Market Research Report : Tire industry in india 2014 - Sample

Tire Industry – India

November 2014

2 TIRE INDUSTRY IN INDIA 2014.PPT

Executive Summary

Drivers:

Replacement Demand

Rising Automobile Sales

Scope in Radialization

Increasing Exports

Increasing Investment in Road Construction

Market Overview

Drivers & Challenges

Key Trends

Competitive Landscape

Global tire market is expected to grow at a CAGR of p% through 20-- to 20-- to reach INR yy bn in 20--

Huge demand from Asia Pacific region will boost the industry’s growth

Indian tire industry is expected to reach INR xx bn in 20--, growing at a CAGR of q%

Retreading of Tires

Emergence of Tubeless Tire Market

Advent of Green Tires

Focus on Radial Tires

Challenges:

Price Volatility in Rubber Prices

Absence of Raw Materials

Inappropriate Duty Structure for Natural Rubber

Key Players

Company A Company B Company C

Company D Company E Company F

3

•Macroeconomic Indicators

•Introduction

•Market Overview

•Export-Import

•Drivers & Challenges

•Government Initiatives

•Trends

•Competitive Landscape

•Opportunities

•Strategic Recommendations

•Appendix

TIRE INDUSTRY IN INDIA 2014.PPT


Rising automobile demand from Asia Pacific region to boost global tire market

• Global tire market is expected to grow at a CAGR of p% through 20-- to 20-- to reach INR xx bn in 20--

• Huge demand from the replacement tire segment and increasing commercial and passenger vehicles sales in developing countries is expected to drive growth in the world market

• Asia Pacific region is expected to show the strongest growth fuelled by huge demand from India and China

• Further, new construction and infrastructural projects and increase in middle class population as well as rise in disposable income of this section in developing countries will boost the global tire industry’s growth

• However, unstable prices of raw materials and increasing dependency of tire manufacturers on OEMs for sales are some of the challenges faced by the global tire industry

Market Overview – Global (1/2)

y4

y3

y2

y1

0

INR bn

p%

20--e

x6

20--e

x5

20--e

x4

20--e

x3

20--e

x2

20--

x1

Global Tire Industry – Size and Growth (Value)

Note: OEM refers to Original Equipment Manufacturer


Growth in automobile sales and advent of new vehicle models has been the key driving force to the tire industry

• Indian tire industry is expected to grow at a CAGR of p% through FY 20-- to FY 20-- to reach INR x6 bn in 20--.

• It manufactures a diversified range of tires catering to the various Indian transport vehicles

However, specialized tires such as aero tires are not manufactured in India

• Organized sector accounts for a major share in the overall tire sector while the unorganized sector is dominant in the bicycles segment

• Performance of the tire industry is closely related to that of the automotive sector.

• There has been a significant increase in the tire supplies to OEMs across all segments

Market Overview – India (1/2)

y2

y3

y4

y1

0

INR bn

p%

FY 20--e

x6

FY 20--e

x5

FY 20--e

x4

FY 20--e

x3

FY 20--e

x2

FY 20--

x1

Indian Tire Industry – Size and Growth (Value)

6

SAMPLE Exports of New Rubber Pneumatic Tires (1/2)

a4

a3

a2

a1

P%

FY 20--

x4

FY 20--

x3

FY 20--

x2

FY 20--

x1

INR mn

Export of New Rubber Pneumatic Tires (Value-Wise)

b5

b4

b3

b2

b1

mn Q%

FY 20--

y4

FY 20--

y3

FY 20--

y2

FY 20--

y1

Export of New Rubber Pneumatic Tires (Volume-Wise)


7

SAMPLE Exports of New Rubber Pneumatic Tires (2/2)

x2

x6 x5

x4

x3

x1

x7

f1

b1

d1

g1

c1

e1

a1

y4

y1

y2

y3

y5 y6

y7

c1

a1

b1

g1

e1

d1

f1

FY20-- FY20--

Exports Based on Volume – Product-Wise Exports Based on Value – Product-Wise

z3

z1 z2

b2

c2 a2 d2 d1

d3

c2

b2

a2

FY20-- FY20--

Export Based on Value – Country-Wise



Drivers & Challenges – Summary

Drivers

Replacement Demand

Rising Automobile Sales

Scope in Radialization

Increasing Exports

Increasing Investment in Road Construction

Challenges

Price Volatility in Rubber Prices

Absence of Raw Materials

Inappropriate Duty Structure for Natural Rubber


Order books of the players is growing owing to strong demand from replacement of tires

• Replacement demand for tires accounts for more than xx% of the total demand for tires

• Increasing replacement demand is generating strong order books for the players in the industry

• Business catering to the replacement of tires is a high margin business generating strong revenues

• Replacement market is dominated by widespread dealer distribution network including exclusive dealer of the companies as well as multi company dealers

