management and their remuneration. The extract of the Nomination and Remuneration Policy covering the salient features are provided in the Corporate Governance Report forming part of Board''s Report.
The Nomination & Remuneration Policy of the Company is available on the website of the Company and the web link is:
https://corporate.apollotures.com/content/dam/orbit/
apollo-corporate/investors/corporate-governance/
codes-policies/codes-policies/nrc-policu.pdf
G) Code of Conduct for Directors and Senior Management
The Company has formulated a Code of Conduct for Directors and Senior Management Personnel and has complied with all the requirements mentioned in the aforesaid code. For further details, please refer the Corporate Governance Report.
ISO 20400 CERTIFICATION
The Company''s Raw Material Procurement Processes have been successfully validated in a third-party process for ISO 20400:2017 Sustainable Procurement standard.
This standard provides organizations with guidelines for integrating sustainability practices into their procurement processes. Sustainability has been one of the pillars of Company''s Vision FY26 and this is an important milestone in that journey. We are the first Company in the automotive sector in India to get the ISO 20400.
The Company continued to focus on its key regions - India and Europe. Also, it continued to build its presence in North America with product releases.
In FY23, the APMEA (Asia Pacific/ Middle East/ Africa) operation continued its focus on key themes for the Indian market - consolidating its leadership position and expanding market share by introducing new products across segments. Committed investments in R&D and brand building continued to fuel the growth journey of the region to attain market leadership position.
According to internal estimates, the Company retained its leadership position in the PV replacement market, now for the third year in a row. With a sharp focus on its Premiumisation strategy, EV leadership and dual brand strategy, the Company continued to consolidate its leadership position in this segment.
In the CV segment, it continued to introduce new products to strengthen its market leadership. It launched the steer fitment tyres - 295/90 R20 EnduRace RA and Endutrax MA in the regional and mixed categories. Further, to cater to the growing ecommerce logistics and perishables sectors, it introduced 9.00 R20 Endurace LD and 9.00 R20 Endurace RA, the LCV range''s succession products for superior performance delivery. During the fiscal, the Company achieved a huge milestone for its flagship CV product, Endurace LD, posting sales of over 10 million units since its inception in 2010. This feat has been possible with the decade long trust customers have placed in the performance of the product.
In the two-wheeler segment, the Company expanded its radial portfolio by introducing a Moto-Cross Tyre brand ''Tramplr''. Several products were added to the ''Tramplr'' brand portfolio, catering to varying motorcycles. With this addition, its two-wheeler tyre segment addressability has gone up substantially.
In Europe, the Company continued to expand its offerings to meet the evolving needs of customers. During FY23, it focussed on building on the expansion spree that happened in the past fiscals for PV All-Season tyres, light truck tyres and winter ranges with Quatrac, Wintrac, Comtrac 2, strengthening its market offering. It celebrated 30 years in the All-Season segment by launching a new key product to extend its range in strategic segments. In the first half of the fiscal, Quatrac Pro EV was launched, specifically designed for electric vehicles, commemorating the launch of its first AllSeason Tyre in 1993. In OHT, it completed 25 years journey of the remarkable and extremely successful Vredestein
Traxion tractor tyres, which became a revolutionary tyre with a strong divergent pattern compared to the usual tractor tyre patterns of its time.
A detailed analysis of the Company''s key initiatives have been shared in the Management Discussion and Analysis section of the annual report.
According to data from International Monetary Fund (IMF), the global economy growth is expected to fall from 3.4% in CY22 to 2.8% in CY23, before inching up to 3.0% in CY24. Advanced economies are expected to see a muted growth from 2.7% in CY22 to 1.3% in CY23. Euro Area will continue in line with the global slowdown as its growth drops to 0.8% in CY23 and then move upwards to 1.4% in CY24.
According to Reserve Bank of India (RBI) and IMF, the overall growth rate for the Indian economy for FY24 is forecasted to be between 6.0-6.5%. The Indian economy is likely to benefit from increased infrastructure spend, banking credit growth, and a possible rural bounce-back due to easing inflation and will continue to be the fastest growing economy in the world. On the other side, risks include a lower-than-average monsoon, weak global demand, slow pickup of private capex, and FII outflows due to rising US policy rates.
Amid such uncertain economic and geo-political conditions, the Company has adopted a prudent fiscal approach. The focus continues to be on investing in good costs and cutting down bad costs, employee safety and conserving cash. The Company will focus on sustainable profitable growth as it focusses to achieve its Vision targets by FY26.
MATERIAL CHANGES AND COMMITMENTS
No material changes and commitments affecting the financial position of your Company have occurred between the end of the financial year of the Company to which the financial statements relate and on the date of this report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS
The Competition Commission of India (CCI) issued an order on February 2, 2022 mentioning that it has held five tyre manufacturers and Automotive Tyre Manufactures Association (ATMA) guilty of contravention of the provisions of Section 3 of the Competition Act, 2002 and imposed a penalty of H425.53 Crores on the Company.
The Company filed an appeal against the aforesaid order before the National Company Law Appellate Tribunal, New Delhi (''NCLAT''). The NCLAT through its judgement dated December 1, 2022 disposed off the appeals by remanding back the case to CCI for review. CCI has filed an appeal in the Supreme Court against the Order passed by the NCLAT. Hearing to consider admission of appeal is likely to come after September 2023.
Other than the aforesaid, no significant and material orders have been passed during the year under review by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.
CHANGE IN THE NATURE OF BUSINESS, IF ANY
There is no change in the nature of business of your Company during the year under review.
Internal Financial Control (IFC) means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Company''s policies, the safeguarding of its assets, timely prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.
The Company''s internal financial control framework is commensurate with the size, nature and complexity of its operations and is in line with the requirements of the Companies Act, 2013. The Company has identified and documented key internal financial controls as part of standard operating procedures (SOPs). The SOPs are designed for critical processes across all plants, warehouses and offices wherein financial transactions are undertaken. The SOPs cover the standard processes, risks, key controls and each process is identified to a process owner. In addition, the Company has a well-defined Financial Delegation of Authority (FDOA), which ensures approval of financial transaction by appropriate personnel.
The Company uses SAP-ERP to process financial transactions and maintain its books of accounts. The SAP has been setup to ensure adequacy of financial transactions and integrity & reliability of financial reporting. SAP was implemented in the European operations in year 2016. SAP was also implemented at Company''s Greenfield plants in Hungary and Andhra Pradesh.
The financial controls are evaluated for operating effectiveness through management''s ongoing monitoring and review process, and independently by Internal Audit. The testing of controls by Internal Audit are divided into three separate categories viz. a) automated controls within SAP, b) segregation of duties within SAP and restricted access to key transactions, c) manual process controls.
In our view, the SOPs, FDOA, SAP-ERP and independent reviews by the Internal Audit help in establishing adequate internal financial controls with reference to the financial statements and such internal financial controls are operating effectively.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required by Regulation 34 (2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed Management Discussion and Analysis Report is presented in a separate section forming part of the Annual Report.
SUBSIDIARY/ ASSOCIATE COMPANIES
As the Company follows its vision to become a global tyre brand of choice, it has multiple Subsidiaries for facilitating these operations in various countries. As on March 31, 2023, your Company had 33 Overseas Subsidiary Companies (including step subsidiaries), 1 wholly owned Subsidiary in India, 2 Associate Companies and 1 Joint Venture.
During the year under review, the Company had made an investment of ?65 million in the equity share capital of Apollo Tyres Centre of Excellence Ltd, a wholly owned Subsidiary of the Company. The Company had also made a second tranche investment of H2.70 million by purchasing 33,750 Equity Shares (0.07%) of CSE Deccan Solar Private Limited, an Associate Company on May 26, 2022, post which, the total investment would aggregate to 12,00,000 Equity Shares (27.27%) amounting to H95.70 million to get a guaranteed supply of electricity for its Chennai Plant.
Apollo Tyres (Malaysia) Sdn. Bhd. (a wholly owned Subsidiary of Apollo Tyres Holdings (Singapore) Pte. Ltd) is in the process of liquidation from the Companies Commission of Malaysia as the Company had changed its business model in Malaysia from multiple dealer network to Distributor model.
During the year under review, ATL Singapore Pte Ltd., (a wholly owned Subsidiary of Apollo Tyres Holdings (Singapore) Pte. Ltd) was liquidated and its name got struck off from the Registrar and Accounting and Corporate Regulatory Authority (ACRA).
Apart from the above, no other Company has become or ceased to be Subsidiary, Associate or Joint Venture of the Company during FY23.
Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 defines a ''material Subsidiary'' to mean a Subsidiary whose income or net worth exceeds ten percent of the consolidated income or net worth respectively, of the listed Company and its subsidiaries in the immediately preceding financial year.
In addition to the above, Regulation 24(1) of the abovementioned regulations requires that at least one Independent Director on the Board of Directors of the listed Company to be a Director on the Board of Directors of unlisted material Subsidiary, whether incorporated in India or not. For this provision, material Subsidiary means a Subsidiary whose income or net worth exceeds twenty percent of the consolidated income or net worth respectively, of the listed entity and its Subsidiaries in the immediately preceding financial year. Basis this definition, your Company has following five material unlisted Subsidiaries viz. Apollo Tyres (NL) B.V. (Formerly Apollo Vredestein B.V.), Apollo Tyres (Hungary) Kft., Apollo Tyres (Europe) B.V. (Formerly Apollo Tyres B.V.), Apollo Tyres Cooperatief U.A. and Apollo Tyres Holdings (Singapore) Pte Ltd. as on March 31, 2023.
Mr. Akshay Chudasama, an Independent Director of the Company was nominated as Director on the Board of Apollo Tyres (NL) B.V., Apollo Tyres (Hungary) Kft., Apollo Tyres Holdings (Singapore) Pte Ltd. and Ms. Pallavi Shroff, an Independent Director of the Company was nominated as Director on the Board of Apollo Tyres (Europe) B.V & Apollo Tyres Cooperatief U.A, with effect from April 1, 2019.
Other requirements of Regulation 24 of SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 with regard to Corporate Governance for Subsidiary Companies have been complied with.
a) Apollo Tyres (NL) B.V. (Formerly Apollo Vredestein B.V.)
Apollo Tyres (NL) B.V. is a 100% subsidiary of Apollo Tyres (Europe) B.V. and ultimately held by Apollo Tyres Ltd, India, a listed multinational organisation, and a global tyre manufacturer.
The Company focuses on developing, manufacturing and sale of various categories of passenger and agriculture tyres. The Company has its production facility based in Enschede, Netherlands. The Company has Subsidiary Companies across Europe, engaged in the sales and distribution of tyres.
b) Apollo Tyres (Hungary) Kft.
Apollo Tyres (Hungary) Kft. is one of the latest manufacturing facility within Apollo Tyres group. The Company continued to ramp up its production capacity during the year for both passenger & commercial tyres production line.
During FY23, the Company has made required investments for debottlenecking and line balancing the capacity in passenger vehicle tyres.
c) Apollo Tyres Holdings (Singapore) Pte. Ltd.
The principal activities of the Company are of sourcing raw materials for Apollo Tyres manufacturing plants in India and Europe besides the provision of other strategic services to the group. 56% of the raw material
procurement was Natural Rubber in the year FY23. Major sourcing countries are Thailand and Indonesia.
Global Supply Chain team based out of Singapore consolidates and manages Global Ocean Freight, Transport Optimization, Offtake activities, Supply Chain Cost Analysis, Mould Management and Certification Projects. The team is also responsible for outsourcing finished goods for APMEA and Europe regions for certain specific tyre categories.
In addition, Corporate HR team, based out of Singapore, is managing and facilitating the effective deployment of HR systems and policies, in key areas such as Talent Acquisition, Rewards & Mobility, Talent Management and core HR processes, which are aligned to the business objectives of Apollo Tyres with the mandate of enhancing organizational effectiveness and human capital utilization.
d) Apollo Tyres (Europe) B.V. (Formerly Apollo Tyres B.V.)
Apollo Tyres (Europe) B.V. incorporated in Netherlands is a Holding Company with two Subsidiaries, Apollo Tyres (NL) B.V. and Apollo Tyres (Hungary) Kft. The Company focuses on developing, sourcing, marketing, sales and distribution of tyres across various categories including passenger car, truck & bus, agriculture, industrial vehicles and bicycles. The group sells passenger vehicle tyres under two brands, Vredestein and Apollo. The Company has its headquarters base at Amsterdam, Netherlands. Sales operations are managed by various Subsidiary Companies across Europe.
e) Apollo Tyres Cooperatief U.A.
Apollo Tyres Cooperatief U.A., a direct Subsidiary of the Company, was incorporated in the Netherlands. The Company is primarily acting as a Holding Company for all overseas operations.
CONSOLIDATED FINANCIAL STATEMENTS
As stipulated by Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Consolidated Financial Statements have been prepared by the Company in accordance with the applicable Accounting Standards. The audited Consolidated Financial Statements, together with Auditors'' Report, form part of the Annual Report.
As per the provisions of Section 129 of the Companies Act, 2013, the consolidated financial statements of the Company, its Subsidiaries and Associates are attached in the Annual Report. The annual accounts of Subsidiaries and Associates 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. A statement in Form AOC-1 containing the salient features of the financial statements of the Company''s Subsidiaries, Associates and Joint Venture for the year ended March 31, 2023 is also attached with financial statements.
The aforesaid NCDs are listed on the debt segment of the National Stock Exchange of India Limited (NSE).
DEPOSITS
During the year under review, your Company did not accept deposits covered under Chapter V of the Companies Act, 2013.
AUDITORS
M/s. S.R. Batliboi & Co. LLP (Firm Registration No. 301003E/ E300005), Chartered Accountants (Member firm of Ernst & Young Global) were appointed as the Statutory Auditors of the Company for a period of 5 years, from the conclusion of 49th AGM until the conclusion of the 54th AGM, at the AGM held on July 11, 2022.
AUDITORS'' REPORT
The report given by M/s. S.R. Batliboi & Co. LLP, Chartered Accountants, Statutory Auditors on financial statements of the Company for FY23 forms part of the Annual Report. The comments on statement of accounts referred to in the report of the Auditors are self explanatory. The Auditors'' Report does not contain any qualification, reservation or adverse remark.
During the year under review, the Auditors had not reported any matter under Section 143(12) of the Companies Act, 2013. Therefore, no detail is required to be disclosed under Section 134(3)(ca) of the Companies Act, 2013.
COST AUDIT
M/s. N.P. Gopalakrishnan & Co., Cost Accountants, were appointed with the approval of the Board to carry out the cost audit in respect of the Company''s plants at Perambra (Kerala), Limda (Gujarat), Chennai (Tamil Nadu) and Chinnapandur (Andhra Pradesh) as well as Company''s leased operated plant at Kalamassery (Kerala) for FY23.
The following series of Secured Redeemable Non-Convertible Debentures (NCDs) were issued and allotted during the year under review through Private Placement: -
No. of NCDs Sl. Series of @ Face No. NCDs Value of J10,00,000 each |
Value (J in Million) |
Date of Allotment |
1 Apollo 2,500 |
2,500 |
September |
Tyres 6.93% |
13, 2022 |
|
2023 Opt I |
||
2 Apollo 2,500 |
2,500 |
September |
Tyres 7.53% |
13, 2022 |
|
2027 Opt II |
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 FY24 subject to Members'' 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 disqualified for such re-appointment within the meaning of Section 141 of the Companies Act, 2013. The remuneration to be paid to M/s. N.P. Gopalakrishnan & Co., for FY24 is subject to ratification by the shareholders at the ensuing AGM.
Cost records as specified by the Central Government under Sub-Section (1) of Section 148 of the Companies Act, 2013 are made and maintained by the Company.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company had re-appointed M/s. PI & Associates, Company Secretaries as Secretarial Auditor of the Company for FY23 to undertake secretarial audit of the Company.
