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India Market Overview


COVID-19 was not only a health crisis, but it had far-reaching implications on the global economy. The pandemic led to a sharp decline in global trade, lower commodity prices and tighter liquidity conditions. The contraction in GDP seen in many countries, including India, was because of reduced economic activity and restricted mobility, due to COVID-19 as people curtailed discretionary spending and focused on essentials and precautionary savings due to the level of uncertainty. The pandemic affected both demand and supply, at least in the short-term. As lockdowns eased across the world economic activity gradually started to recover.

According to the Economic Survey 2020-2021, the government adopted a four-pillar strategy of containment, fiscal, financial, and long-term structural reforms. India had good monsoons, and the Indian agriculture sector achieved record food grain production and registered positive growth despite the coronavirus pandemic. Rural consumption was stronger than urban demand. According to Indias Economic Survey 2020-2021, India remained a preferred investment destination in financial year 2020-21

As per the Governments second advance estimates of the economic growth, the de-growth in Indias real GDP during 2020-21 is estimated at (8%) as compared to the growth rate of 4.2% in the previous fiscal.

Auto segment

Even as the industry had started seeing slowing of its growth to 5.2% in FY19, it slipped to negative growth in the subsequent two fiscals. It posted a fall of 14.2% for FY20 due to overall economic slowdown, lack of government stimulus for the industry, liquidity crisis and poor consumer sentiments. The COVID-19 pandemic raging across the country impacted the auto industry significantly. However, despite the pandemic, the industry saw a see saw in performance with an extremely low Q1 and steady picking of demand during the remaining quarters. As per data from Society of Indian Automobile Manufacturers (SIAM), the industry saw a whopping decline of 79% in Q1 numbers. Post the lockdown, some demand started coming back to the market even as the production numbers for Q2 continued to be on a negative with a de-growth of 7%. Q3 saw the beginning of the recovery phase largely attributable to the pent-up demand, positive agri-economics and a moderate shift from public to private transport. During the quarter, Passenger Vehicle (PV) and Two-Wheeler (2W) segments saw some recovery, even as Commercial Vehicle (CV) and Three-Wheeler (3W) segments continued to be in a negative zone. The PV segment continued to strongly lead the recovery on quarter-on-quarter basis and saw sales of 0.9 million units, marginally above the previous best sales unit of Jan-March 2018 at 0.8 million lacs.

CV sales rebounded strongly in the quarter with sale of 0.2 million units in the quarter accounting for nearly 40% of total yearly sales.

However, despite the performance in the second half of the year, the CV segment continued its downward spiral of FY20, as it posted sales of 0.57 million units, as compared to 0.72 million units, and was down by a huge 21%. 2W and 3W, which account for over 80% of the total units sold in the country, saw negative growth of 13% and a whopping 66% respectively for the year.

PV segment was down by 2.2% as it closed the financial year with a sale of 2.7 million units, as compared to 2.8 million units in FY19. The hero of the segment was the continued demand for the Utility vehicles which saw a healthy growth of 12% to close the year at 1.1 million units and now accounts for 39% of the total PV market, up from 34% in FY20. In the electric vehicle (EV) space, the industry saw registration of 4,588 units, compared to 3,000 units in FY20.

Overall, the automobile industry remained in the negative growth zone as it posted a 13.6% decline over its previous year.

Tyre Segment

The impact of slow auto sales will have a direct impact on tyre sales. At times, sale of tyres in the replacement market helps the industry to overcome the degrowth in the Original Equipment Manufacturer (OEM). However, the previous fiscal saw lockdowns across the country and poor consumer sentiments ensured that the overall tyre industry post a negative growth. According to the data released by ATMA for 11-months, the industry has shown a decline of around 8% as compared to the 11-months numbers of FY20.

Post the lockdown coupled with aggressive measures to spur demand, the industry saw some traction in the Medium & Heavy Commercial Vehicle (M&HCV) segment which posted a fall of 3% for FY21 as compared to a drop of 12% in FY20. However, there is a story of the strong recovery by the segment. For example, in April 2020, the segment saw a fall of 96% with an overall decline of 56% for quarter one. However, recovery started coming back in September 2020 where the segment posted 39% growth over September 2019. If one looks at the performance of segment since September 2020 till February 2021, it grew by a whopping 28%.

The story for the other major segment, PV, is also similar. While it posted an overall drop of 10% for the 11 months period, the segment recouped its losses of the initial period in the 2nd half of the fiscal. Production from September 2020 to February 2020 accounted for 74% of total units as compared to only 56% for Fy20

Industry Structure and Developments

The tyre industry is directly dependent on the business from the OEMs and the replacement market. As the OEMs for PV and CV continued to show poor sales, demand from them impacted the tyre industry adversely. The replacement market continued to support the tyre players and help them to recoup some of the losses of the OEM market.

