Apollo Tyres Limited: history, ownership, mission, how it works & makes money

A Brief History of Apollo Tyres Limited

Apollo Tyres Limited was founded in 1972 in Gurgaon, India. The company began its operations with the production of bias tires for two-wheelers and passenger cars. Over the subsequent decades, Apollo expanded its product range to include tires for commercial vehicles, agricultural vehicles, and off-the-road vehicles.

In 1991, the company enhanced its international presence by establishing its first foreign subsidiary in South Africa, named Apollo Tyres South Africa. This marked a significant step towards becoming a global player in the tire manufacturing industry.

By 2005, Apollo Tyres had made a notable acquisition by purchasing the European tire manufacturer, Vredestein Banden B.V., based in the Netherlands. This acquisition allowed Apollo to gain a foothold in the European market and expand its product offerings to include high-performance tires.

In 2006, Apollo launched its brand “Apollo” in the United States, furthering its ambitions in North America. The company invested heavily in marketing and brand development to establish its reputation in this competitive market.

As of 2022, Apollo Tyres has reported a consolidated revenue of approximately ₹ 22,000 crores (around $2.95 billion), with a net profit of ₹ 1,643 crores (about $220 million) according to the company’s financial report.

The company operates in multiple countries, including India, Europe, the U.S., and South Africa, with manufacturing facilities located in these regions. Currently, Apollo Tyres boasts a production capacity exceeding 15 million tires per annum.

Apollo Tyres has focused on innovation and sustainability, investing in R&D to develop eco-friendly products and solutions. The company launched its “Green Tyres” initiative in recent years, aiming to reduce rolling resistance and enhance fuel efficiency.

As of 2023, Apollo Tyres continues to expand its global footprint, targeting a market share of over 10% in the European tire market as per recent projections. The company remains dedicated to delivering quality and performance across its tire range while ensuring sustainable practices throughout its operations.

A Who Owns Apollo Tyres Limited

Apollo Tyres Limited, incorporated in 1972, is one of the world's leading tyre manufacturers. The company is headquartered in Gurgaon, India, and operates in more than 100 countries. The ownership structure of Apollo Tyres is diverse, with significant stakes held by both institutional and individual investors.

As of October 2023, the ownership breakdown of Apollo Tyres Limited is as follows:

Promoter ownership is primarily held by the Apollo Group, with key figures such as Onkar Singh Kanwar, the Chairman, and Neeraj Kanwar, the Vice Chairman and Managing Director, having substantial influence over company decisions. Their familial ties contribute significantly to the strategic direction of the company.

In terms of institutional investments, FIIs have been increasingly interested in Apollo Tyres due to its robust performance. Major FIIs include BlackRock and Goldman Sachs, which are significant stakeholders. The DIIs also play a crucial role in stabilizing the stock through their long-term investment strategies.

The financial performance of Apollo Tyres has shown resilience in recent years. As of March 2023, the company reported total revenue of approximately ₹22,000 crores, marking a year-on-year growth of 12%. The net profit for the fiscal year stood at ₹1,800 crores, reflecting a profit margin of 8.18%.

Apollo Tyres' stock performance has been favorable, with shares trading at approximately ₹400 as of late October 2023. The market capitalization is around ₹25,000 crores, showcasing the company’s stable financial health amidst fluctuating market conditions.

In summary, Apollo Tyres Limited is characterized by a well-diversified ownership structure, with a significant portion of shares held by its promoters, institutional investors, and retail shareholders. Their collective influence and investment strategies play a crucial role in Apollo Tyres' ongoing growth and market presence.

Apollo Tyres Limited Mission Statement

Apollo Tyres Limited is driven by its mission to deliver high-quality products that exceed customer expectations through innovative and sustainable practices. The company focuses on growing its global footprint while maintaining a commitment to corporate social responsibility. As of the end of FY 2022, Apollo Tyres reported a consolidated revenue of INR 21,654 crores, marking a growth of 25% year-on-year.

The mission statement emphasizes key areas: innovation, sustainability, and customer-centricity. Apollo Tyres aims to achieve operational excellence through continuous improvement, ensuring that its products not only meet but also exceed industry standards.

Core Values and Strategic Objectives

• Innovation: Investing in R&D to enhance product offerings.
• Sustainability: Utilizing eco-friendly materials and processes.
• Customer Commitment: Prioritizing customer needs and satisfaction.
• Global Expansion: Increasing market share in international markets.

Financial Performance Overview

The fiscal year ending March 2023 saw Apollo Tyres reporting a net profit of INR 1,209 crores, a significant increase from INR 906 crores in the previous year. The company has continuously improved its profit margins, with a gross margin of 40% in FY 2023, reflecting strong cost management and operational efficiency.

Apollo Tyres is also committed to environmental sustainability, having reduced its energy consumption by 19% over the past three years. This aligns with their mission to produce eco-friendly products while minimizing their carbon footprint.

Global Presence

Apollo Tyres operates in over 100 countries and has manufacturing facilities in India, the Netherlands, and Hungary. The company has a strong distribution network that supports its extensive product line, catering to both passenger and commercial vehicle segments.