The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. Secretarial Audit Report given by Secretarial Auditor is annexed with the report as Annexure I.
M/s. PI & Associates, Company Secretaries have been reappointed to conduct the Secretarial Audit of the Company for FY24. They have confirmed that they are eligible for the said appointment.
MEETINGS OF THE BOARD OF DIRECTORS
A calendar of meetings is prepared and circulated in advance to the Directors. During the year, 5 (five) Board meetings were convened and held. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details of all Board/ Committee meetings held are given in the Corporate Governance Report.
The details of the Audit Committee including its composition and terms of reference mentioned in the Corporate Governance Report forms part of the Board''s Report.
The Board, during the year under review, had accepted all recommendations made to it by the Audit Committee.
The Company has formulated a vigil mechanism through Whistle Blower Policy to deal with instances of unethical
behaviour, actual or suspected, fraud or violation of Company''s code of conduct or ethics policy. The details of the policy are explained in the Corporate Governance Report and also posted on the website of the Company.
Pursuant to the requirement under Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors has constituted various Committees of Board such as Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee, Business Responsibility and Sustainability Committee, Risk Management Committee and Corporate Social Responsibility Committee. The details of composition and terms of reference of these Committees are mentioned in the Corporate Governance Report.
During the year under review the issued, subscribed and paid-up Equity Share Capital of the Company was 635,100,946 equity shares of ? 1/- each. There was no change in the capital structure of the Company.
a) Issue of equity shares with differential rights
Your Company has not issued any equity shares with differential rights during the year under review.
b) Issue of sweat equity shares
Your Company has not issued any sweat equity shares during the year under review.
c) Issue of employee stock options
Your Company has not issued any employee stock options during the year under review.
d) Provision of money by Company for purchase of its own shares by employees or by trustees for the benefit of employees
Your Company has not made any provision of money for purchase of its own shares by employees or by trustees for the benefit of employees during the year under review.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186
During the year under review, your Company has not given any loan or guarantee which is covered under the provisions of Section 186 of the Companies Act, 2013. However, details of investments made during the year are given under notes to the financial statements.
All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length
basis and do not attract the provisions of Section 188 of the Companies Act, 2013. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.
Suitable disclosures as required by the Indian Accounting Standards have been made in the notes to the financial statements. The policy on related party transactions as approved by the Board is uploaded on the Company''s website.
a) The details required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in the Corporate Governance Report.
b) During the year under review, Mr. Neeraj Kanwar (DIN:00058951), Vice Chairman & Managing Director, also received remuneration from Apollo Tyres (UK) Holdings Ltd. (Formerly Apollo Tyres (UK) Pvt. Ltd.), wholly owned Subsidiary of the Company.
Particulars of employees as required in terms of the provisions of Section 197 of the Companies Act, 2013, read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out in Annexure A to the Board''s Report.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
Your Company has in place a formal policy for prevention of sexual harassment of its employees at workplace and the Company has complied with provisions relating to the constitution of Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company conducts, from time to time, awareness sessions on prevention of sexual harassment at workplace for its employees.
During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Furthermore, there was no pending complaint/ case at the beginning as well as at the end of financial year.
HEALTH, SAFETY AND ENVIRONMENT
As a firm commitment to Health, Safety and Environment (HSE), the year saw multiple initiatives to implement and review the HSE plans and achieve the defined KPIs. For details on HSE, please refer to Management Discussion and Analysis Report.
In its constant quest for growth and excellence, your Company was honoured and recognised at various forums.
The Chennai plant of your Company has been awarded the Deming Prize, perhaps the most important recognition in the field of Quality. This award is sponsored by the Japanese Union of Scientists and Engineers and since 1951 when it was instituted, it is the gold standard in quality that all around the world aspire to. This was a moment of great pride for all of us at Apollo Tyres.
The Company bagged certification of Top Employers in Singapore and the UK for 2023. The Top Employers Institute is the global authority on recognising excellence in people practices.
Other prominent Awards are listed below for your reference.
Name of the Award |
Category |
Awarded by |
Compliance Team 2022 |
Compliance |
Legasis Services and Bombay Stock Exchange |
ASSOCHAM WORKVISION 2022 HR |
Effective Drivers of Recruitment, |
ASSOCHAM |
Excellence Award |
Engagement & Retention |
|
18th Indo-American Corporate Excellence (IACE) Awards 2022 |
Indo-American Chamber of Commerce (IACC) |
|
SEEM National Energy Management |
Industries & Facilities (Tyres) |
Society of Energy Engineers and Managers |
Award (SNEMA) |
(SEEM) |
|
Best Kaizen, Best Idea and Maximum |
Water Conservation and |
Confederation of Indian Industry (CII) |
Contributor of Ideas |
Management (Reduce, Recycle, Reuse and Regenerate) |
|
Green Champions Award 2021 |
Government of Tamil Nadu |
|
Good Design Awards 2021 |
Transportation category |
Chicago Athenaeum: Museum of architecture and design and the European Centre for Architecture Art Design and Urban Studies |
ISO 20400 certification for Sustainable Procurement |
Sustainable procurement |
|
Best Organisation for Promoting QC |
Quality Circle Forum of India |
activities are linked with National Development Goals and globally with the Sustainable Development Goals (SDGs). The Company has a CSR team, which exclusively works towards achievement of CSR goals of the organisation. All the CSR activities of the Company are routed through a registered trust (Apollo Tyres Foundation) and functions with close monitoring and guidance of the CSR committee.
In the reporting year, the Company has undertaken various initiatives related to Healthcare Programme for Trucking Communities, Solid Waste Management and Sanitation Programme for Communities, Livelihood for Underprivileged Women, Biodiversity Conservation and Philanthropy Initiatives, focussing on eradicating hunger and poverty, preventive health and promoting education.
Corporate Social Responsibility Report, pursuant to clause (o) of sub section (3) of Section 134 of the Act and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 including salient features mentioned under outline of Company''s CSR policy forms part of this Report as Annexure II.
The CSR Policy of the Company is available on the website of the Company and the weblink is: - https://corporate. apollotures.com/content/dam/orbit/apollo-corporate/ investors/corporate-governance/codes-policies/codes-policies/atl-csr-policy.pdf
The Company has constituted a Risk Management Committee (RMC) of the Board comprising of Directors and Senior Executives of the Company. The RMC has a Risk Management Charter and Policy that is intended to ensure that an effective Risk Management framework is established and implemented within the organisation. The Company has also formed Internal Risk Committees (IRCs), which review risk registers for Asia Pacific Middle East Africa (APMEA) region including India, Europe region, United States (US) region and Corporate Functions headed by President (APMEA), President (Europe), Group Head (New Market & Channels) and Chief Financial Officer as Chairperson of the respective Committees. The IRCs review each risk on a quarterly basis and evaluate its impact and plans for mitigation. Further details about the RMC including its composition are mentioned in the Corporate Governance Report which forms part of the Board''s Report.
CORPORATE SOCIAL RESPONSIBILITY
The Company initiated its CSR activities way before the Companies Act, 2013 came in existence. The Company has a well-defined CSR policy which is made as per the requirement of Section 135 of the Companies Act, 2013. All the CSR
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time, has mandated the top 1000 Listed Companies by market capitalisation to include Business Responsibility and Sustainability Report (''BRS Report'') in their Annual Report with effect from FY23. This BRS Report will replace the existing Business Responsibility Report.
Accordingly, a BRS Report describing the initiatives taken by the Company from an environmental, social and governance perspective, forms part of this Report as Annexure III.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Particulars required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, are given in Annexure IV, forming part of this report.
As per Section 134(3)(a) of the Companies Act, 2013, the Annual Return referred to in Section 92(3) of the said Act has been placed on the website of the Company www.apollotures.com under the Investors Section (Refer link: https://corporate.apollotures.com/investors/corporate-governance/#?activeTab=Others).
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. S.R. Batliboi & Co. LLP, Chartered Accountants, Statutory Auditors of the Company, regarding compliance of the conditions of corporate governance, as stipulated under Chapter IV of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached herewith as Annexure V to this report.
DIRECTORS'' RESPONSIBILITY STATEMENT
As required by Section 134(3)(c) of the Companies Act, 2013, your Directors state that:
(a) in the preparation of the annual accounts for the financial year ended March 31, 2023, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) the Directors had prepared the annual accounts on a going concern basis;
(e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
During the year under review, your Company had complied with all the applicable Secretarial Standards.
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, Tamil Nadu and Andhra Pradesh and the National Governments of India, Netherlands and Hungary. 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 ONKAR KANWAR
Place: Amsterdam Chairman
Date: May 9, 2023 DIN: 00058921
Mar 31, 2022
Your Directors have pleasure in presenting the 49th Annual Report on the business and operations of Apollo Tyres Ltd. ("the Company"), together with the audited financial statements for the financial year ended March 31, 2022.
The financial performance of the Company for the financial year ended March 31, 2022 is summarised below:
(? Million) |
||||
Particulars |
Year Ended |
Year Ended |
||
March 31, 2022 |
March 31, 2021 lalone |
March 31, 2022 |
March 31, 2021 lidated |
|
Stand |
Conso |
|||
Sales |
143,068 |
113,545 |
205,808 |
169,546 |
Other operating income |
3,426 |
3,789 |
3,668 |
4,424 |
Revenue from operations |
146,494 |
117,334 |
209,476 |
173,970 |
Operating profit (EBITDA excluding other income) |
14,308 |
20,343 |
25,741 |
27,975 |
Other income |
1,269 |
1,215 |
1,235 |
1,294 |
Less: Finance costs |
3,822 |
3,794 |
4,444 |
4,430 |
Less: Depreciation & amortization expenses |
8,239 |
7,134 |
13,997 |
13,150 |
Profit before share of profit/ (loss) in associates / Joint venture, exceptional items & tax |
3,517 |
10,630 |
8,535 |
11,689 |
Share of profit / (loss) in associates / joint venture |
0 |
- |
1 |
0 |
Exceptional items |
(13) |
(110) |
(59) |
(6,077) |
Profit before tax |
3,504 |
10,520 |
8,477 |
5,612 |
Less: Provision for tax |
893 |
3,292 |
2,091 |
2,110 |
Profit after tax |
2,611 |
7,228 |
6,386 |
3,502 |
The tyre industry is dependent on the business from the OEMs and the Replacement market. According to the data from Automotive Tyre Manufacturers'' Association (ATMA), in the past decade, only twice has the industry seen double digit growth (13% in FY15 and 10% in FY17). However, FY22 might be a year where the growth might surpass the previous growth numbers. According to the data released by ATMA for 9 months, the industry has grown at a robust 23%.
In the European market, given the contraction in the auto industry and especially in the PV segment, it directly impacted the tyres supply to the OEM segment which recorded a decline of 8%, as per data from the European Tyre & Rubber Manufacturers Association. However, this was offset by the gains made by the industry in the Replacement market which grew by 14%, led largely by a 35% growth in all-season segment and single digit growth in the other segments - summer and winter tyres.
The industry also saw solid growth coming in from the OEM Truck segment which grew by 25%. Even the replacement Truck tyres segment registered an increase of 12%.
The standalone revenue from operations of your Company was D 146,494 million during FY22 as against D 117,334 million during the previous financial year. EBITDA (excluding
other income) was at D 14,308 million as compared to D 20,343 million during the previous financial year. The Net Profit for the year under review was D 2,611 million, as against D 7,228 million in the previous fiscal.
The consolidated revenue from operations of your Company was D 209,476 million during FY22, as compared to D 173,970 million in FY21. The consolidated EBITDA (excluding other income) was D 25,741 million for FY22 as compared to D 27,975 million for the previous financial year. On consolidated basis, Apollo Tyres earned a Net Profit of D 6,386 million for FY22 as against D 3,502 million for the previous financial year.
The year under review witnessed a sharp ~ 30% increase in the raw material cost. The year began with the COVID-19 Delta variant subduing demand followed by successful vaccination program in the country which helped mitigate the Omicron wave towards end of the year. The supply chains reeling under COVID-19 were subjected to unprecedented disruptions on account of global port congestions, container shortages and blank sailings. The ocean freight rates rose by over 5 times on most shipping routes during the year.
FY22 had multi-year highs in most commodities in the Energy, Metals and the Agriculture space. The Bloomberg
Commodity Index rose by 45% while the S&P Goldman Sachs Commodity Index increased by 54% in FY22.
The Rupee started the year at a level of 74 against the US Dollar and weakened to a level of 76 by the end of the year.
Oil prices continued their northward ascent during the year scaling a peak of USD 140/bbl on account of geo-political factors, supply disruptions, inability of OPEC members to increase oil supply as per agreement and rise in Natural Gas prices. Brent Crude Oil started the year in the range of USD 65/bbl rising steadily to USD 80/bbl by Q3. This was followed by Crude breaching the level of USD 100/bbl in Q4. The prices rose by 75% during the year.
Natural Rubber availability in India was severely constrained during the period April to December 2021 on account of weather related challenges, COVID-19 restrictions in Kerala, etc. The Port Restriction on imports of Natural Rubber continues with imports allowed only at Nhava Sheva and Chennai ports. The inverted duty structure on Natural Rubber @ 25% or D 30/kg whichever is lower continued during the year. The domestic Natural Rubber prices rose to 7 year highs during the year. The shortfall in domestic availability had to be met through imports from major producing countries such as Thailand and Indonesia.
The Company has partnered with the Government of India in developing new Natural Rubber plantations in the North East of India under the Prime Ministers'' Atma Nirbhar Bharat Scheme. The project is designed to implement the scheme for developing 200,000 hectares of rubber plantations financially supported by major tyre companies with technical support and coordination by the Rubber Board under the Ministry of Commerce.
The Crude based raw materials - Carbon Black, Synthetic Rubber, Nylon and Polyester Fabric, Chemicals also experienced high input cost increase. The Customs duty on Polyester Fabric was increased from 5% to 20% in February 2022.
The Company taking forward the Sustainability initiative in the Raw Material Supply Chain organized a virtual Global Partners'' Summit 2021 under the theme "Sustainability in Uncertainty - the Challenges Ahead". The Vision 2025 together with the Sustainable Procurement Roadmap was shared with over 600 representatives of Raw Material Business Partners.
The Company successfully managed the Global Supply Chain disruptions through focus on building Resilience in the Supply Chain, increasing near Sourcing, Inventory Management and leveraging Raw Material Business Partner relationships.
Your Company has a consistent track record of dividend payment. The Directors are pleased to recommend a dividend of D 3.25 (325%) per share of D 1/- each on Equity Share Capital of the Company for FY22 for your approval.
The dividend, if approved, shall be payable to the Members holding shares as on cut-off date i.e. June 17, 2022.
reserves
The amount available for appropriations, including surplus from previous year amounted to D 44,699.87 million. Surplus of D 42,635.79 million has been carried forward to the balance sheet. A general reserve of D 1,000 million has been provided.
A) Appointment/ Re-appointment of Directors
Ms. Lakshmi Puri (DIN: 09329003) was appointed as an Independent Director of the Company, not liable to retire by rotation, to hold office for a term of 5 consecutive years with effect from October 29, 2021 to October 28, 2026 by the Members through Postal Ballot dated December 19, 2021.
In line with the succession planning of the Company and to separate the roles of Chairman and Managing Director, Mr. Onkar Kanwar (DIN:00058921) has desired to step down from his current position of Managing Director with effect from January 31, 2023 and will continue to act as Non-Executive Director designated as "Chairman" with effect from February 1, 2023 subject to your approval at the ensuing Annual General Meeting.
