FINANCIAL ANALYSIS REPORT

2009-2010

TEAMAbhishek Kumar- BLP038Abhishek Saxena- BLP012Kushal Prakash- BLP061Nihar Routray- BLP022Shankar Narayan- BLP039

An enterprise that started as a toy balloon maker in 1946 in South India quickly grew to become one of India's biggest and respected companies. Renowned for product superiority and innovation, MRF continues to be the leading tyre-maker in India

Tyre Industry Structure in INDIA Valued at approximately Rs.25,000 crore per annum. With Rs.3000 crore estimated to be the value of exports.• 39 tyre companies.• 60 factories located all over India.• 10 major tyre companies account for 88% of the tyre business in the country.

55%

30%

15%

30% OEM

15% Export

Market Distribution of Tyre Manufactured

55% Replacement Market

About Indian Tyre Industry Facts• Second largest two wheeler manufacturer in the world.• Largest tractor and three wheeler manufacturer in the world.• Fourth largest commercial vehicle market in the world.• Eleven largest passenger car market in the world.

Trends> Growth of exports of 22.30% FY 2009-10

> Commercial vehicles segment grew at 4.07% > Light commercial vehicles grew at 12.29%

Growth Potential• Can become world's third largest automobile market in 2030.• By 2016, Automotive sector can double its percentage contribution to GDP from current level of 5% (US $50billion) to 10% (US $180billion)

SWOT analysis of Tyre Industry in India

Opportunities• Growing Economy.• Govt emphasis on

infrastructure development.• Steady increase in radial

tyres for MHCV, LCV.

Weaknesses• Cost Pressure• Pricing pressure• High capital investment

Threats• Continuous increase in price

of natural rubber.• Cheap Import of tyres.• Cynical nature of automobile

industry.• Ban on overloading (short

term negative).

Strengths• Established Brand names• Exclusive distribution

network• Good R&D

DIRECTOR’S REPORT• Landmark achievement of sales turnover of Rs 8000 crores• 31% sales growth > Leveraged by growth in automobile sector

> Low interest rates• Twice interim dividend of Rs 3/share in the month of Sept. and Dec . were

declared by board of director.• Further board recommended final dividend of Rs 19/share and a special

dividend of Rs 25/share on Paid-up-Equity share capital .• An amount of Rs 329.26 crores was recommended to be transferred to

General Reserve after tax provision and proposed dividend. Concern for uncertain rise of material price and price sensitive

market. Imbalance in duty structure of import.

20% duty charges on Raw material 8 – 10 % duty charges on finished tyres from other countries

especially China.

Financial Results

High Sales Growth of 31 %Growth due to:

• Turnaround in Automobile market• Low Interest rates• General recovery of business

COMPARATIVE ANALYSIS

LIQUIDITY AND

TURNOVER RATIOS

CURRENT RATIO

2010 2009 20080

0.2

0.4

0.6

0.8

1

1.21.08

1.16

0.9

0.98

1.15

0.99

0.79

0.600000000000001

0.670000000000001

MRF Apollo JK

QUICK RATIO

2010 2009 20080

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0.720000000000001 0.730000000000001