According to ATMA data, replacement sales for M&HCV accounted for 81% of total domestic production, among the highest in all categories. This is as compared to 72% in the previous fiscal. Exports accounted for around 12% of the total volume for the segment. PV replacement accounted for 55% of total domestic availability, while OEMs gave the industry around 37% of the business. During the year, demand came in from rural India as it evident in the double-digit growth in Tractor Front, Tractor Rear and Tractor Trailer as these segments grew by 47%, 70% and 24% respectively.

India constitutes for one of the biggest 2W market in the world with still headroom for growth. Even in the current pandemic, the segment is witnessing demand coming with people moving away from shared/ public transport and gradually moving to own a personal vehicle, including a two-wheeler, further driving the demand for tyres in this category.

On the raw material front, the industry saw two distinct themes playing out during the year. In the first half of the year, COVID-19 induced lockdowns lead to demand contraction along with a fall in the raw material cost. However, in the second half of the year, with a recovery in automobile production and support from the replacement market saw a sharp rise in cost of raw materials. The other crisis faced by the industry and its players was at the shipping and logistics front. The industry faced shortages of containers, blank sailings, port congestion leading to sharp spike in ocean freight rates during the second half of the year adding to the cost push.



• Tyre manufacturing facility leased to Apollo Tyres Ltd.("ATL").

• Fixed income from lease rent of the tyre unit.

• ATL has the advantage of a diversified market base across geographies and therefore, it is not completely dependent on the Indian market alone. Further, the Company is working towards establishing and growing operations in other large markets, including ASEAN and North America.

• With its reasonable presence in the two-wheeler segment, ATL is now a full-range tyre player in India and can service the large and growing two-wheeler tyre segment in India.

• ATL is powered by strong product brands in its key markets – Apollo and Vredestein.


• A relatively old tyre manufacturing unit with not very modern machinery.

• No direct presence in the tyre market.

• Dependence on ATL.

• Any impact on margins and revenue of ATL might force ATL to renegotiate the lease agreement.


• Diversification into other sector through new investments.

• Production of ATL leading to technology up gradation.


• Economic downturn or slowdown in the key markets (India and Europe) can lead to decreased volumes and capacity utilisation.

• The continuing lockdown situation due to COVID-19 pandemic in many parts where the Company operates can have a significant impact of the business of the Company.

• The coming year will have one large investments on stream. There would be pressure on margins of the ATL, as the utilizations ramp up gradually and reduced demand due to COVID-19 pandemic.

• A weak Indian currency can result in pressure on margins of the ATL, since the ATL is a net importer.

Segment-wise performance

The truck-bus, cross ply tyres manufactured at the Companys plant leased to Apollo Tyres Ltd. - under the brand name ‘Apollo are mostly sold/exported by Apollo Tyres Ltd.


The second wave of COVID-19 pandemic means bad news for the various economies, including India.

According to IMF, global prospects remain highly uncertain. New virus mutations and the accumulating human toll raise concerns, even as growing vaccine coverage lifts sentiment. The outlook depends not just on the outcome of the battle between the virus and vaccines—it also hinges on how effectively economic policies deployed under high uncertainty can limit lasting damage from this unprecedented crisis.

IMF is projecting a global growth at 6% in 2021, moderating to 4.4 % in 2022. Of course, high uncertainty surrounds this outlook in relation to the path of the pandemic, the effectiveness of policy support to provide a bridge to vaccine-powered normalization, and the evolution of financial conditions.

For India, IMF has a bullish outlook. In its update in April, IMF said it expects Indias GDP to grow 12.5% in FY22, the highest among emerging and advanced economies. GDP growth for FY23 is pegged at 6.9%. India is the only country expected to register a double-digit growth this fiscal. However, the rapid spread of the second wave of COVID-19 might temper the bullish outlook.

The COVID-19 has grave consequences for the automobile industry and all related sectors. In its outlook in April 2021, SIAM estimates passenger vehicle sales to grow between 3-5% and commercial vehicle at 10-12%. The 2W segment is expected to grow between 5-7% and 3W segment is pegged to grow between 7-9%. However, the country is witnessing lockdowns by various state governments and hence the outlook might be subject to change.