Pursuant to the provisions of Section 152(6) of the Companies Act, 2013, Mr. Robert Steinmetz (DIN: 00178792) and Mr. Sunam Sarkar (DIN: 00058859), Directors of the Company, are liable to retire by rotation and being eligible offers themselves for re-appointment.
The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise and hold highest standards of integrity.
None of the aforesaid Directors are disqualified under Section 164(2) of the Companies Act, 2013. Further, they are not debarred from holding the office of Director pursuant to order of SEBI or any other authority.
B) Changes in Directors and Key Managerial Personnel
During the year under review and between the end of the financial year and on the date of this report, apart from aforementioned appointment/ re-appointment of Directors, Ms. Anjali Bansal (DIN: 00207746), Independent Director had tendered her resignation as an Independent Director of the Company with effect from end of the business hours of September 13, 2021, due to other preoccupations. She has also confirmed that there is no material reason for her resignation.
There are no changes in Key Managerial Personnel of the Company.
C) Declaration by Independent Directors
In terms with Section 149(7) of the Companies Act, 2013, Independent Directors of the Company have submitted declarations that they meet the criteria of Independence as provided in Section 149(6) of the Companies Act, 2013 and also Regulation 16(l)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Independent Directors have also complied with the Code for Independent Directors as per Schedule IV of the Companies Act, 2013. All our Independent Directors are registered on the Independent Directors Databank.
D) Formal Annual Evaluation
Pursuant to the provisions of the Companies Act, 2013, the Board is required to carry out annual evaluation of its own performance and that of its Committees and individual Directors. The Nomination and Remuneration Committee (NRC) of the Board also carries out evaluation of every Director''s performance. Accordingly, the Board and NRC of your Company have carried out the performance evaluation during the year under review.
For annual performance evaluation of the Board as a whole, it''s Committee(s) and individual Directors including the Chairman of the Board, the Company has formulated a questionnaire to assist in evaluation of the performance. Every Director has to fill the questionnaire related to the performance of the Board, its Committees and individual Directors except himself by rating the performance on each question on the scale of 1 to 5, 1 being Unacceptable and 5 being Exceptionally Good.
On the basis of the response to the questionnaire, a matrix reflecting the ratings was formulated and placed before the Board for formal annual evaluation by the Board of its own performance and that of its Committees and individual Directors. The Board was satisfied with the evaluation results.
E) Separate Meeting of Independent Directors
In terms of requirements under Schedule IV of the Companies Act, 2013 and Regulation 25(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate meeting of the Independent Directors was held on February 15, 2022.
The Independent Directors at the meeting, inter alia, reviewed the following:-
⢠Performance of Non- Independent Directors and Board as a whole.
⢠Performance of the Chairman of the Company, taking into account the views of Executive Directors and Non-Executive Directors.
⢠Assessed the quality, quantity and timeliness of flow
of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
F) Remuneration Policy
The Board has, on the recommendation of the Nomination & Remuneration Committee, laid down a Nomination & Remuneration Policy for selection and appointment of the Directors, Key Managerial Personnel and Senior Management and their remuneration. The extract of the Nomination and Remuneration Policy covering the salient features are provided in the Corporate Governance Report forming part of Board''s Report.
The Nomination & Remuneration Policy of the Company is available on the website of the Company and the web link is: https://corporate.apollotures.com/investors/ corporate-governance/?filter=CodesPolicies
G) Code of Conduct for Directors and Senior Management
The Company has formulated a Code of Conduct for Directors and Senior Management Personnel and has complied with all the requirements mentioned in the aforesaid code. For further details, please refer the Corporate Governance Report.
new corporate identity and vision 2025
The Company, on June 18, 2021, had unveiled its new corporate identity and vision ''Driving Progress, Together'' setting the path for the next 5 (five) years. As a parent Company for both the Apollo and Vredestein tyres product brands, the Company is committed to bringing together a global community and fostering a diverse and inclusive culture, that powers innovation to transport, both its business and society forward.
This vision is supported by the organisation''s purpose, ''Enabling Excellence'', a belief that excellence should be universally accessible, and the Company''s role is to connect people globally to the tyres, tools and support they need to reach their potential.
With this corporate identity, the Company has built a new purpose and vision for the whole organisation that everyone can identify with. The current Apollo Tyres logo will continue as the identity for the product brand - retaining the strength of the brand equity already established over many years. The exciting new identity unveiled last year for the Vredestein Tyres brand, building on its European heritage, will continue as well.
The five key pillars to realise the Company''s 5-year vision are Digitalisation, Technology & Innovation, People, Brand and Sustainability.
The Company continued to focus on its key regions - India and Europe. AIso, it continued to build its presence in North America with product releases.
In FY22, the APMEA operation continued its focus on key themes for the Indian market - consolidating its leadership position and expanding market share by introducing new products across segments.
Apollo Tyres maintained its overall leadership across the radial segments in the M&HCV category. This was supported due to the strategy of new launches or refreshing the range, investing in expanding the distribution network, investing in dealer relationship and multiple initiatives.
In the LCV segment, the Company continued to play on its strength of radial technology, strong brand and a segmental approach to the market. It dominated the market with a high replacement market share.
In Pickup and SCV radials, the top selling ENDUMAXX LT continued to show a consistent gain in volume and market share throughout the year. The Company also strengthened its Bias portfolio for the SCV segment with the launch of ''BHIM''. The product has been appreciated by the customers and business partners alike.
In the PV tyres segment, the Company continued to strengthen its market leadership position in India driven by new product launches, a sharp focus on building brand salience with effective campaigns, expansion of distribution footprint and adding new OEM customers to the Company''s portfolio. Even as the year began under the shadows of the second wave of the COVID-19 pandemic, the Company, with its focus on the above initiatives managed to successfully thwart the headwinds and close the year with a double-digit growth for the overall PV category. Like its overall strategy of bringing in top class products, focus on brand campaigns and increasing distribution footprint, the Company''s twowheeler category followed a similar strategy and made significant inroads in the high-value, highly profitable premium motorcycle tyre market, increasing market share to reach double digits. The Company''s full range strategy supported it to cross sell the two-wheeler products to customers of agriculture and car category, both in the rural and urban markets.
In Europe, the Company largely operates in the replacement market in PV, agriculture, industrial, truck and bicycle segments, even as it continues to make inroads into the OEM segment in PV and agriculture.
During FY22, the Company focussed on adding new sizes to its product lines introduced in FY21 and consolidate the market offering. The year saw the product launches and marketing initiatives in line with this strategy as it added 24 sizes in the UUHP segment (19 inches and above) among its All-Season and Winter offering - Vredestein Quatrac Pro and Vredestein Wintrac Pro respectively. Further, it expanded its offering for the family and executive car segment - 18 sizes in the new summer product Vredestein Ultrac and 11 sizes in the new winter tyre, Vredetstein Wintrac.
A detailed analysis of the Company''s key initiatives for both regions have been shared in the Management Discussion and Analysis section of the annual report.
future outlook
According to the World Economic Outlook (WEO) update in April 2022, "Economic damage from the conflict will contribute to a significant slowdown in global growth in 2022 and add to inflation. Fuel and food prices have increased rapidly, hitting vulnerable populations in low-income countries hardest." Supply disruptions have become the norm and will result in higher and more broad-based inflation. Private consumption is expected to recover much slowly leading to restrained consumer demand.
Against such see-sawing outlook, Apollo Tyres continues with its cautious approach. The focus continues to be on investing in good costs and cutting down bad costs, employee safety and conserving cash. The Company is cutting down on all avoidable costs and focusing on good costs - R&D, eTraining, brand building, etc.
To tap the new demand coming in the Indian and APMEA markets, the APMEA region will continue to focus on bringing in new products in all its key segments.
Some key launches are planned in the coming year in both TBB and TBR categories including some future flagship products. The products are made to undergo a rigorous testing phase after understanding the customer and the application requirements.
The Europe region has been working on refreshing its entire portfolio in last two years. The results of this strategy have been evident given the strong growth and market share gain in FY22. The region is confident that these refreshed products and a focus on brand spend on both the Company''s global brands ''Vredestein and Apollo'' will help the region to further its position in the market.
material changes and commitments
Except the impact of COVID-19 as mentioned in this report, no material changes and commitments affecting the financial position of your Company have occurred between the end of the financial year of the Company to which the financial statements relate and on the date of this report.
significant and material orders passed by regulators
The Competition Commission of India (CCI) has issued an order on February 2, 2022 mentioning that it has held five tyre manufacturers and Automotive Tyre Manufactures Association (ATMA) guilty of contravention of the provisions of Section 3 of the Competition Act, 2002 and imposed a penalty of D 425.53 Crores on the Company.
The Company does not agree with the findings of the Commission. The Company has proceeded with an appeal against the Judgement and sought stay on the order before the National Company Law Appellate Tribunal (NCLAT).
We would like to reiterate that the Company follows the highest level of governance practices and operates within the letter and spirit of the law.
Other than the aforesaid, no significant and material orders have been passed during the year under review by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.
change in the nature of business, if any
There is no change in the nature of business of your Company during the year under review.
Internal Financial Control (IFC) means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Company''s policies, the safeguarding of its assets, timely prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.
The Company has identified and documented key internal financial controls as part of standard operating procedures (SOPs). The SOPs are designed for critical processes across all plants, warehouses and offices wherein financial transactions are undertaken. The SOPs cover the standard processes, risks, key controls and each process is identified to a process owner. In addition, the Company has a well-defined Financial Delegation of Authority (FDoA), which ensures approval of financial transactions by appropriate personnel.
The Company uses SAP-ERP to process financial transactions and maintain its books of accounts. The SAP has been setup to ensure adequacy of financial transactions and integrity & reliability of financial reporting. SAP was implemented in the European operations in year 2016. SAP was also implemented at Company''s Greenfield plants in Hungary and Andhra Pradesh.
The financial controls are evaluated for operating effectiveness through management''s ongoing monitoring and review process, and independently by Internal Audit. The testing of controls by Internal Audit are divided into three separate categories viz. a) automated controls within SAP, b) segregation of duties within SAP and restricted access to key transactions, c) manual process controls.
In our view, the SOPs, FDoA, SAP-ERP and independent reviews by the Internal Audit help in establishing adequate internal financial controls with reference to the financial statements and such internal financial controls are operating effectively.
management discussion and analysis report
As required by Regulation 34 (2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed Management Discussion and Analysis Report is presented in a separate section forming part of the Annual Report.
subsidiary/ associate companies
As the Company follows its vision to become a global tyre brand of choice, it has multiple Subsidiaries for facilitating these operations in various countries. As on March 31, 2022, your Company had 34 Overseas Subsidiary Companies (including step subsidiaries), 1 wholly owned Subsidiary in India, 2 Associate Companies and 1 Joint Venture.
During the year under review the Company had made an investment of ? 49 million in the equity share capital of Apollo Tyres Centre of Excellence Ltd, a wholly owned Subsidiary of the company. The Company had also made an investment of ? 93 million by purchasing 11,66,250 Equity Shares (27.2%) of CSE Deccan Solar Private Limited on January 14, 2022, to get a guaranteed supply of 40 million units of electricity per annum for its Chennai Plant. Consequent to this investment, CSE Deccan Solar Private Limited has become an Associate Company.
Apollo Tyres (Malaysia) Sdn. Bhd. (a wholly owned Subsidiary of Apollo Tyres Holdings (Singapore) Pte. Ltd) had initiated for striking off its name from the Companies Commission of Malaysia and is in the process of liquidation as the company has changed its business model in Malaysia from multiple dealer network to Distributor model.
During the year under review, ATL Singapore Pte Ltd., (a wholly owned Subsidiary of Apollo Tyres Holdings (Singapore) Pte. Ltd) had also initiated for striking off its name from the Registrar and Accounting and Corporate Regulatory Authority (ACRA) and is in the process of liquidation, as the Company had ceased its business operations completely since February 28, 2022 and Company does not have any intention of carrying on business in the future.
Apart from the above, no other Company has become or ceased to be Subsidiary, Associate or Joint Venture of the Company during the financial year.
In order to distinguish between a Corporate and a Brand image of the overall Apollo Group, the Management had decided to change the name of few of its European Subsidiaries as a move towards Corporate Restructuring, Simplification and Operational Convenience. In view of the same, the names of following step-down Subsidiaries were changed during the year under review:
s. No. |
Old Name |
New Name |
i. |
Apollo Vredestein B.V. |
Apollo Tyres (NL) B.V. |
2. |
Apollo Tyres B.V |
Apollo Tyres (Europe) B.V. |
3. |
Apollo Tyres (UK) Pvt |
Apollo Tyres (UK) |
Limited |
Holdings Ltd. |
|
4. |
Apollo Vredestein SAS |
Apollo Tyres (France) SAS |
5. |
Apollo Vredestein Tires Inc. |
Apollo Tires (US) Inc. |
6. |
Apollo Vredestein (UK) Ltd |
Apollo Tyres (UK) Sales Ltd. |
7. |
Apollo Tyres (Germany) GmbH |
Apollo Tyres (R&D) GmbH |
8. |
Apollo Vredestein Kft |
Apollo Tyres (Hungary) Sales Kft. |
s. No. |
Old Name |
New Name |
9. |
Apollo Vredestein Belux |
Apollo Tyres (Belux) SA |
10. |
Apollo Vredestein Schweiz ag |
Apollo Tyres (Schweiz) ag |
11. |
Apollo Vredestein GmbH |
Apollo Tyres (Germany) GmbH |
12. |
Apollo Vredestein Nordic AB |
Apollo Tyres (Nordic) AB |
13. |
Apollo Vredestein Gesellschaft m.b.H. |
Apollo Tyres (Austria) Gesellschaft m.b.H. |
14. |
Apollo Vredestein Opony Polska Sp. Zo.o. |
Apollo Tyres (Polska) Sp. Z o.o |
15. |
Apollo Vredestein Iberica s.a.u. |
Apollo Tyres Iberica S.A. |
consolidated financial statements
As stipulated by Regulation 33 of the Listing Regulations, the Consolidated Financial Statements have been prepared by the Company in accordance with the applicable Accounting Standards. The audited Consolidated Financial Statements, together with Auditors'' Report, form part of the Annual Report.
As per the provisions of Section 129 of the Companies Act, 2013, the consolidated financial statements of the Company, its Subsidiaries and Associates are attached in the Annual Report. The annual accounts of Subsidiaries and Associates 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. A statement in Form AOC-1 containing the salient features of the financial statements of the Company''s Subsidiaries, Associates and Joint Venture for the year ended March 31, 2022 is also attached with financial statements.
Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 defines a ''material Subsidiary'' to mean a Subsidiary whose income or net worth exceeds ten percent of the consolidated income or net worth respectively, of the listed Company and its subsidiaries in the immediately preceding financial year.
In addition to the above, Regulation 24(1) of the abovementioned regulations requires that at least one Independent Director on the Board of Directors of the listed Company to be a Director on the Board of Directors of unlisted material Subsidiary, whether incorporated in India or not. For this provision, material Subsidiary means a Subsidiary whose income or net worth exceeds twenty percent of the consolidated income or net worth respectively, of the listed entity and its Subsidiaries in the immediately preceding financial year. Basis this definition, your Company has following five material unlisted Subsidiaries viz. Apollo Tyres (NL) B.V. (Formerly Apollo Vredestein B.V.), Apollo Tyres (Hungary) Kft., Apollo Tyres (Europe) B.V. (Formerly Apollo Tyres B.V.), Apollo Tyres Cooperatief U.A. and Apollo Tyres Holdings (Singapore) Pte Ltd. as on March 31, 2022.