0.780.740000000000001

0.91

0.830000000000001

0.710000000000001

0.620000000000001

0.720000000000001

MRF Apollo JK

DEBTORS TURNOVER RATIO

2010 2009 20080

5

10

15

20

25

30

35

40

45

10.739.54

8.71

44.89

33.75

20.69

7.91

11.24

6.12

MRFApolloJK

AVERAGE COLLECTION PERIOD

2010 2009 20080.00

10.00

20.00

30.00

40.00

50.00

60.00

33.55

37.74

41.33

8.0210.67

17.04

45.51

32.03

58.82

MRFApolloJK

INVENTORY TURNOVER RATIO

2010 2009 20080

2

4

6

8

10

12

14

16

7.68

10.17

6.09

10.47

11.77

8.729.11

14.03

5.58

MRFApolloJK

INVENTORY HOLDING PERIOD

2010 2009 20080.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

46.88

35.40

59.11

34.38

30.59

41.2839.52

25.66

64.52

MRFApolloJK

CAPITAL STRUCTURE RATIOS

DEBT EQUITY RATIO

2010 2009 20080

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

0.860000000000001

0.22

0.56

0.38

0.51

0.660000000000001

1.71

1.91

1.24

MRF Apollo JK

DEBT ASSETS RATIO

2010 2009 20080

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.36

0.17

0.46

0.39

0.330000000000001

0.27

0.55

0.650000000000001

0

MRF Apollo JK

INTEREST COVERAGE RATIO

2010 2009 20080

1

2

3

4

5

6

7

8

9

10

4.12

6.69

9.22

7.51

3.67

8.8

2.11

1.55

4.17

MRFApolloJK

FIXED CHARGES COVERAGE RATIO

2010 2009 20080

2

4

6

8

10

12

14

6.68

10.31

13.35

6.28

3.51

7.37

2.99

1.65

3.05

MRFApolloJK

Profit Margin Ratios

2010 2009 20080

2

4

6

8

10

12

14

16

11

12

8

14.5

8.4

12.612.5

2.3

10.1

MRFApolloJK Tyres

Gross Profit Margin Ratio (%)

2010 2009 20080

2

4

6

8

10

12

14

7.57.9

4.9

13.1

5.6

10.2

7.8

2

5.4

MRFApolloJK Tyres

Operating Profit Margin Ratio (%)

Profit Margin Ratios

2010 2009 20080

1

2

3

4

5

6

7

8

4.8

4.4

2.8

8

2.8

5.7

4.9

0.38

2.5

MRFApolloJK Tyres

Net Profit Margin Ratio (%)

Return on Investment Ratios

Profit Margin Ratios

2010 2009 20080

5

10

15

20

25

18.2

21.9

10.4

21.6

10.3

20.5

9.7

2

6.7

MRFApolloJK Tyres

Return On Assets (%)

Profit Margin Ratios

2010 2009 20080

5

10

15

20

25

30

20.9

19.1

12.4

24

8

17.8

26.4

3.33

13

MRFApolloJK Tyres

Return On equity /Net worth (%)

Profit Margin Ratios

2010 2009 20080

5

10

15

20

25

30

22.6

27

13.9

28.9

12.9

23.7

25.4

6.8

15.8MRFApolloJK Tyres

Return on Capital Employed (%)

Valuation Ratios

Profit Margin Ratios

2010 2009 20080

100

200

300

400

500

600

700

800

900834.63

604.37

334.74

8.23 2.15 4.49

39.81

4.6421.67

MRFApolloJK Tyres

Earnings Per Share - EPS (Rs)

Profit Margin Ratios

J K Tyres Apollo MRF0

1

2

3

4

5

6

7

8

9

2.5

3.8

8.7

2010

Price to Earnings (P/E) Ratio

Valuation Ratios

2010 2009 20080

5

10

15

20

25

30

35

40

45

50

50

25

20

0.75 0.45 0.5

3.5 2.7 2.7

MRFApolloJK Tyres

Dividend Per share (Rs)

Valuation Ratios

JK Tyres Apollo MRF0

0.5

1

1.5

2

2.5

3

2.6

1.5

0.7

2010

Dividend yield(%)

Way Ahead…• The automobile industry has picked up really fast this year

hence boosting tyre sales.• Chinese tyres have lower import duty(8-10%) thus are more in

demand whereas raw material import duties(20%) are high thus having higher cost.

• High reserve surplus to cover fluctuation in raw material cost(70 % of total cost). Natural Rubber prices increased from Rs.132 /kg to Rs 180 /kg.

• MRF has invested heavily in R&D which in turn is providing higher returns .

• MRF has also come up with a new factory in Andhra Pradesh which is highly automated and technologically advanced.

Market price of share very high. Rs 9439 per share in Sept 2010 with 544616 shares traded on NSE.

Recommendations

1. Stock split up as per share market price is very high.2. This will increase the equity base also.

Cont…

Q n A

Thank you