Replacement Demand Impact

p1%

p3%

p2%

y z x

Replacement Demand in T&B Segment Replacement Demand in PV Segment

Note: T&B refers to Trucks and Buses, PV refers to Passenger Vehicles

Apr-Dec FY 20-- Apr-Dec FY 20--

q1%

q3%

q2%

a c b


Trends – Summary

Retreading of Tires

Emergence of Tubeless Tire Market

Focus on Radial Tires Advent of Green Tires

Key Trends

11

Competitive Benchmarking (1/5)

Public Trading Comparables (FY 2014)

Company A Company B Company C

Market Capitalization (INR mn)

Share Price (INR)

EV/EBITDA (x)

EV/Revenue (x)

PE Ratio

Note: Top 3 Public companies based on the Market Capitalization; Market Capitalization is as on 30/10/2014, Share Price is as on 29/10/2014 and PE ratio is as on 30/10/2014


12

SAMPLE Key Ratios of Top 3 Companies – Operational Basis (FY 2014) (1/4)

Competitive Benchmarking (2/5)

a4

a3

a2

a1

%

Company C

z3 y3

x3

Company B

z2 y2

x2

Company A

z1 y1

x1

Operating Margin Gross Margin Net Margin

• Company B recorded gross margin of x2%, higher than that of Company A and Company C which recorded gross margin of x1% and x3% respectively

• Company B recorded highest operating margin of y2%, followed by Company C and Company A which recorded operating margin of y3% and y1% respectively

• Company B recorded a net margin of z2%, higher than that of Company C and Company A which recorded net margin of z3% and z2%


13

SAMPLE Public: Domestic Company – Company A (1/4)

Key People

Products and Services

Company Information Offices and Centres – India

Corporate Address

Tel No.

Fax No.

Website

Year of Incorporation

Ticker Symbol

Stock Exchange

Name Designation

Person 1

Person 2

Person 3

Person 4

Noida

Category Products/Services

Headquarters


14

SAMPLE Financial Snapshot Key Ratios

Financial Summary

• The company earned a net profit of INR y4 mn in FY 20--, as compared to net profit of INR y3 mn in FY 20--

• The company reported total income of INR x4 mn in FY 20--, registering an increase of p% over FY 20--

• The company earned an operating margin of z1% in FY 20--, an increase of z2 percentage points over FY 20--

• The company reported debt to equity ratio of d1 in FY 20--, an increase of d2% over FY 20--

Key Financial Performance Indicators

Indicators Value Market Capitalization (INR mn)

Total Enterprise Value (INR mn)

EPS (INR)

PE Ratio (Absolute)

Particulars y-o-y change

(2014-13) 2014 2013 2012 2011

Profitability Ratios

Operating Margin

Net Margin

Profit Before Tax Margin

Return on Equity

Return on Capital Employed

Return on Working Capital

Return on Assets

Return on Fixed Assets

Cost Ratios Operating costs (% of Sales)

Administration costs (% of Sales)

Interest costs (% of Sales)

Liquidity Ratios Current Ratio

Cash Ratio

Leverage Ratios Debt to Equity Ratio

Debt to Capital Ratio

Interest Coverage Ratio

Efficiency Ratios Fixed Asset Turnover

Asset Turnover

Current Asset Turnover

Working Capital Turnover

Capital Employed Turnover

Improved Decline

Net Profit/Loss Total Income

b4

b3

b2

b1

a4

a3

a2

a1

y3

x3

y2

x2

20--

y1

x1

INR mn INR mn

y4

x4

20-- 20-- 20--

Public: Domestic Company – Company A (2/4)


15

SAMPLE


Key Business Segments Key Geographic Segments

Business Highlights

Description News

Overview • Company A is engaged in the manufacture and sales of tires for more than 40 years

Manufacturing Facilities

• Manufacturing presence in Asia, Europe and Africa

• Recently in Sep 2014, confirmed Hungary as the location for the first greenfield manufacturing facility outside India

New Ventures and Product Launch

• In Feb 2014, announced entry in Qatar to tap the potential market for truck-bus radials and high performing passenger car tires

• In May 2014, introduced two new tires Apollo Alnac 4G All Season and Apollo Alnac 4G Winter tires at the international tire exhibition in Germany

• Opened its first branded retail outlet in Kuwait in Aug 2014

s3

s2

s1

20--

p4%

20--

p3%

20--

p2%

20--

p1%

b3

b2

b1

2014

r3 z4

9%y4

x4

2013

r2 z3

y3

x3

2012

r1 z2

y2

x2

2011

z1 y1

x1


q a4 a3 a2 a1

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SAMPLE

T O

W S



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Opportunity Areas

Gujarat Tamil Nadu and Andhra Pradesh

Maharashtra

Tire manufacturing plants should be built near the major automobile production or assembly facilities to capitalize on the growing opportunities provided by the existing as well as the emerging auto hubs in India

Opportunity Areas – Summary


NCR and Surrounding

18

SAMPLE

X

Y

Z

Strategic Recommendations


19

Thank you for the attention

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Market Research Report : Tire industry in india 2014 - Sample

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