Pursuant to this, Mr. Akshay Chudasama, an Independent Director of the Company was nominated as Director on the Board of Apollo Tyres (NL) B.V, Apollo Tyres (Hungary) Kft., Apollo Tyres Holdings (Singapore) Pte Ltd. and Ms. Pallavi Shroff, an Independent Director of the Company was nominated as Director on the Board of Apollo Tyres (Europe) B.V. & Apollo Tyres Cooperatief U.A, with effect from April 01, 2019.
Other requirements of Regulation 24 of SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 with regard to Corporate Governance for Subsidiary Companies have been complied with.
a) Apollo Tyres (NL) B.V. (Formerly Apollo Vredestein
b.v.)
Apollo Tyres (NL) B.v. is a 100% subsidiary of Apollo Tyres (Europe) B.v. and ultimately held by Apollo Tyres Ltd, India, a listed multinational organisation, and a global tyre manufacturer.
The Company focuses on developing, manufacturing, marketing, sales and distribution of tyres across various categories including passenger car, truck & bus, agriculture, industrial vehicles and bicycles. The group sells passenger vehicle tyres under two brands, Vredestein and Apollo. The Company has its headquarters based at Amsterdam, Netherlands and production facility based in Enschede, Netherlands. Sales operations are managed by various subsidiary companies across Europe. The group''s distribution network covers Europe, its products are also exported to various other countries.
b) Apollo Tyres (Hungary) Kft.
Apollo Tyres (Hungary) Kft. is one of the latest manufacturing facility within Apollo Tyres group. The Company continued to ramp up its production capacity during the year for both passenger & commercial tyres production line.
During the FY22, the Company has made an additional investment in passenger vehicle tyres production line for debottlenecking and line balancing the capacity.
c) Apollo Tyres Holdings (Singapore) Pte. Ltd.
The principal activities of the Company are of sourcing raw materials for Apollo Tyres manufacturing plants in India and Europe besides the provision of other strategic services to the group. 53% of the raw material procurement is for Natural Rubber for the year FY22. Major sourcing countries are Thailand, Indonesia. Company is also outsourcing finished goods for APMEA and Europe regions for certain specific tyre categories.
Global Supply Chain team based out of Singapore consolidates and manages Global Ocean Freight, Transport Optimization, Offtake activities, Supply Chain Cost Analysis, Mould Management and Certification Projects.
In addition, Corporate HR team, based out of Singapore, is managing and facilitating the effective deployment of HR systems and policies, in key areas such as Talent Acquisition, Rewards & Mobility, Talent Management and core HR processes, which are aligned to the business objectives of Apollo Tyres with the mandate of enhancing organizational effectiveness and human capital utilization.
d) Apollo Tyres (Europe) B.V. (Formerly Apollo Tyres
b.v.)
Apollo Tyres (Europe) B.v. incorporated in Netherlands is a Holding Company with two Subsidiaries, Apollo Tyres (NL) B.v. and Apollo Tyres (Hungary) Kft.
e) Apollo Tyres Cooperatief U.A.
Apollo Tyres Cooperatief U.A., a direct Subsidiary of the Company, was incorporated in the Netherlands. The Company is primarily acting as a Holding Company for all overseas operations.
deposits
During the year under review, your Company did not accept deposits covered under Chapter V of the Companies Act, 2013.
auditors
M/s. Walker Chandiok & Co LLP, Chartered Accountants, Firm Registration No. 001076N/N500013 (the firm licenses audit software as well as audit methodology from Grant Thornton International Ltd), had been appointed as Statutory Auditors of your Company for a period of 5 years from FY18 to FY22 at the Annual General Meeting held on July 5, 2017. The present term of M/s. Walker Chandiok & Co LLP, Chartered Accountants, would expire at the conclusion of the ensuing AGM.
The Board of Directors of your Company has proposed the appointment of M/s. S.R. Batliboi & Co. LLP (Firm Registration No. 301003E/E300005), Chartered Accountants (Member firm of Ernst & Young Global) as the Statutory Auditors of the Company to hold office from the conclusion of this 49th AGM until the conclusion of the 54th AGM.
The Company has received a letter from the Auditors confirming that they are eligible for appointment as Statutory Auditors of the Company under Section 139 of Companies Act, 2013 and meet the criteria for appointment specified in Section 141 of the Companies Act, 2013. Further, they have confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India (ICAI).
auditors'' report
The report given by M/s. Walker Chandiok & Co LLP, Chartered Accountants, Statutory Auditors on financial statements of the Company for FY22 is part of the Annual
Report. The comments on statement of accounts referred to in the report of the Auditors are self explanatory. The Auditors'' Report does not contain any qualification, reservation or adverse remark.
During the year under review, the Auditors had not reported any matter under Section 143(12) of the Companies Act, 2013. Therefore, no detail is required to be disclosed under Section 134(3)(ca) of the Companies Act, 2013.
M/s. N.P. Gopalakrishnan & Co., Cost Accountants, were appointed with the approval of the Board to carry out the cost audit in respect of the Company''s plants at Perambra (Kerala), Limda (Gujarat), Chennai (Tamil Nadu) and Chinnapandur (Andhra Pradesh) as well as Company''s leased operated plant at Kalamassery (Kerala) for FY22.
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 FY22 subject to Members'' 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 disqualified for such re-appointment within the meaning of Section 141 of the Companies Act, 2013. The remuneration to be paid to M/s. N.P. Gopalakrishnan & Co., for FY23 is subject to ratification of the shareholders at the ensuing AGM.
Cost records as specified by the Central Government under Sub-Section (1) of Section 148 of the Companies Act, 2013 are made and maintained by the Company.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company had re-appointed M/s. PI & Associates, Company Secretaries as Secretarial Auditor of the Company for FY22 to undertake secretarial audit of the Company.
The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. Secretarial Audit Report given by Secretarial Auditors is annexed with the report as Annexure I.
meetings of the board of directors
A calendar of meetings is prepared and circulated in advance to the Directors. During the year, 5 (five) Board meetings were convened and held. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details of all Board/ Committee meetings held are given in the Corporate Governance Report.
The details of the Audit Committee including its composition and terms of reference mentioned in the Corporate Governance Report form part of Board''s Report.
The Board, during the year under review, had accepted all recommendations made to it by the Audit Committee.
The Company has formulated a vigil mechanism through Whistle Blower Policy to deal with instances of unethical behaviour, actual or suspected, fraud or violation of Company''s code of conduct or ethics policy. The details of the policy are explained in the Corporate Governance Report and also posted on the website of the Company.
Pursuant to requirement under Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors has constituted various Committees of Board such as Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee, Business Responsibility and Sustainability Committee, Risk Management Committee and Corporate Social Responsibility Committee. The details of composition and terms of reference of these Committees are mentioned in the Corporate Governance Report.
During the year under review the issued, subscribed and paid up Equity Share Capital of the Company was 635,100,946 equity shares of D 1/- each. There was no change in the capital structure of the Company.
a) issue of equity shares with differential rights
Your Company has not issued any equity shares with differential rights during the year under review.
b) issue of sweat equity shares
Your Company has not issued any sweat equity shares during the year under review.
c) issue of employee stock options
Your Company has not issued any employee stock options during the year under review.
d) Provision of money by Company for purchase of its own shares by employees or by trustees for the benefit of employees
Your Company has not made any provision of money for purchase of its own shares by employees or by trustees for the benefit of employees during the year under review.
particulars of loans, guarantees or investments under section 186
During the year under review, your Company has not given any loan or guarantee which is covered under the provisions of Section 186 of the Companies Act, 2013. However, details of investments made during the year are given under notes to the financial statements.
All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis and do not attract the provisions of Section 188 of the Companies Act, 2013. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.
Suitable disclosures as required by the Indian Accounting Standards have been made in the notes to the financial statements. The policy on related party transactions as approved by the Board is uploaded on the Company''s website.
a) The details required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in the Corporate Governance Report.
b) During the year under review, Mr. NeeraJ Kanwar (DIN: 00058951), Vice Chairman & Managing Director, also received remuneration from Apollo Tyres (UK) Holdings Ltd. (formerly Apollo Tyres (UK) Pvt. Ltd.), wholly owned Subsidiary of the Company.
Particulars of employees as required in terms of the provisions of Section 197 of the Companies Act, 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out in Annexure A to the Board''s Report.
prevention of sexual harassment at workplace
Your Company has in place a formal policy for prevention of sexual harassment of its employees at workplace and the Company has complied with provisions relating to the constitution of Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company conduct, from time to time, the awareness sessions on prevention of sexual harassment at workplace for its employees.
During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Furthermore, there was no pending compliant/ case at the beginning as well as ending of financial year.
As a firm commitment to Health, Safety and Environment (HSE), the year saw multiple initiatives to implement and
review the HSE plans and achieve the defined KPIs. For details on HSE, please refer to Management Discussion and Analysis Report.
In its constant quest for growth and excellence, 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 |
CSR Health Impact Awards 2021 |
Health CSR Project- Campaign of the Year Category |
Integrated Health & Wellbeing Council |
National Intellectual Property Award for |
Top Indian Co for designs & |
Indian Intellectual Property Office and |
the year 2020 |
commercialisation |
Confederation of Indian Industry (Cll) |
Sustainable Development Goals (SDG) 2021 |
ET SDG Summit |
|
CSR Times |
Health category |
CSR Times |
All Kerala CSR Award 2020 |
Environment Sustainability |
Kerala Chapter of National Institute of Personnel Management (NIPM) |
National Convention on Quality Concepts (NCQC) 2021 |
Par Excellence award |
qcfi |
Good Design Award 2021 |
The Chicago Athenaeum Museum of Architecture and Design |
|
India Risk Management Awards |
Masters of Risk |
CNBC TV18 |
Pitch CMO Awards |
CMO Sustainability Award |
The Company has constituted a Risk Management Committee (RMC) of the Board comprising of Directors and Senior Executives of the Company. The RMC has a Risk Management Charter and Policy that is intended to ensure that an effective Risk Management framework is established and implemented within the organisation. The Company has also formed Internal Risk Committees (IRCs), which review risk registers for Asia Pacific Middle East Africa (APMEA) Region including India, Europe region and Corporate Functions including United States (US) Region headed by President (APMEA), President (Europe) and Chief Financial Officer as Chairperson of the respective Committees. The IRCs review each risk on a quarterly basis and evaluate its impact and plans for mitigation. Further details about the RMC including its composition are mentioned in the Corporate Governance Report which forms part of the Board''s Report.
corporate social responsibility
The Company initiated its CSR activities way before the Companies Act, 2013 came in existence. The Company has a well-defined CSR policy which is made as per the requirement of Section 135 of the Companies Act, 2013. All the CSR activities are linked with National Development Goals and globally with the Sustainable Development Goals (SDGs).
The Company has a CSR team, which exclusively works towards achievement of CSR goals of the organisation. All the CSR activities of the Company are routed through a registered trust (Apollo Tyres Foundation) and functions with close monitoring and guidance of the CSR committee.
In the reporting year, the Company has undertaken various initiatives related to Healthcare Programme for Trucking Communities, Solid Waste Management and Sanitation Programme for Communities, Livelihood for Underprivileged Women, Biodiversity Conservation and Philanthropy Initiatives; focussing on eradicating hunger and poverty, preventive health and promoting education. Additionally, under Disaster Relief theme, the Company has also undertaken COVID-19 relief activities (mass vaccination, testing and helpline service) for its key stakeholder (trucking community).
Corporate Social Responsibility Report, pursuant to clause (o) of sub section (3) of Section 134 of the Act and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 including salient features mentioned under outline of Company''s CSR policy forms part of this Report as Annexure II.
The CSR Policy of the Company is available on the website of the Company and the weblink is: - https:// corporate.apollotures.com/investors/corporate-governance/?filter=CodesPolicies
business responsibility report
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time, mandates the top 1000 Listed Companies by market capitalisation to include Business Responsibility Report ("BR Report") in their Annual Report.
Your Company falls under the top 500 Listed Companies by market capitalisation. Accordingly, a BR Report describing the initiatives taken by the Company from an environmental, social and governance perspective, forms part of this Report as Annexure ML
conservation of energy, technology absorption, foreign exchange earnings and outgo
Particulars required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, are given in Annexure IV, forming part of this report.
As per Section 134(3)(a) of the Companies Act, 2013, the Annual Return referred to in Section 92(3) has been placed on the website of the Company www.apollotyres.com under the Investors Section (Refer link: https://corporate.apollotures. com/en-in/investors/corporate-governance/?filter=Others ).
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. Walker Chandiok & Co LLP, Chartered Accountants, Statutory Auditors of the Company, regarding compliance of the conditions of corporate governance, as stipulated under Chapter IV of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached herewith as Annexure V to this report.
directors'' responsibility statement
As required by Section 134(3)(c) of the Companies Act, 2013, your Directors state that:
(a) in the preparation of the annual accounts for the financial year ended March 31, 2022, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) the Directors had prepared the annual accounts on a going concern basis;
(e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
During the year under review, your Company had complied with all the applicable Secretarial Standards.
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, Tamil Nadu and Andhra Pradesh and the National Governments of India, Netherlands and Hungary. 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
onkar kanwar
Place: Gurugram Chairman & Managing Director
Date: May 12, 2022 DIN: 00058921
Mar 31, 2018
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, 2018.
FINANCIAL PERFORMANCE
The financial performance of the Company for the financial year ended March 31, 2018 is summarised below:
(Rs. in Million)
Year ended |
Year ended |
|||
Particulars |
March 31, 2018 |
March 31, 2017 |
March 31, 2018 |
March 31, 2017 |
Standalone |
Consolidated |
|||
Net Sales |
101,332 |
88,167 |
146,741 |
130,630 |
Other Income |
2,883 |
2,524 |
2,830 |
2,689 |
Operating Profit (EBIDTA) |
13,692 |
14,626 |
17,678 |
20,005 |
Less: Depreciation/Amortisation Exp. |
3,644 |
2,882 |
5,926 |
4,618 |
Finance Cost |
1,375 |
888 |
1,629 |
1,029 |
Provision for Tax |
2,449 |
2,829 |
2,884 |
3,365 |
Net Profit before Exceptional Items |
6,224 |
8,027 |
7,239 |
10,993 |
Add: Exceptional Items |
- |
- |
- |
- |
Less: Share of Profit/(Loss) in Associate/Joint Venture |
- |
- |
- |
(3) |
Net Profit |
6,224 |
8,027 |
7,239 |
10,990 |
OPERATIONS
With the bullishness in the Indian economy and the Indian auto industry, the tyre industry also was on a northward march. Internal estimates indicate that the growth has been led by the OE sales more than sales in the replacement market. A 19% growth in the commercial vehicle segment saw the tyre industry following a similar growth graph and continues to account for the highest value within the industry. Good monsoons saw a strong demand for all tractor tyres (front, rear and trailer) which posted good growth numbers.
Europe saw a stable performance of the tyre industry with the exception of the agricultural tyre sales, which performed badly for the fourth year in a row. The OE component of the passenger car segment grew marginally by 1% to close the year with 86.7 million units.
On a standalone basis, your Company achieved a net turnover of Rs.101,332 million as against Rs.88,167 million during the previous financial year. EBIDTA was at Rs.13,692 million as compared to Rs.14,626 million during the previous financial year. The Net Profit for the year under review was Rs.6,224 million, as against Rs.8,027 million in the previous fiscal.
The consolidated net turnover of your Company was Rs.146,741 million during FY2018, as compared to Rs.130,630 million in FY2017. The consolidated EBIDTA was Rs.17,678 million for FY2018 as compared to Rs.20,005 million for the previous financial year. On consolidated basis, Apollo Tyres earned a Net Profit of Rs.7,239 million for FY2018 as against Rs.10,990 million for the previous financial year.