Risk and Concerns from the point of view of the organization

The Company has in place a robust risk management framework that identifies and evaluates business risks and opportunities. The Company recognizes that these risks need to be handled effectively and mitigated to protect the interest of the shareholders and stakeholders, to achieve business objectives and create sustainable value and growth. The Companys risk management processes focus on ensuring that these risks are identified promptly and a mitigation action plan is identified and monitored periodically to ensure that the risks are being addressed accordingly. The Companys risk management framework operates with the following objectives:

• Proactively identify and highlight risks to the right stakeholders.

• Facilitate discussions around risk prioritization and mitigation.

• Provide a framework to assess risk capacity and appetite; develop systems to warn when the appetite is getting breached.

The list of key risks and opportunities identified by the Management are the following:

• Demand-supply situation must remain in favour of the industry to enable it to undertake price increases.

• Demand in the tyre industry is dependent on economic growth and/or infrastructure development. Any slowdown in the economic growth across regions impacts the industry.

• The continuing lockdown situation due to the COVID-19 pandemic can lead to a serious impact on the organization including a significant drop in demand of Apollo tyres, drop in profitability, liquidity concerns, etc.

Internal Controls and Systems

The Company believes that Internal Control is one of the key pillars of governance, which provides freedom to the management within a framework of appropriate checks and balances. It has a robust internal control framework, which has been instituted considering the nature, size and risks in the business. The framework comprises, inter alia, a well-defined organization structure, roles and responsibilities, documented policies and procedures, financial delegation of authority, etc. Information Technology (IT) policies and processes also ensure that they mitigate the current business risks. These policies are complimented by a management information and monitoring system, which ensures compliance with internal processes, as well as with applicable laws and regulations.

The Companys internal control environment ensures efficient conduct of operations, security of assets, prevention and detection of frauds/errors, accuracy and completeness of accounting records and the timely preparation of reliable financial information. The Company uses SAP – an Enterprise Resource Planning (ERP) software – as its core IT system. The systems and processes are continuously improved by adopting best-in-class processes and automation and implementing the latest IT tools. The operating management is not only responsible for revenue and profitability, but also for maintaining financial and commercial discipline.

The Company has a well-established independent Internal Audit function that is responsible for providing assurance on compliance with operating systems, internal policies and legal requirements, as well as suggesting improvements to systems and processes. The Company has also identified and documented key internal financial controls for critical processes across all plants, warehouses and offices wherein financial transactions are undertaken. The financial controls are evaluated for operating effectiveness through managements ongoing monitoring and review process, and independently by Internal Audit.

The Head of Internal Audit reports functionally to the Audit Committee and administratively to the Chairman of the Company. Key internal audit findings are presented to the Audit Committee at its quarterly meetings.

Most importantly, the senior management sets the tone at the top of no tolerance to non-compliance and promotes a culture of continuous innovation and improvement.


Rs in Lakhs

S. No. Particulars Year Ended
31.03.2021 31.03.2020
1. Revenue from operations 6,322.15 6,323.03
2. Other income 736.69 356.20
Total 7,058.84 6,679.23
3. Expenditure
a) Employee benefit expenses 224.76 213.93
b) Other expenses 352.89 328.03
Total 577.65 541.96
4. Operating Profit (EBITDA including other income) 6,481.19 6,137.27
5. Finance cost 703.78 211.89
6. Depreciation and amortization expense 160.25 124.83
7. Profit Before Exceptional Item And Tax 5,617.16 5,800.55
8. Exceptional items 2,935.64 -
9. Profit Before Tax 8552.80 5800.55
10. Provision for tax
- Current tax 1,548.73 1,440.04
- Deferred tax (0.39) (33.06)
Total 1,548.34 1,406.98
11. Profit after tax 7,004.46 4,393.57


The Company workers are the key drivers for its sustained growth and success. The Company nurtures and trains its employees to further enhance their management and leadership skills, while the same time rewarding them for high performance; this is done to attract and retain the best talent within the Company. The industrial relations for the year under consideration, by and large, were cordial. The number of permanent employees on the rolls of the company are 670.


Particulars 2020-21 2019-20 Explanation
Current ratio 2.28 0.26 Increase in current ratio is mainly attributable to increase in Bank and Other bank balances at year end.
Interest Coverage Ratio 13.70 - Interest coverage ratio applicable for current year due to borrowing during the current year.
Debt Equity Ratio 0.16 - Debt Equity ratio applicable for current year due to borrowing during the current year.
Net Profit Margin 110.79% 69.49% Increase in Net profit margin is due to exceptional gain on sale of land


Particulars 2020-21 2019-20
Return on net worth 13.44% 9.40%

Explanation: The Increase in return on net worth was mainly attributable to higher net profits in the current year.