Apollo Tyres Ltd

May 2009

2

Industry Highlights India

Industry Highlights South Africa

Significant events

Key statistics

Outlook

Apollo Snapshot

3

Significant Events• Reduced demand in wake of global slowdown

– Sharp reduction in OE demand starting September 2008 – production cuts implemented by major OEs

– Industry forced to take production cuts in Q3– Situation improved slightly in Q4

• Collapse of credit market – Liquidity crunch post Lehman debacle

• Soaring Raw Material (RM) Prices– Rubber at Rs. 130/ Kg for good half of CY 2008 – peaked

at ~ Rs.137/ Kg in September 2008– Crude crossed $100/ barrel in Feb 2008 – touched an all

time high of ~ $145/ barrel in July 2008– Rubber after experiencing a significant fall in Q4,

increased to Rs.100/kg by quarter end; softening of crude in Q4

4

Significant Events• Profits declining

– Price increase taken but insufficient to counter the raw material cost impact

– Production cuts resulting in relatively higher fixed overheads

– Improvement in Q4 due to pick up in demand and softening of raw material cost

• Strengthening of Dollar– Up from an average Rs.40.0 in FY 2008 to Rs.46.5 in FY

2009 – Industry a net importer – adverse impact on profitability

• Measures taken by the Government– License required to import Truck Bus Radials (TBR) in

Nov 2008– Excise duty cut by 4% in December ’08 and 2% in

February ’09

5

Key Statistics

Mn No.CAGR (5 years)

Growth FY 2009

Truck & Bus* -1.4% -32.4%

Light Truck 13.5% -10.5%

Passenger Car 12.2% 9.6%

Vehicle Sales

Tyre Sales

Mn No.

CAGR (5

years)Growth

FY 2009

Truck & Bus 7.2% 0.6%

Light Truck 6.5% 0.1%

Passenger Car Radials (PCR) 12.3% 13.1%

* 5 Year CAGR in FY ’08 : 15%

6

Apollo, 16%

MRF, 24%

JK, 20%

Ceat, 3%

Goodyear, 13%

Bridgestone, 20%

Others, 3%

Apollo, 28%

MRF, 22%JK, 19%

Ceat, 7%

Birla, 4%

Others, 19%

Apollo, 27%

MRF, 22%JK, 20%

Ceat, 14%

Birla, 15%

Others, 3%

Key Statistics

Presence of Large PlayersPresence of Large Players

Truck and Bus Tyres FY 09

PCR Tyres FY 09Light Truck Tyres FY 09

7

Outlook

+ -• RM prices coming off

– Expected to remain stable at Q4 2009 level in 1st half of FY 2010 and then move upwards

• Signs of improvement in OE & Replacement demand

• Global meltdown expected to continue– Slowdown in economic

growth– Liquidity crisis

• No consensus on Dollar – Rupee parity. No significant movement expected

8

Industry Highlights South Africa

Industry Highlights India Significant events

Key statistics

OutlookApollo Snapshot

9

Significant Events• Industry affected by high raw material prices and

reduced demand– Replacement market under pressure due to lower

consumer spend and liquidity crunch– Exports affected due to global recession

• Production cuts - Truck and Mining tyres the most affected segment

• Currency depreciation against US$– US$ moved up from an average R7.1 to R8.8 in FY 08-

09. Average for Q4 at R10.0– Costlier imports - benefiting the domestic industry;

offset by higher raw material prices

• Interest rate touched a peak of 15.5%; down to 12.0% now

10

Key Statistics

Apollo, 19%

Imports, 38%

Other Manufacturers, 43%

Apollo, 14%

Imports, 24%

Other Manufacturers, 62%

Apollo, 18%

Imports, 43%

Other Manufacturers, 38%

Presence of Large PlayersPresence of Large Players

Truck and Bus Tyres CY 08

Light Truck Tyres CY 08 PCR Tyres CY 08

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Outlook+ -

• RM prices coming off– ~ 15% reduction expected in

Q1 FY 2010– Expected to remain at similar

level in Q2 & Q3 and then move upwards

• Market share shifting from imports to local manufacturers due to weaker currency

• Infrastructure projects on account of FIFA World Cup

• Profitability under pressure– Unfavorable demand

supply situation

• Volatility in currency expected to continue

12

Business highlights

Recent Development

Financial highlights

Shareholding information

Looking ahead

Industry Highlights South Africa

Apollo Snapshot

Industry Highlights

13

22

26

43

47

50

-

10

20

30

40

50

60

FY 05 FY 06 FY 07 FY 08 FY 09

Rs

. Bn

Business Highlights

Consolidated Top Line

CAGR – 22%

14

Business Highlights

Revenue Segmentation

Replacement, 74%

OE, 14%

Exports, 11%

Truck, 64%Light Truck, 11%

PCR, 16%

Farm, 7% Others, 2%

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Business Highlights

• Close to Customers - wide distribution network– India

• 4000+ dealers• Largest number of exclusive dealers (2100+)• Special Networks : Apollo Radial World (190+) &

Apollo Pragati Kendra (60+)• Strategic distribution partnership : Reliance

Petroleum, ONGC & Tata Motors– South Africa

• 600+ dealers• Special franchisees (200+ Dunlop Accredited

Dealers)

Distribution Strength Distribution Strength

16

Recent Development

Announced acquisition of Vredestein Banden B.V., a €300+ Mn Company with manufacturing base in Netherlands, and

operations all over Europe

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Recent Development

Manufacturing Facility

• Manufacturing Plant at Enschede, Netherlands (2 hours from Amsterdam), close to Dutch/German border

• Capacity : 5.5 Mn units p.a

• Manpower : 1,500+

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Recent Development

Rationale

• Continuation of our journey to become a global player - $2 Bn target

• Entry into European Market– Presence with a manufacturing site – Access to existing marketing and distribution network

• Leveraging on “Vredestein” brand positioning in Europe

• Enhancing export sales from India using “Vredestein” brand (South East Asia)

• Upgradation in PCR Technology/ Automation

19

46,912

6,088

49,841

-1,088 -2,072

Financial Highlights

Sales growth led by price improvement

Volumes (-4.4%)

Price Mix (+13.0%)

+6.2%

Consolidated Net Sales : FY 2008/ FY 2009(Rs. Mn)

FY 2008 FY 2009

Others (-2.3%)

Revenue Bridge (Consolidated)

20

47

50

45

46

46

47

47

48

48

49

49

50

50

51

Rs.

Bn

5.7%

2.8%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

%

Financial Highlights

FY 2008

FY 2009

Net Sales EBIDTA Margin

Net Profit Margin EPS

6.2%

13.1%

8.8%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

%

5.7

2.8

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Rs

.

21

Financial Highlights

Balance Sheet Size Net Debt

20.0

24.6

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Rs.

Bn

3.6

5.3

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Rs.

Bn

FY 2008

FY 2009

22

0.7

0.5

0.3

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Rat

io

17.1%

24.6%

13.9%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Rat

io 14.9%

25.5%

10.9%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Rat

io

1.4

0.8

1.0

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

Rat

io

Financial HighlightsNet Debt to Equity

ROCE ROE

Net Debt to EBIDTA

FY 2008

FY 2009

FY 2007

23

Shareholding Information

Promoters, 39%

FIs/ Banks/ Mutual Funds, 18%

Public, 26%

FIIs/ NRIs/ Foreign Bodies Corporate, 15%

Govt of Kerala & Others, 2%

24

Looking Ahead

• Aggressively pursue market shares in India and South Africa Market

• Focus on TBR capacity in India

• Focus on integration of Vredestein Banden B.V.

Thank You