RAW MATERIALS
The year under review saw the raw material cost increase by ~ 10% over the last fiscal. The major contribution in this cost push was from Carbon Black, Synthetic Rubber, Nylon Fabric, Chemicals and Natural Rubber.
The recovery in the automobile industry and the resultant strong OE demand post GST put a lot of pressure on the raw material supply chain in the second half of the year with tightness noticed in Carbon Black, Chemicals and Beadwire. The demand supply gap in Natural Rubber continued during the course of the year.
Oil prices during the year continued to climb upwards. The brent oil prices crossed the psychological mark of USD 70 per barrel in the month of January 2018. Increased compliance by OPEC members to agreed production cuts supported by other large oil exporters has kept the oil prices high during the financial year. The present OPEC production cuts are likely to extend till the end of 2018. The oil prices have now found a new normal in the band of USD 60 - 65 /bbl as against USD 50 - 55 /bbl in the last year.
The three major Natural Rubber (NR) producing countries of Thailand, Indonesia and Malaysia have been moderating exports of NR under the Agreed Export Tonnage Scheme (AETS) to shore up prices. During the year, AETS 4 and AETS 5 were introduced to curtail exports by 615,000 MT and 350,000 MT respectively.
Natural Rubber in India continued to attract 25% Customs Duty. The port restrictions on NR and also the pre import condition on NR imports under advance licences continued during the year. Indiaâs requirement of NR for radial application continues to grow rapidly with the increase in the production of truck and bus radial tyres. This increased requirement for radial application has to be met through imports. The duty on import of Nylon Fabric was raised from 10% to 20% in the month of October 2017.
There was severe tightness in the availability of Carbon Black in India. The capacity creation in the Carbon Black industry has lagged behind the investments made in the Tyre Industry leading to serious supply constraints. The situation became acute in Q4 with the closure of a Carbon Black unit in North India owing to environmental reasons. The Company had to import Carbon Black to continue its manufacturing operations inspite of antidumping duty on import of Carbon Black from China which is the largest producer of Carbon Black in the world.
The conventional grades of Synthetic Rubber - Styrene Butadiene Rubber (SBR) are now produced in India leading to import substitution. However, antidumping duty has been imposed on imports of SBR from Korea, Thailand and Europe in August 2017. The Solution SBRs used in the manufacture of tyres with low rolling resistance are not produced in India and have to be imported from Europe and South East Asia.
Rubber chemicals availability has been impacted due to shutdown of chemical industries in China which has the largest chemical footprint globally. The antidumping duty continues on imports of major Raw Materials - Carbon Black from China and Russia, Nylon Fabric from China, Rubber Chemicals from China, EU and Korea.
DIVIDEND
Your Company has a consistent track record of dividend payment. The Directors are pleased to recommend a dividend of â3/- (300%) per share of Rs.1/- each on Equity Share Capital of the Company for FY2018 for your approval. There will be no tax deduction at source on dividend payments, but certain specified shareholders (resident in India) receiving a dividend income exceeding Rs.1 million, would become liable to pay additional tax @ 10% (plus applicable surcharge and cess). Your Company would continue to bear tax on dividend @ 20.56 %, inclusive of surcharge and cess.
The dividend, if approved, shall be payable to the members holding shares as on record date/cut-off date, i.e. July 19, 2018.
RESERVES
The amount available for appropriations, including surplus from previous year amounted to Rs.37,367 million. Surplus of Rs.33,888 million has been carried forward to the balance sheet. A debenture redemption reserve of Rs.160 million and general reserve of Rs.1000 million has been provided.
BOARD OF DIRECTORS
A) Appointment/Re-appointment of Director
Mr. Onkar S. Kanwar (DIN: 00058921), Managing Director was re-appointed for a period of 5 years w.e.f. February 1, 2018 at the AGM held on July 5, 2017.
Pursuant to Section 161 of the Companies Act, 2013, Ms. Anjali Bansal (DIN:00207746) was appointed as an Additional Director (Independent) of the Company w.e.f. November 1, 2017, to hold office till the date of the ensuing Annual General Meeting (AGM). The Company has received requisite notice, as provided under Section 160 of the Companies Act, 2013, from a member, proposing the appointment of Ms. Anjali Bansal, as an Independent Director not liable to retire by rotation.
Dr. M. Beena (DIN: 03483417), IAS, was nominated by Government of Kerala as a Director on the Board of the Company in place of Mr. Paul Antony (DIN:02239492) w.e.f. January 30, 2018.
Pursuant to the provisions of Section 152 (6) of the Companies Act, 2013, Mr. Sunam Sarkar, (DIN:00058859), Director of the Company, is liable to retire by rotation and being eligible, offers himself for re-appointment. Mr. Sunam Sarkar is not disqualified under Section 164(2) of the Companies Act, 2013.
B Changes in Directors and Key Managerial Personnel
During the year under review, except the appointment of Ms. Anjali Bansal as an Additional Director (Independent) w.e.f. November 1, 2017 and nomination of Dr. M. Beena, IAS, in place of Mr. Paul Antony to the Board of the Company by Government of Kerala w.e.f. January 30, 2018, there were no changes in Directors and Key Managerial Personnel of the Company.
C) Declaration by Independent Directors
In terms with Section 149 (7) of the Companies Act, 2013, every Independent Director of the Company has submitted a declaration that they meet the criteria of Independence.
D) Formal Annual Evaluation
Pursuant to the provisions of the Companies Act, 2013, the Board is required to carry out annual evaluation of its own performance and that of its Committees and individual Directors. The Nomination and Remuneration Committee of the Board also carries out evaluation of every Directorâs performance. Accordingly, your Company has carried out the performance evaluation during the year under review.
For annual performance evaluation of the Board as a whole, itâs Committee(s) and individual Directors including the Chairman of the Board, the Company has formulated a questionnaire to assist in evaluation of the performance. Every Director has to fill the questionnaire related to the performance of the Board, its Committees and individual Directors except himself by rating the performance on each question on the scale of 1 to 5, 1 being Unacceptable and 5 being Exceptionally Good.
On the basis of the response to the questionnaire, a matrix reflecting the ratings was formulated and placed before the Board for formal annual evaluation by the Board of its own performance and that of its Committees and individual Directors. The Board was satisfied with the evaluation results.
E) Separate Meeting of Independent Directors
In terms of requirements under Schedule IV of the Companies Act 2013 and Regulation 25 (3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate meeting of the Independent Directors was held on January 9, 2018.
The Independent Directors at the meeting, inter alia, reviewed the following:
- Performance of Non- Independent Directors and Board as a whole.
- Performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-Executive Directors.
- Assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
F) Remuneration Policy
The Board has, on the recommendation of the Nomination & Remuneration Committee, laid down a Nomination & Remuneration Policy for selection and appointment of the Directors, Key Managerial Personnel and Senior Management and their remuneration. The extract of the Nomination and Remuneration Policy provided in the Corporate Governance Report forms part of Boardâs Report.
PRODUCT & MARKETING
FY2018 for the APMEA region began with a clarion call for the Indian market to cross the Rs.10,000 crore milestone. The entire financial year saw the India team relentlessly focusing on this goal by launching new products across segments, strengthening the dealer network, increasing investments in branding, winning new OE customers and creating unique and innovative initiatives for dealers and customers and in the process ended the year with increased market share in various categories.
Cutting edge R&D, highly efficient factory processes, high product quality, wide product portfolio and good marketing activation ensured growth for the Commercial vehicle tyres in both its segment - replacement and OE business. The year saw multiple product launches in the passenger car segment including Altrust in the general car segment, Apterra HT2 for the SUV segment and Aspire 4G tyre for the luxury segment. Along with the Companyâs bestseller range like Alnac 4G, it helped the Company to post a good growth rate in the passenger car segment. A strengthened product range including products for specific applications like the VIRAT 23 for hard soil application, a targeted distribution network and new customer acquisition saw the OHT business segment growing significantly.
The year was a significant milestone for the Company in its brand building journey. The Company deepened its association with football and this helped it to cover the fan base across the country. It associated with I-league team Minerva Punjab FC as the title sponsor and for Indian Super League (ISL) team Chennaiyin FC as its principal sponsor. Both the teams emerged as winners in their respective leagues and helped connect Apollo Tyres to the football loving fans across the country. The Company also partnered with Indian Super League and brought in the worldâs best freestyle football artists to popularise the sport and engage with the enthusiastic fans. This helped the Company garner high amount of paid and earned media. Given the importance of digital media, the Company focussed on this media for all its campaigns including the #ApolloXISL, #iloveunited, #monsoondrift.
Beyond India, the Thailand market saw high growth in the overall OHT segment including the Agriculture segment. With a strategy of introducing products catering to specific markets and for specific applications, the Company has started witnessing traction in countries like Malaysia, Vietnam and Myanmar among other countries. Despite availability of low cost Chinese tyres in these countries, the Company saw healthy double digit growth from the region. The Company expanded its two-wheeler business beyond India with the launch of the tyres in Bangladesh and Sri Lanka.
With the Hungary manufacturing plant going live in the beginning of the financial year, the year saw continuous efforts by the Company to ramp up and stabilize operations and overcome the initial teething challenges. The key businesses for the region - PCR and agricultural - saw decent growth with agricultural segment sales was up by 6.6% in an overall declining market. The Company is currently seeding its TBR products in various European markets to understand the market needs, even as R&D continues to improve the products for the market.
EXPANSION PROGRAMME AND FUTURE OUTLOOK
Even as the Company continues to seed other markets, India will continue to be the dominant market. With its leadership position in TBR, the Company will continue to focus on achieving terminal capacity utilization of its Chennai plant with completion of large truck and bus radial tyres investment and also sweat its other plant assets. For the high volume two-wheeler segment, the Company plans to introduce radial tyre through a pilot capacity.
Our new production plant in Gyongyoshalasz (Hungary) was opened in April 2017. The new plant ramped up capacity and production through the year and should target to reach planned full capacity production by end of next fiscal year. The commercial production of truck and bus radial tyres will start by summer of 2018.
In our plant in Enschede (the Netherlands) we continued to invest in modernization.
MATERIAL CHANGES AND COMMITMENTS
No material changes and commitments affecting the financial position of your Company have occurred between the end of the financial year of the Company to which the financial statements relate and on the date of this report.
SIGNIFICANT MATERIAL ORDERS PASSED BY REGULATORS
No significant material orders have been passed during the year under review by the regulators or courts or tribunals impacting the going concern status and Companyâs operations in future.
CHANGE IN THE NATURE OF BUSINESS, IF ANY
There is no change in the nature of business of your Company during the year under review.
INTERNAL FINANCIAL CONTROLS
The Company has identified and documented key internal financial controls as part of standard operating procedures (SOPs). The SOPs are designed for critical processes across all plants, warehouses and offices wherein financial transactions are undertaken. The SOPs cover the standard processes, risks, key controls and each process is identified to a process owner. In addition, the Company has a well defined Financial Delegation of Authority (FDOA), which ensures approval of financial transaction by appropriate personnel.
The Company uses SAP-ERP to process financial transactions and maintain its books of accounts. The SAP has been setup to ensure adequacy of financial transactions and integrity & reliability of financial reporting. SAP was implemented in the European operations in year 2016. SAP was also implemented at Companyâs Greenfield plant in Hungary.
The financial controls are evaluated for operating effectiveness through managementâs ongoing monitoring and review process, and independently by Internal Audit. The testing of controls by Internal Audit are divided into three separate categories; a) automated controls within SAP, b) segregation of duties within SAP and restricted access to key transactions, c) manual process controls.
In our view, the Company has in place adequate internal financial controls with reference to its financial statements and such internal financial controls are operating effectively.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required by Regulation 34 (2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed Management Discussion and Analysis Report is presented in a separate section forming part of the Annual Report.
MANUFACTURING FACILITY AT ANDHRA PRADESH
Your Company intends to set up a state-of-the-art facility in Industrial Park, Chinnapanduru, Chittoor District, Andhra Pradesh for manufacturing of tyres. The Company had executed an Agreement for sale of land with Andhra Pradesh Industrial Infrastructure Corporation Ltd on March 13, 2018 and got the possession of the land admeasuring 200 acres.
The foundation stone for Companyâs manufacturing unit at Andhra Pradesh was laid by the Honourable Chief Minister of Andhra Pradesh Mr. N. Chandrababu Naidu on January 9, 2018. This will be the Indiaâs 5th and globally 7th manufacturing unit for the Company.
The planned capacity in the first phase based on the current demand & existing capacity situation is 5.5 million tyres per annum of Passenger Car Tyres anRs.1 million tyres per annum of Truck & Bus Radial tyres. The first tyre roll out is expected to happen within 2 years from the start of construction.
QUALIFIED INSTITUTIONS PLACEMENT (QIP)
Your Company, on October 10, 2017, had issued and allotted 63,025,210 Equity Shares to eligible qualified institutional buyers at the issue price of â238/- per share (including premium of â237/- per share) aggregating to â15,000 million, through private placement under QIP. Pursuant to the allotment, the paid up equity share capital of the Company stands increased from Rs.509,024,770 to Rs.572,049,980 comprising of 572,049,980 Equity Shares of Rs.1/- each.
The aforesaid shares have been listed for trading on the Stock Exchanges (NSE & BSE) w.e.f. October 12, 2017.
SUBSIDIARY/ ASSOCIATE & JOINT VENTURE COMPANIES
As the Company follows its vision to become a global tyre brand of choice, it created multiple subsidiaries/ associates for facilitating these operations in various countries. As on March 31, 2018, your Company had 43 subsidiaries including step subsidiaries, 2 associates anRs.1 joint venture.
Apollo Tyres Holdings (Singapore) Pte. Ltd. had incorporated ATL Singapore Pte. Ltd. as its wholly owned subsidiary on May 11, 2017 in Singapore.
Apollo Tyres (Cyprus) Pvt Ltd, wholly owned subsidiary of the Company is under winding up.
Apollo Vredestein Italia Srl, a step subsidiary of the Company is under winding up.
Your Company had decided to make an investment upto â9 crores in KT Telematic Solutions Private Ltd. (âKTTâ), a Company operating in Automotive and Information Technology Sector, by way of subscription of equity shares in one or more tranches within a time span of one year on achievement of certain milestones. The Company had invested Rs.2.25 crores in KTT on February 21, 2018. By virtue of control in certain business decisions under an agreement, KTT had become an Associate of the Company w.e.f. February 21, 2018.
As per the provisions of Section 129 of the Companies Act, 2013, the consolidated financial statements of the Company, its subsidiaries and associates are attached in the Annual Report. A statement containing brief financial details of all the subsidiaries and associates of the Company for the year ended March 31, 2018, forms part of the Annual Report. The annual accounts of subsidiaries and associates 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. A statement in Form AOC-1 containing the salient features of the financial statements of the Companyâs subsidiaries, associates and joint venture is also attached with financial statements.
DEBENTURES
The following series of Secured Redeemable Non-Convertible Debentures (NCDs) were issued and allotted during the year under review through Private Placement:-
SL.No |
Series of NCDs |
No. of NCDs @ Face Value of Rs.10,00,000 each |
Value (RS. in Million) |
Date of Allotment |
1 |
7.80 % Series A, B & C |
4,500 |
4,500 |
May 31, 2017 |
The aforesaid NCDs are listed on the debt segment of the National Stock Exchange of India Limited (NSE).
DEPOSITS
During the year under review, your Company did not accept deposits covered under Chapter V of the Companies Act, 2013.
AUDITORS
M/s. Walker Chandiok & Co LLP, Chartered Accountants, Firm Registration No. 001076N/N500013 (the firm licenses audit software as well as audit methodology from Grant Thornton International Ltd), had been appointed as Statutory Auditors of your Company for a period of 5 years from FY2018 to FY2022 at the Annual General Meeting held on July 5, 2017.