In FY 2023, the company launched an innovative range of tyres incorporating sustainable materials, enhancing its commitment to environmental practices. Apollo Tyres also engaged in various CSR initiatives, contributing INR 43 crores towards community development projects.

Conclusion

Apollo Tyres' mission statement is not just a declaration of intent; it is supported by quantifiable performance metrics and a clear focus on growth, sustainability, and innovation. With solid financial results and ongoing commitment to community and environmental initiatives, Apollo Tyres continues to strengthen its position in the global tyre market.

How Apollo Tyres Limited Works

Apollo Tyres Limited, established in 1972, is a leading tire manufacturing company headquartered in Gurugram, India. It operates in over 100 countries, delivering a diverse range of tires for passenger vehicles, commercial vehicles, and two-wheelers. The company employs a vertically integrated model, controlling the entire manufacturing process from raw material selection to product distribution.

In FY 2022-23, Apollo Tyres reported consolidated revenue of ₹20,306 crores, a strong increase of approximately 22% compared to the previous fiscal year. The operating profit (EBITDA) for the same period was ₹3,486 crores, reflecting a margin of around 17.2%.

The company's production capabilities are spread across 17 manufacturing facilities located in India, the Netherlands, and Hungary. The following table summarizes the capacity of each facility:

Apollo Tyres' R&D efforts focus on developing innovative products that meet global standards. In FY 2022-23, the company invested ₹230 crores in research initiatives, leading to the introduction of the new Apollo Aspire 4G tire line, which emphasizes fuel efficiency and longer mileage.

Additionally, the company has made significant commitments toward sustainability. As of 2023, Apollo Tyres has reduced its carbon footprint by 12% in its manufacturing processes since 2020, aiming for a target reduction of 20% by 2025.

Apollo Tyres fosters strategic partnerships with various automotive manufacturers, enhancing its market reach. Some of the collaborations include OEM tie-ups with companies like Tata Motors, Mahindra & Mahindra, and Ford Motor Company.

In terms of market performance, Apollo Tyres' stock has shown a consistent upward trend. As of October 2023, the stock price is approximately ₹340, reflecting a year-to-date increase of 18%. The company's market capitalization stands at around ₹21,000 crores.

In summary, Apollo Tyres operates through a combination of extensive manufacturing capabilities, robust R&D, sustainability efforts, and strategic partnerships, solidifying its position in the global tire market.

How Apollo Tyres Limited Makes Money

Apollo Tyres Limited generates revenue primarily through the manufacturing and sale of vehicle tires, catering to multiple segments, including passenger cars, commercial vehicles, and two-wheelers. The company operates globally, with a significant presence in Europe, India, and many emerging markets.

For the fiscal year 2023, Apollo Tyres reported consolidated revenues of ₹20,202 crore (approximately $2.5 billion), marking an increase of 16% from ₹17,395 crore in FY 2022. The growth was driven by robust demand in the domestic market and improved pricing strategies.

The company’s revenue streams can be segmented as follows:

• Passenger Vehicle Tires: Contributed approximately 60% of total revenues.
• Commercial Vehicle Tires: Accounted for around 30% of total revenues.
• Two-Wheeler Tires: Made up about 10% of total revenues.

The pricing strategies and product differentiation have allowed Apollo Tyres to maintain a strong foothold in competitive markets. The average selling price (ASP) of tires saw an increase of nearly 4% in FY 2023, driven by rising raw material costs and increased demand.

Apollo Tyres also invests in research and development to innovate and enhance their product offerings. For instance, in FY 2023, the company allocated approximately ₹220 crore (about $27.5 million) toward R&D to develop new technologies and sustainable manufacturing processes.

Below is a table highlighting the revenue contributions from different market segments and geographical regions for Apollo Tyres in FY 2023:

Additionally, Apollo Tyres has been pursuing strategic partnerships and collaborations to enhance its market presence. In FY 2023, the company entered into a joint venture with a leading European tire manufacturer, aiming to expand its reach in the European market and tap into innovative tire technologies.

The cost structure for Apollo Tyres is crucial for its profitability. For FY 2023, the cost of goods sold (COGS) amounted to ₹15,300 crore, resulting in a gross profit of ₹4,902 crore, leading to a gross margin of approximately 24.2%.

Operating expenses for the same fiscal year were reported at ₹2,800 crore, which includes selling, general, and administrative (SG&A) expenses. This resulted in an operating income of ₹2,102 crore, with an operating margin of 10.4%.

Apollo Tyres also focuses on sustainability, which has become a key driver of its brand value. In FY 2023, the company reported that 30% of its production was from sustainable materials, aiming to increase this to 50% by 2025.

In conclusion, Apollo Tyres’ revenue generation is a combination of effective pricing strategies, diverse product offerings, innovative technology, and robust market penetration across various segments and regions. With its strategic initiatives and focus on sustainability, the company is positioned for consistent growth in the tire manufacturing industry.