AUDITORSâ REPORT
The report given by M/s. Walker Chandiok & Co LLP, Chartered Accountants, Statutory Auditors on financial statements of the Company for FY2018 is part of the Annual Report. The comments on statement of accounts referred to in the report of the Auditors are self explanatory. The Auditorsâ Report does not contain any qualification, reservation or adverse remark.
During the year under review, the Auditors had not reported any matter under Section 143(12) of the Companies Act, 2013 therefore no detail is required to be disclosed under Section 134(3)(ca) of the Companies Act, 2013.
COST AUDIT
M/s. N.P. Gopalakrishnan & Co., Cost Accountants, were appointed with the approval of the Board to carry out the cost audit in respect of the Companyâs facilities at Perambra, Vadodara and Chennai as well as Companyâs lease operated plant at Kalamassery for FY2018.
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 Auditor for FY2019 subject to membersâ 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 disqualified for such re-appointment within the meaning of Section 141 of the Companies Act, 2013.
SECRETARIAL AUDITOR
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has re-appointed M/s. PI & Associates, Company Secretaries as Secretarial Auditor of the Company for FY2018 to undertake Secretarial Audit of the Company.
The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. Secretarial Audit Report given by Secretarial Auditors is annexed with the report as Annexure I.
MEETINGS OF THE BOARD OF DIRECTORS
A calendar of meetings is prepared and circulated in advance to the Directors. During the year, six Board meetings were convened and held. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details of all Board/ Committee meetings held are given in the Corporate Governance Report.
AUDIT COMMITTEE
The details of the Audit Committee including its composition and terms of reference mentioned in the Corporate Governance Report forms part of Boardâs Report.
The Board, during the year under review, had accepted all recommendations made to it by the Audit Committee.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has formulated a vigil mechanism through Whistle Blower Policy to deal with instances of unethical behaviour, actual or suspected, fraud or violation of Companyâs code of conduct or ethics policy. The details of the policy are explained in the Corporate Governance Report and also posted on the website of the Company.
COMMITTEES OF BOARD
Pursuant to requirement under Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors has constituted various Committees of Board such as Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee, Business Responsibility Committee and Corporate Social Responsibility Committee. The details of composition and terms of reference of these Committees are mentioned in the Corporate Governance Report.
SHARE CAPITAL
During the year under review, the Company has issued and allotted 63,025,210 Equity Shares on October 10, 2017 by way of qualified institutions placement and post issue, the Issued, Subscribed and Paid-up Share Capital increased from 509,024,770 to 572,049,980 equity shares. As on March 31, 2018, the Issued, Subscribed and Paid-up Share Capital of the Company was 572,049,980 equity shares of Rs.1/- each.
a) Issue of equity shares with differential rights
Your Company has not issued any equity shares with differential rights during the year under review.
b) Issue of sweat equity shares
Your Company has not issued any sweat equity shares during the year under review.
c) Issue of employee stock options
Your Company has not issued any employee stock options during the year under review.
d) Provision of money by Company for purchase of its own shares by employees or by trustees for the benefit of employees
Your Company has not made any provision of money for purchase of its own shares by employees or by trustees for the benefit of employees during the year under review.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186
During the year under review, your Company has not given any loan or guarantee which is covered under the provisions of Section 186 of the Companies Act, 2013. However, details of investment made during the year, are given under notes to the financial statements.
RELATED PARTY TRANSACTIONS
All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an armâs length basis and do not attract the provisions of Section 188 of the Companies Act, 2013. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.
Suitable disclosure as required by the Indian Accounting Standards has been made in the notes to the financial statements. The policy on Related Party Transactions as approved by the Board is uploaded on the Companyâs website.
MANAGERIAL REMUNERATION
a) The details required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in the Corporate Governance Report.
b) During the year under review, Mr. Neeraj Kanwar (DIN: 00058951), Vice Chairman & Managing Director also received remuneration from Apollo Tyres (UK) Pvt. Ltd., wholly owned subsidiary of the Company.
PARTICULARS OF EMPLOYEES
Particulars of employees as required in terms of the provisions of Section 197 of the Companies Act, 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out in Annexure A to the Boardâs Report.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
Your Company has in place a formal policy for prevention of sexual harassment of its employees at workplace.
During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
HEALTH, SAFETY & ENVIRONMENT
As a firm commitment to Health, Safety and Environment (HSE), the year saw multiple initiatives to implement and review the HSE plans and achieve the defined KPIs. For details on HSE, please refer to Management Discussion and Analysis Report.
AWARDS AND RECOGNITIONS
In its constant quest for growth and excellence, 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 |
Flame Awards Asia 2017 |
Best Campaign Leveraging Technology Experience & Engagement |
Rural Marketing Association of India (RMAI) |
SNEMA 2016 |
Energy Conservation |
Society of Energy Engineers and Managers(SEEM) |
Campaign India Digital Crest Awards 2017 |
Best use of Search marketing - Consumer promotion in the PCR segment |
Campaign India |
QCFI 2017 |
Quality |
Quality Circle Forum of India |
ICQCC2017 |
Quality |
Quality & Productivity Association of The Philippines (QPAP) |
Compliance Team 2017 |
Annual Compliance Awards |
Compliance 10/10 award organised by Legasis Services |
ABCI Award 2017 |
Annual Report |
Association of Business Communicators of India (ABCI) |
Golden Peacock Award |
Risk Management |
Indiaâs Corporate Institute of Directors (IOD) |
RISK MANAGEMENT
The Company has a well laid out Risk Management Policy, covering the process of identifying, assessing, mitigating, reporting and reviewing critical risks impacting the achievement of Companyâs objectives.
The Risk Management Steering Committees have been formed for APMEA and Europe regions which are headed by President (APMEA) and President (Europe) as Chairman of the respective Committees and represented by the functional heads as Chief Risk Officers. The Committees review each risk on a quarterly basis and evaluate its impact and plans of mitigation. Few cross functioning teams have been formed to share the common risks between dependent functions to avoid overlap of risks. The risks duly aligned with the organisation objectives, documented in form of risk register are placed before Audit Committee. The Audit Committee of the Company reviews the risks of APMEA and Europe regions and provides its directions to the management, if any. The Audit Committee updates the Board on the key risks placed before it.
CORPORATE SOCIAL RESPONSIBILITY
Your Company has been taking initiatives under Corporate Social Responsibility (CSR) for society at large, well before it has been prescribed through the Companies Act 2013. The Company has a well defined Policy on CSR as per the requirement of Section 135 of the Companies Act, 2013 which covers the activities as prescribed under Schedule VII of the Companies Act 2013. The Company has an in-house department which is exclusively working towards that Objective. The Company is carrying out its CSR Activities through Registered Trusts, created by the Company, for this purpose and the Trust is monitored by CSR Committee.
During the year under review, the Company has carried out activities primarily related to promoting preventive healthcare, ensuring environmental sustainability, livelihood enhancement projects, rural development projects, promoting education and eradication of hunger and poverty.
Corporate Social Responsibility Report, pursuant to clause (o) of sub-section (3) of Section 134 of the Act and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 forms part of this Report as Annexure II.
BUSINESS RESPONSIBILITY REPORT
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandates the top 500 Listed Companies by market capitalisation to include Business Responsibility Report (âBR Reportâ) in their Annual Report.
Your Company falls under the top 500 Listed Companies by market capitalisation. Accordingly, a BR Report describing the initiatives taken by the Company from an environmental, social and governance perspective, forms part of this Report as Annexure III.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Particulars required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, are given in Annexure IV, forming part of this report.
EXTRACT OF THE ANNUAL RETURN
The extract of the annual return in Form MGT- 9 is enclosed herewith as Annexure V, 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 organisationâs 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. Walker Chandiok & Co LLP , Chartered Accountants, Statutory Auditors of the Company, regarding compliance of the conditions of corporate governance, as stipulated under Chapter IV of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached herewith as Annexure VI to this report.
DIRECTORSâ RESPONSIBILITY STATEMENT
As required by Section 134(3)(c) of the Companies Act, 2013, your Directors state that:
(a) in the preparation of the annual accounts for the financial year ended March 31, 2018, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) the Directors had prepared the annual accounts on a going concern basis;
(e) t he Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
SECRETARIAL STANDARDS
During the year under review, your Company had complied with all the applicable Secretarial Standards.
ACKNOWLEDGEMENT
Your Companyâs organisational culture upholds professionalism, integrity and continuous improvement across all functions, as well as efficient utilisation of the Companyâs resources for sustainable and profitable growth.
Your Directors wish to place on record their appreciation to the respective State Governments of Kerala, Gujarat, Haryana, Tamil Nadu and Andhra Pradesh and the National Governments of India, Netherlands and Hungary. 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 Board of Directors
Place: Gurgaon ONKAR S. KANWAR
Date: May 10, 2018 Chairman & Managing Director
Mar 31, 2017
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, 2017.
FINANCIAL PERFORMANCE
The financial performance of the Company for the financial year ended March 31, 2017 is summarized below:
Rs,Million
Particulars |
Year ended |
Year ended |
||
March 31, 2017 |
March 31, 2016 |
March 31, 2017 |
March 31, 2016 |
|
Standalone |
Consolidated |
|||
Net Sales |
88,167 |
86,485 |
130,630 |
117,399 |
Other Income |
2,524 |
3,125 |
2,712 |
1,767 |
Operating Profit (EBIDTA) |
14,626 |
17,698 |
20,005 |
20,655 |
Less: Depreciation/Amortization Exp. |
2,882 |
2,652 |
4,618 |
4,268 |
Finance Cost |
888 |
901 |
1,029 |
926 |
Provision for Tax |
2,829 |
4,124 |
3,365 |
4,677 |
Net Profit before Exceptional Items |
8,027 |
10,021 |
10,993 |
10,784 |
Add: Exceptional Items |
- |
- |
- |
478 |
Less: Share of loss in Joint Ventures |
- |
- |
3 |
32 |
Net Profit |
8,027 |
10,021 |
10,990 |
11,230 |
OPERATIONS
The Indian tyre industry showed a volume growth of 12%, led primarily by the Passenger Vehicles, Scooters and Motorcycle/Moped segments. While the tyre production for Medium and Heavy Commercial Vehicles (M&HCV) de-grew by 3%, the tyre production for Light Commercial Vehicle (LCV) segment grew by 7%. Pick-up in rural demand, thanks to an above-normal monsoon is evident with the demand for all tractor tyres (front, rear and trailer) growing in double digits.
On a standalone basis, your Company achieved a net turnover of Rs, 88,167 million as against Rs, 86,485 million during the previous financial year. EBIDTA was at Rs, 14,626 million as compared to Rs, 17,698 million during the previous financial year. The net profit for the year under review was Rs, 8,027 million, as against Rs, 10,021 million in the previous fiscal.
The consolidated net turnover of your Company was Rs, 130,630 million during FY17, as compared to Rs, 117,399 million in FY16. The consolidated EBIDTA was Rs, 20,005 million for FY17 as compared to Rs, 20,655 million for the previous financial year. On consolidated basis, Apollo Tyres earned a net profit of Rs, 10,990 million for FY17 as against Rs, 11,230 million for the previous financial year.
RAW MATERIALS
The year under review witnessed the raw material cost increasing by around 3% after 4 years of continued decline in raw material prices.
The first half of FY17 saw raw material prices ruling lower than the corresponding period in the last fiscal. The raw material prices rose sharply in the second half of FY17 over the same period last year putting pressure on the margins.
The OPEC oil pact in November 2016 acted as the trigger for reversal of the softening trend in commodity prices. OPEC members agreed to reduce their output from 33.7 million barrels/ day to 32.5 million barrels/ day. This led to Oil Prices (Brent Crude) breaching the barrier of USD 50/ barrel and prices have stayed in the band of USD 54 - 56/ barrel since then.
Natural Rubber prices started to rise during 2016 on the back of International Tripartite Rubber Council (ITRC) agreeing to continue export cutbacks through the implementation of the Agreed Export Tonnage Scheme (AETS) by major exporting countries. The prices rose sharply from November 2016 onwards due to floods in rubber producing regions of Thailand affecting the availability leading to supply crunch. The international rubber prices for TSR 20 grade
touched a level of USD 2.3/kg in February 2017 from a level of USD 1.3/kg in August 2016 representing a 77% rise.
The demand-supply gap in Natural Rubber continued during the year. As per the Indian Rubber Board estimates, the shortfall in production in the country is likely to be around 3,74,000 MT. This shortfall together with the fact that rubber required for radial application needs to be imported from major producing countries such as Thailand and Indonesia leads to a significant dependence on imports of natural rubber.
The other major raw materials such as Synthetic Rubber, Carbon Black, Nylon Fabric also went up in the later part of the year. Synthetic rubber prices in particular spurted by around 40% aided by steep increase in the butadiene prices during the second half of the year.
The antidumping duty continues on imports of major raw materials - Carbon Black from China and Russia, Nylon Fabric from China, Rubber Chemicals from China, EU and Korea. The antidumping duty investigations have been initiated on the imports of Styrene Butadiene Rubber (SBR) and Poly Butadiene Rubber (PBR).
The Company strengthened its sourcing organisation by setting up procurement office in Singapore to work closely with the suppliers in the South East Asian region, having direct business with the manufacturers.
DIVIDEND
Your Company has a consistent track record of dividend payment. The Directors are pleased to recommend a dividend of Rs, 3/- (300%) per share of Rs, 1/- each on Equity Share Capital of the Company for FY17 for your approval. There will be no tax deduction at source on dividend payments, but those shareholders receiving a dividend income exceeding Rs, 10 lakh, would become liable to pay additional tax @ 10%. Your Company would continue to bear tax on dividend @ 20.36%, inclusive of surcharge.
The dividend, if approved, shall be payable to the members holding shares as on record date, i.e. June 28, 2017.
RESERVES
The amount available for appropriations, including surplus from previous year amounted to Rs, 33,826 million. Surplus of Rs, 32,731 million has been carried forward to the balance sheet. A debenture redemption reserve of Rs, 94 million and general reserve of Rs, 1,000 million has been provided.
BOARD OF DIRECTORS
A) Appointment/Re-appointment of Director
Mr. Paul Antony (DIN: 02239492), IAS, Additional Chief Secretary, was nominated by Government of Kerala as a Director on the Board of the Company in place of Mr. P. H. Kurian (DIN: 00027596) w.e.f. November 18, 2016.
Pursuant to the provisions of Section 152 (6) of the Companies Act, 2013, Mr. Paul Antony, (DIN: 02239492), Nominee Director of the Company, is liable to retire by rotation and being eligible, offers himself for re-appointment.
Mr. Paul Antony is not disqualified under Section 164(2) of the Companies Act, 2013.
B) Changes in Directors and Key Managerial Personnel
During the year under review, except the nomination of Mr. Paul Antony, IAS, Additional Chief Secretary in place of Mr. P. H. Kurian to the Board of the Company by Government of Kerala w.e.f. November 18, 2016, there were no changes in Directors and Key Managerial Personnel of the Company.
C) Declaration by Independent Directors
In terms with Section 149 (7) of the Companies Act, 2013, every Independent Director of the Company has submitted a declaration that they meet the criteria of Independence.
D) Formal Annual Evaluation
Pursuant to the provisions of the Companies Act, 2013, the Board is required to carry out annual evaluation of its own performance and that of its committees and individual Directors. The Nomination and Remuneration Committee of the Board is also required to carry out evaluation of every Directorâs performance. Accordingly, your Company has carried out the performance evaluation during the year under review.
For annual performance evaluation of the Board as a whole, itâs Committee(s) and individual Directors including the Chairman of the Board, the Company has formulated a questionnaire to assist in evaluation of the performance. The questionnaire is based on âGuidance Note on Board Evaluationâ as prescribed by SEBI vide its circular dated January 5, 2017. Every Director has to fill the questionnaire related to the performance of the Board, its Committees and individual Directors except himself by rating the performance on each question on the scale of 1 to 5, 1 being Unacceptable and 5 being Exceptionally Good.
On the basis of the response to the questionnaire, a matrix reflecting the ratings was formulated and placed before the Board for formal annual evaluation by the Board of its own performance and that of its Committees and individual Directors. The Board was satisfied with the evaluation results.
E) Separate Meeting of Independent Directors
In terms of requirements under Schedule IV of the Companies Act, 2013 and Regulation 25 (3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate meeting of the Independent Directors was held on December 16, 2016.
The Independent Directors at the meeting, inter alia, reviewed the following:-
- Performance of Non-Independent Directors and Board as a whole.
- Performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-Executive Directors.
- Assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
F) Remuneration Policy
The Board has, on the recommendation of the Nomination & Remuneration Committee, laid down a Nomination & Remuneration Policy for selection and appointment of the Directors, Key Managerial Personnel and Senior Management and their remuneration. The extract of the Nomination and Remuneration Policy provided in the Corporate Governance Report forms part of Boardâs Report.
PRODUCT & MARKETING
In FY17, the APMEA operations continued its focus on key themes for the Indian market - consolidating its leadership position and expanding market share by introducing new products across segments. For other countries in the APMEA region, the objectives were to continue seeding the markets with country specific products, building brand salience and expanding the distribution network.
During the year, the Company expanded its TBR capacity of its Chennai unit from 6,000 units per day to 9,000 units per day. Benchmarked on both counts - quality and value, the Company TBR tyres are the preferred choice for major CV OEMs like Tata Motors, Ashok Leyland, Eicher Motors, Bharat Benz, etc.
It introduced new TBR products to cater to various applications including Apollo Endumile LHD, Apollo Enducomfort CA, etc. In the TBB market, the Company introduced premium products like Amar Gold and XT-7. To further enhance the customer experience, the Company expanded its network of Apollo CV zones to 15 and increased the Apollo Retread Zone network in India. The Company did multiple high impact programs like âApollo Aazadi Ke Rangâ and âLoad ka Championâ to engage with the customers. In the Passenger Car segment, the Company increased the reach for its top selling product - Amazer 4G Life, by another 13 new sizes. Further, the Companyâs branded retail network increased to 290 stores spread across 150 cities. From an OE perspective, the Companyâs tyres are an OE fitment to 16 of the Top 20 cars on Indian roads. Within the first year of launch, Apollo crossed the 1 million tyre mark in the two-wheelers category. The
Company continued its association with Manchester United as it signed a global sponsorship agreement for another 3 years.
The Europe operations continued to build on its Agriculture portfolio as it unveiled nine new sizes of the Traxion85 range. The Companyâs dedicated satellite R&D centre in Raunheim (Frankfurt), Germany continues to work towards establishing ties with leading German OE customers for both Apollo and Vredestein brands. Further, the Vredestein brand became official tyre partner of Mille Miglia, a race for classic and vintage cars.
EXPANSION PROGRAMME AND FUTURE OUTLOOK
Apollo Tyres will continue its three-pronged strategy:
- To consolidate market position in existing markets and seek new markets/ new segments;
- To continue investment in both the brands -Apollo and Vredestein and capacity expansion via Greenfield/ Brownfield facilities; and
- To seek other growth opportunities.
The Company has announced plans to set up a plant in Andhra Pradesh, India.
With the commencement of the commercial production of the Hungarian plant, the Company hopes to increase the continuous and regular supply of its highly rated tyres to the European customers. The Company will further strengthen its portfolio, especially the all-season given the strong industry and Company growth in this segment. The Company strategy around Premiumisation in PV segment will further see growth in the 17 inch and above segment. Importantly, the Company wants to replicate its TBR success story in European market and launched a disruptive online model to enter the European CV segment.
MATERIAL CHANGES AND COMMITMENTS
No material changes and commitments affecting the financial position of your Company have occurred between the end of the financial year of the Company to which the financial statements relate and on the date of this report.
SIGNIFICANT MATERIAL ORDERS PASSED BY REGULATORS
No significant material orders have been passed during the year under review by the regulators or courts or tribunals impacting the going concern status and Companyâs operations in future.
CHANGE IN THE NATURE OF BUSINESS, IF ANY
There is no change in the nature of business of your Company during the year under review.
INTERNAL FINANCIAL CONTROLS
The Company has identified and documented all key internal financial controls as part of standard operating procedures (SOPs). The SOPs are designed for all critical processes across all plants, warehouses and offices wherein financial transactions are undertaken. The SOPs cover the standard processes, risks, key controls and each process is identified to a process owner. In addition, the Company has a well defined Financial Delegation of Authority (FDOA), which ensures approval of financial transaction by appropriate personnel.
The Company uses SAP-ERP to process financial transactions and maintain its books of accounts. The SAP has been setup to ensure adequacy of financial transactions and integrity & reliability of financial reporting. SAP was implemented in the Europe (Netherlands operation) in the previous year with continued work on the same in the current year and it is under implementation at the Companyâs Greenfield plant in Hungary.
The financial controls are evaluated for operating effectiveness through Managementâs ongoing monitoring and review process and independently by Internal Audit. The testing of controls by Internal Audit are divided into three separate categories; a) automated controls within SAP, b) segregation of duties within SAP and restricted access to key transactions, c) manual process controls.
In our view the Internal Financial Controls are adequate and are operating effectively.
SHIFTING OF REGISTERED OFFICE
The Registered Office of your Company has been shifted to 3rd Floor, Areekal Mansion, Near Manorama Junction, Panampilly Nagar, Kochi - 682036 w.e.f. May 1, 2016.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required by Regulation 34 (2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed Management Discussion and Analysis Report is presented in a separate section forming part of the Annual Report.
COMMENCEMENT OF PRODUCTION AT HUNGARY PLANT
The Companyâs 6th tyre manufacturing unit and second in Europe at Gyongyoshalasz, Hungary was inaugurated by the Honorable Prime Minister of Hungary, Mr. Viktor Orban on April 7, 2017. This is Companyâs first Greenfield facility outside India.
This facility will help the Company to further increase its presence and market share in Europe. From being only a replacement market focused company in Europe, the Company would soon be starting supplies of passenger car tyres to all the leading OEs in Europe.
GLOBAL R&D CENTRE, ASIA
The Companyâs 2nd Global R&D Centre, Asia, just outside the southern Indian city of Chennai, was inaugurated on November 9, 2016. First Global R&D Centre, Europe is in Enschede, the Netherlands, which is operational since 2013. The two Global R&D Centres of Apollo Tyres, in addition to the core research, service the product development needs of the respective regions. The Global R&D Centre, Europe services the Europe and America region while the Global R&D Centre, Asia, services the product development needs for the entire India, Asia Pacific, Middle East & Africa region.
SUBSIDIARY/ASSOCIATE & JOINT VENTURE COMPANIES
As the Company follows its vision to become a global tyre brand of choice, it created multiple subsidiaries/ associates for facilitating these operations in various countries. As on March 31, 2017, your Company had 42 subsidiaries including step subsidiaries, 1 associate and 1 joint venture.
The Honâble High Court of Kerala on August 26, 2016, had sanctioned the scheme of amalgamation of Apollo (Mauritius) Holdings Pvt. Ltd. (âAMHPLâ), a wholly owned subsidiary, with the Company. The appointed date of amalgamation was April 1, 2016.
The Corporate and Business Registration Department, Mauritius, vide its letter dated December 7, 2016, had approved the amalgamation of AMHPL with the Company thereby removing the name of AMHPL from its register. AMHPL was amalgamated with the Company with effect from December 7, 2016.
Apollo Tyres Cooperative U.A. had incorporated Saturn F1 Pvt. Ltd, as its wholly owned subsidiary on September 16, 2016 in United Kingdom.
Apollo Tyres Cooperative U.A. had incorporated Retail Distribution Holding B.V., as its wholly owned subsidiary on February 14, 2017 in Netherlands.
Apollo Tyres Cooperative U.A had incorporated Rubber Research LLC, as its wholly owned subsidiary on February 16, 2017 in United States of America.
Apollo Tyres (Cyprus) Pvt. Ltd., wholly owned subsidiary of the Company is under winding up.
Vredestein Norge AS, wholly owned subsidiary of Apollo Vredestein B.V. was wound up on March 21, 2017.
As per the provisions of Section 129 of the Companies Act, 2013, 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, 2017, 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
DEPOSITS
inspection by any shareholder at the Registered Office and Corporate Office of your Company. A statement in Form AOC-1 containing the salient features of the financial statements of the Companyâs subsidiaries, associate and joint venture is also attached with financial statements.
DEBENTURES
The following series of Secured Redeemable Non-Convertible Debentures (NCDs) were issued and allotted during the year under review through Private Placement:-
Sl.No |
Series of NCDs |
No. of NCDs @ Face Value Rs, 10,00,000 each |
Value (Rs, in Millions) |
Date of Allotment |
1 |
8.65% Series A, B S C |
3,250 |
3,250 |
May 30, 2016 |
2 |
7.50% Series A, B & C |
3,000 |
3,000 |
October 21, 2016 |
The aforesaid NCDs are listed on the debt segment of the National Stock Exchange of India Limited (NSE).During the year under review, your Company did not accept deposits covered under Chapter V of the Companies Act, 2013.
AUDITORS
Pursuant to Section 139 (2) of the Companies Act, 2013, read with Companies (Audit and Auditors) Rules, 2014, the Company at its 41st Annual General Meeting (AGM) held on August 6, 2014, had appointed M/s. Deloitte Haskins & Sells as Statutory Auditors for a period of 3 years i.e, up to the conclusion of the 44th AGM to be held in the year 2017. The present term of M/s. Deloitte Haskins & Sells, Statutory Auditors, would expire at the conclusion of the ensuing AGM.
The Board of Directors of your Company has proposed the appointment of M/s. Walker Chandiok & Associates, Chartered Accountants (Grant Thornton International Ltd.), as the Statutory Auditors of the Company to hold office from the conclusion of this 44th AGM until the conclusion of the 49th AGM.
The Company has received a letter from the Auditors confirming that they are eligible for appointment as Statutory Auditors of the Company under Section 139 of Companies Act, 2013 and meet the criteria for appointment specified in Section 141 of the Companies Act, 2013.
AUDITORSâ REPORT
The comments on statement of accounts referred to in the report of the Auditors are self explanatory. The Auditorsâ Report does not contain any qualification, reservation or adverse remark.
COST AUDIT
M/s. N. P. Gopalakrishnan & Co., Cost Accountants, were appointed with the approval of the Board to carry out the Cost Audit in respect of the Companyâs facilities at Perambra, Vadodara and Chennai as well as Companyâs lease operated plant at Kalamassery for FY17.
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 FY18 subject to members 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 disqualified for such re-appointment within the meaning of Section 141 of the Companies Act, 2013.
MEETING OF THE BOARD OF DIRECTORS
A calendar of meetings is prepared and circulated in advance to the Directors. During the year, four Board meetings were convened and held. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details of all Board/ Committee meetings held are given in the Corporate Governance Report.
AUDIT COMMITTEE
The details of the Audit Committee including its composition and terms of reference mentioned in the Corporate Governance Report forms part of Boardâs Report.
The Board, during the year under review, had accepted all recommendations made to it by the Audit Committee.
VIGIL MECHANISM WHISTLE BLOWER POLICY
The Company has formulated a vigil mechanism through Whistle Blower Policy to deal with instances of unethical behavior, actual or suspected, fraud or violation of Companyâs code of conduct or ethics policy. The details of the policy are explained in the Corporate Governance Report and also posted on the website of the Company.
COMMITTEES OF BOARD
Pursuant to requirement under Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors has constituted various Committees of Board such as Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee, Business Responsibility Committee and Corporate Social Responsibility Committee. The details of composition and terms of reference of these Committees are mentioned in the Corporate Governance Report.
SHARE CAPITAL
During the year under review, the Issued, Subscribed and Paid-up Share Capital of the Company was 50,90,24,770 shares of '' 1/- each. There was no change in the capital structure of the Company.
a) Issue of equity shares with differential rights
Your Company has not issued any equity shares with differential rights during the year under review.
b) Issue of sweat equity shares
Your Company has not issued any sweat equity shares during the year under review.
c) Issue of employee stock options
Your Company has not issued any employee stock options during the year under review.
d) Provision of money by company for purchase of its own shares by employees or by trustees for the benefit of employees
Your Company has not made any provision of money for purchase of its own Shares by employees or by trustees for the benefit of employees during the year under review.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186
During the year under review, your Company has not given any loan or guarantee which is covered under the provisions of Section 186 of the Companies Act, 2013. However, details of investment made during the year, are given under notes to the financial statements.
RELATED PARTY TRANSACTIONS
All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an armâs length basis and do not attract the provisions of Section 188 of the Companies Act, 2013. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.
Suitable disclosure as required by the applicable Accounting Standards has been made in the notes to the financial statements. The Policy on Related Party Transactions as approved by the Board is uploaded on the Companyâs website.
MANAGERIAL REMUNERATION
a) The details required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in the Corporate Governance Report.
b) During the year under review, Mr. Neeraj Kanwar (DIN: 00058951), Vice Chairman & Managing Director also received remuneration from Apollo Tyres (UK) Pvt. Ltd., wholly owned subsidiary of the Company.
PARTICULARS OF EMPLOYEES
Particulars of employees as required in terms of the provisions of Section 197 of the Companies Act, 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out in Annexure A to the Boardâs Report.
SEXUAL HARASSMENT AT WORKPLACE
Your Company has in place a formal policy for prevention of sexual harassment of its employees at workplace.
During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
SECRETARIAL AUDITOR
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has re-appointed M/s. PI & Associates, Company Secretaries as Secretarial Auditor of the Company for FY17 to undertake Secretarial Audit of the Company.
The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. Secretarial Audit Report given by Secretarial Auditors is annexed with the report as Annexure I.
RISK MANAGEMENT
AWARDS AND RECOGNITIONS
In its constant quest for growth and excellence, your Company was honored and recognized at various forums. The prominent Awards are listed below for your reference.
Name of the Award |
Category |
Awarded by |
Best Corporate Citizen Award |
CSR initiatives |
Kerala Chapter of National Institute of Personnel Management (NIPM) |
CSR Excellence Award 2016 |
Promoting Ecological and Environmental Sustainability |
Bureaucracy Today (BT) |
ICQCC 2016 |
Quality |
The Association of QC Headquarters of Thailand in co-operation with Department of Industrial Promotion, Ministry of Industry |
Corporate Talent Championship 2016 |
Group Theatre |
Engage4more |
CSR Excellence Award 2016 |
CSR initiatives |
Quality Circle Forum of India |
Sparsha Award 2016 |
CSR initiatives |
National Institute of Industrial Engineering (NITIE) and Lakshya SM |
Golden Peacock Award for Excellence in Corporate Governance 2016 - Special Commendation |
Corporate Governance |
India''s Corporate Institute of Directors (IOD) |
NDTV Architecture and Design Award 2016 Office Category |
NDTV Architecture and Design Award for Apollo Tyres R&D Centre |
|
2015/16 Vision Awards |
Annual Report; Annual Report - Best Letter to Shareholders; Annual Report - Top 50 Reports Worldwide |
League of American Communications Professionals (LACP) |
The Company has a well laid out Risk Management Policy, covering the process of identifying, assessing, mitigating, reporting and reviewing critical risks impacting the achievement of Companyâs objectives.
The Risk Management Steering Committees have been formed for APMEA and Europe regions which are headed by President (APMEA) and President (Europe) as Chairman of the respective Committees and represented by the functional heads as Chief Risk Officers. The Committees review each risk on a quarterly basis and evaluate its impact and plans of mitigation. The risks are documented in form of risk register, which are placed before Audit Committee, at its meeting(s). The Audit Committee of the Company reviews the risks of APMEA and Europe regions and provides its directions to the management, if any. The audit committee updates the Board on the key risks placed before it.
CORPORATE SOCIAL RESPONSIBILITY
Your Company has been taking initiatives under Corporate Social Responsibility (CSR) for society at large, well before it has been prescribed through the Companies Act, 2013. The Company has a well defined Policy on CSR as per the requirement of Section 135 of the Companies Act, 2013 which covers the activities as prescribed under Schedule VII of the Companies Act, 2013. The Company has an in-house department which is exclusively working towards that Objective. The Company is carrying out its CSR Activities through registered trusts created by the Company for this purpose and which is monitored by CSR Committee.
During the year under review, your Company has carried out activities primarily related to promoting preventive healthcare, ensuring environmental sustainability, livelihood enhancement projects, rural development projects, promoting education and eradication of hunger, poverty & malnutrition.
Corporate Social Responsibility Report, pursuant to clause
(o) of sub-section (3) of Section 134 of the Act and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 forms part of this Report as Annexure II.
BUSINESS RESPONSIBILITY REPORT
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandates the top 500 Listed Companies by Market capitalization to give Business Responsibility Report (âBR Reportâ) in their Annual Report effective from April 1, 2016.
Your Company falls under the top 500 Listed Companies by market capitalization. Accordingly, a BR Report describing the initiatives taken by the Company from an environmental, social and governance perspective, forms part of this Report as Annexure III.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Particulars required under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014, regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, are given in Annexure IV, forming part of this report.
EXTRACT OF THE ANNUAL RETURN
The extract of the annual return in Form MGT- 9 is enclosed herewith as Annexure V, 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 organizationâs 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, Chartered Accountants, Statutory Auditors of the Company, regarding compliance of the conditions of corporate governance, as stipulated under Chapter IV of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is attached herewith as Annexure VI to this report.
DIRECTORSâ RESPONSIBILITY STATEMENT
As required by Section 134(3)(c) of the Companies Act,
2013, your Directors state that:
(a) in the preparation of the annual accounts for the financial year ended March 31, 2017, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) the Directors had prepared the annual accounts on a going concern basis;
(e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
ACKNOWLEDGEMENT
Your Companyâs organizational culture upholds professionalism, integrity and continuous improvement across all functions, as well as efficient utilization of the Companyâs 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, Netherlands and Hungary. 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 5, 2017 Chairman & Managing Director
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 Â''There are no
Shortcuts'' Â 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 ÂFriedrichshafen 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, 2011
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, 2011.
FINANCIAL PERFORMANCE
Rs Million
Year Ended Year Ended
31.03.2011 31.03.2010 31.03.2011 31.03.2010
Standalone Consolidated
Net Sales 54,905 50,366 88,677 81,207
Other Income 267 112 263 214
Operating Profit
(EBIDTA) 5,603 7,949 10,042 11,963
Less: Depreciation 1,474 1,228 2,719 2,542
Interest 1,493 739 1,852 1,154
Provision for Tax 653 1,832 1,063 2,607
Net profit before
Exceptional Items 1,983 4,150 4,408 5,660
Add: Exceptional Items - - - 874
Less: Share of loss of
associates/ 6
minority interest
Net Profit 1,983 4,150 4,402 6,534
OPERATIONS
On a standalone basis, your Company registered a net turnover of Rs
54,905 million as against Rs 50,366 million during the previous
financial year, a growth of 9%. The Company registered EBIDTA of Rs
5,603 million as compared to Rs 7,949 million during the previous
financial year. The net profit for the year under review was Rs 1,983
million, as against Rs 4,150 million in the previous fiscal. The steep
hike in raw material prices coupled with production loss, due to labour
problems, at one of the units had an adverse impact on the
profitability of the Company.
The consolidated net turnover of the Company as a group has increased
to Rs 88,677 million during FY 2010-11 as compared to Rs 81,207 million
during the previous financial year, registering a growth of 9.2 %. The
consolidated EBIDTA was Rs 10,042 million for FY 2010-11 as compared to
Rs 11,963 million for the previous financial year. On consolidated
basis, the Company earned net profit of Rs 4,402 million for FY 2010-11
as against Rs 6,534 million for the previous financial year.
The amount available for appropriations, including surplus from
previous year amounted to Rs 7,874 million. Surplus of Rs 6,469 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 112 million and general reserve of Rs 1,000
million.
Your Company sustained its leadership position in the Indian tyre
industry despite challenging market conditions and production loss
caused due to labour problem, at the Perambra unit in India, due to
lock out from June 11, 2010 to August 21, 2010. In May 2010 there was
also a 2-week strike at the ports in South Africa, affecting the supply
of raw materials to the Durban and Ladysmith facilities. In September
2010 your Companys South Africa Operations were again brought to a
standstill by an industry-wide labour strike, which was resolved after
prolonged negotiations.
PRODUCTION
During the year under review, your Companys production has shown a
consolidated growth of 2.8%, in production tonnage, by generating an
output of 438,524 metric tonnes (MT) as against 426,641 MT in the
previous year.
RAW MATERIALS
During the year under review, raw material dynamics in the tyre
industry have undergone a significant change, primarily from the
perspective of key raw material prices, which have risen beyond
expectations. Robust demand from China and India, along with resurgence
of output in the industrialised countries, saw prices of natural rubber
peaking to US$ 6/kg in the international market. The supply of natural
rubber was also adversely impacted in the year due to climatic
conditions in rubber growing regions. The domestic rubber prices
reached an all time high of Rs 241/kg during the year, registering an
increase of almost 70% over the prices in the last fiscal.
Crude oil prices also crossed the US$ 100/barrel level on geo-political
factors and strong demand growth from major economies across the globe.
Crude based items, namely, synthetic rubber, nylon tyre cord fabric,
polyester fabric, carbon black and rubber chemicals also showed a
rising trend during the course of the year. Moreover, anti-dumping duty
on nylon tyre cord fabric, carbon black and rubber chemicals continued.
Considering that the global GDP is projected to grow at 4% in 2011-12,
fuelling the demand for commodities and base metals, prices of major
commodities such as natural rubber, crude oil and steel are likely to
remain bullish.
Despite a challenging environment with respect to raw materials, your
Company strives to remain globally and regionally attractive to
customers and investors by continuing to focus on working capital
management, alternative energy source development, new vendor
development and nurturing existing relationships with business
partners. These strategic initiatives are expected to fuel your
Companys growth across geographies.
DIVIDEND
The Directors are pleased to recommend a dividend of Re 0.50 (50%) per
share on Equity Share Capital of the Company for the FY 2010-11 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 July 28, 2011 to August 11, 2011 (both days
inclusive).
MARKETING
FY 2010-11 was a landmark year for Apollo Tyres Ltd. For starters, your
Company introduced its flagship Apollo brand in the European market at,
what is arguably the worlds largest tyre exposition, Reifen in Essen,
Germany. Later in the year, coinciding with the opening of the
International Geneva Motor Show or Salon International de lAuto,
Apollo launched its biggest ever mega billboard campaign for brand
Vredestein. During March 2011, the billboards were on view in 37 major
European cities à placed in prime high traffic locations.
In India, Apollo launched a high-voltage passenger car radial
advertising campaign titled "Road Is A Friend", which was aided by an
aggressive consumer promotion scheme called "Exchange For A Tubeless
Future" to promote the use of tubeless PCR tyres. However, the focus
was on below-the-line promotional activities, with individual and fleet
customers, through initiatives like Apollo ET ZigWheels Awards for
recognising excellence amongst automakers and Apollo Safe Drive which
promotes safe driving and tyre maintenance.
Brand Dunlop, sold in 32 African countries, emerged as the # 1 brand in
the tyre category, in a survey commissioned by Rapport and City Press
newspapers on South Africas iconic brands. This was an independent
survey measuring the usage of more than 8,000 brands under 19 different
product categories by South African consumers. The South Africa
Operations took forward their Driven By Precision position for brand
Dunlop, by launching a new advertisement campaign. The new
communication positions the Dunlop Zones à exclusive retail outlets Ã
as the ultimate destination for a premium tyre fitment experience and
outstanding service from committed professionals and experts.
EXPORTS
Exports of passenger car radials, despite a demand slump, grew
marginally over the previous years sales volumes. Your Company
continues to be the largest exporter of passenger car radials from
India with a share of over 75% vis-ÃÂ -vis exports by domestic industry.
Truck-bus cross ply sales volumes fared as per expectations; though
price undercutting by competition and increasing preference for radial
tyres posed to be a challenge. The year also witnessed the successful
pilot launch of Apollos truck-bus radial tyres in select markets of
Asia, Africa and the Middle East à this category shows tremendous
potential for growth in the coming years.
Apollos European Operations largely focus on the domestic replacement
market and there is not much by way of exports. On the other hand,
your Companys South African Operations saw a healthy growth in exports
with almost 23.7% of the current financial years revenue coming from
this segment, compared to 17.5% in the previous year.
EXPANSION PROGRAMME AND FUTURE OUTLOOK
The greenfield project of the Company in Chennai, is progressing as per
schedule. At present the facility is producing 7,500 passenger car
radial (PCR) tyres and 2,000 truck-bus radial (TBR) tyres per day. It
would reach its planned capacity of 16,000 PCR tyres per day and 6,000
TBR tyres per day by the last quarter of the current financial year.
The unit is supplying to major OEMs like Hyundai, Tata Motors, Ashok
Leyland and Mahindra, all of whom have reviewed the product performance
favourably. Supplies to other major OEMs like Ford, Nissan and Maruti
Suzuki is expected to commence shortly.
During the year, the cross ply light truck tyre production was enhanced
by 1000 tyres per day to its current 2030 tyres per day, at the
Perambra facility. Similarly, an increase in production was also
undertaken at the Limda unit à 1581 to 2151 tyres per day for light
truck cross ply and 351 to 651 tyres per day for rear tractor cross
ply; resulting in the total tonnage production going up by
approximately 36 MT/day. On the radial front, the PCR and light truck
radial (LTR) production at the Limda facility was upped to around
18,000 tyres per day and 2,000 tyres per day, respectively, taking the
total radial tonnage production at the said facility to approximately
165 MT/day.
The Companys units in South Africa are in the process of further
production building à from 10,000 PCR tyres per day to 13,000 PCR tyres
per day at Ladysmith and from 1000 TBR tyres per day to 1200 TBR tyres
per day at Durban. The said production increase and modernisation and
quality improvement project includes installation of a new calender
line, fischer cutter, triplex extruder, bead apexing and high speed PCR
tyre building machines. The total cost of such an expansion in South
Africa would be around Rand 275 million (equivalent to Rs 1820 million)
and the same is expected to be completed by September 2011. However,
the total production increase would be realised only by the last
quarter of the current financial year.
The European Operations expanded PCR capacity from 5.2 million to 6.4
million tyres per annum, with an investment of Ã6 million (equivalent
to Rs 380 million). The increased capacity is already under utilisation
since the last quarter of the year, allowing the Company to sell higher
volumes in the European market.
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 on March 31, 2011, your Company had 35 subsidiaries including
indirect subsidiaries. During the year, the following changes have
taken place in subsidiary companies:
During the year under review, Apollo (Mauritius) Holdings Pvt. Ltd,
your Companys subsidiary has incorporated Apollo Tyres Holdings
(Singapore) Pte. Ltd w.e.f. September 8, 2010 and Apollo Tyres (Middle
East) FZE w.e.f. January 2, 2011 as its wholly owned subsidiaries.
The main activity of the Middle East Company will be warehousing and
trading of tyres manufactured at various locations in India, South
Africa and the Netherlands to cater to customers in Middle Eastern and
African countries.
Apollo Tyres Holdings (Singapore) Pte. Ltd acquired 95% shareholding in
K P Construction and Forestry Development Co. Ltd (name being changed
to Apollo Tyres (Lao) Company Ltd) w.e.f. February 15, 2011 which would
be engaged in business of natural rubber plantations.
Vredestein Kft your Companys step subsidiary in Hungary through Apollo
Vredestein B V formed a wholly owned subsidiary of Vredestein Ro SRL
w.e.f. August 18, 2010.
Apollo Tyres (Pte) Ltd ceased to be the subsidiary Company of Apollo
(Mauritius) Holdings Pvt. Ltd w.e.f. June 4, 2010.
The Ministry of Corporate Affairs vide its letter No: 5/12/2007-CL-III
dated February 8, 2011, has granted a general exemption to the
companies under section 212(8) of the Companies Act, 1956 from
attaching a copy of the balance sheet and the profit and loss account
of the subsidiary companies, and other documents, to the Annual Report
of the companies, subject to fulfilment of certain conditions specified
in the aforesaid circular.
The annual accounts 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 Headquarters of your
Company, and its subsidiaries.
The consolidated financial statements presented by the Company include
the financial statements of each of its subsidiaries. As required,
pursuant to the provisions of Section 212 of the Act, a statement of
the holding Companys interest in the subsidiary companies forms part
of the Annual Report.
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) ÃConsolidated Financial Statements. Please refer to note 3 (c) of
schedule 12 of the consolidated accounts.
FIXED DEPOSITS
Your Company is not accepting fixed deposits from the public /
Shareholders.
In respect of deposits accepted earlier, cheques had been issued for
the principal amount and interest thereon amounting to Rs 1.31 million,
which remained unencashed as on March 31, 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 be eligible to offer themselves for
reappointment as Statutory Auditors for FY 2011-12.
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, have been appointed as
cost auditors to conduct an audit of the Companys cost records, for
the year ended March 31, 2011, with the approval of the Central
Government. 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 Dr A K Dubey in place of P
Prabakaran on the Board of the Company w.e.f. March 26, 2011. Mr Mike J
Hankinson resigned from the Directorship of the Company w.e.f. April 2,
2011. The Board places on record its appreciation for the contribution
made by Mr Mike J Hankinson during his tenure of Directorship.
Mr Shardul S Shroff has been appointed as an additional director of the
company w.e.f. May 11, 2011. 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
Shardul S Shroff as a director liable to retire by rotation.
In accordance with the provisions of the Act and Articles of
Association of the Company, Mr T Balakrishnan, Mr Robert Steinmetz 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
Top Company of the Year
Award Tyre Sector Dun & Bradstreet - Rolta
Corporate Awards 2010
Safety Award 2010 for Large Factories Department of Factories and
Boilers, Government
Perambra Unit of Kerala
Gold Certificate of Merit
for Process Sector, The Economic Times Indian
Manufacturing Excellence
Limda Unit Large Category Awards 2010 in Partnership
with Frost and Sullivan
Best Innovative
Practices Innovation Todays Travellers
Awards 2010
CORPORATE SOCIAL RESPONSIBILITY
Your Company is a responsible corporate citizen, and strives to create
value for the communities it operates in. A detailed report on the
Companys community efforts form part of the Annual Report.
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
An organisations Corporate Governance philosophy is directly linked to
its excellence in performance. Keeping this important dictum in view,
your Company has always placed major thrust on managing its affairs
with diligence, transparency, responsibility and accountability.
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
In terms of the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975,
the names and other particulars of the employees 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,
2011, 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, 2011, 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 Ãgoing concern basis.
ACKNOWLEDGEMENT
Your Company has been able to operate efficiently because of an
organisational culture which upholds professionalism, integrity and
continuous improvement across all functions, as well as efficient
utilisation of the Companys 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
Date: May 11, 2011
(Onkar S Kanwar)
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
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