ON A NEW ROAD. ALWAYS. Annual Report 2017-18 apollotyres.com Contents 01 On a New Road. Always. 10 Key Performance Highlights 12 Integrated Report 26 Management Discussion and Analysis Corporate Overview Statutory Reports 01 On a New Road. Always. 62 Board’s Report 02 Chairman’s Message 71 Annual Report on CSR 04 Vice Chairman’s Message 78 Business Responsibility Report 06 Board of Directors 101 Corporate Governance Report 08 Management Board 10 Key Performance Highlights Financial Statements 12 Integrated Report 123 Standalone Financial Statements 26 Management Discussion & Analysis 177 Consolidated Financial Statements 42 Sustainability Snapshot On a New Road. Key highlights for FY2018 Always. `149.29 bn GROSS SALES At Apollo Tyres, we further cemented our position in FY2018 as a leading tyre manufacturer by recording a profitable and sustainable growth. We reached this high point `30.80 bn on the back of our vision to create relevant CAPITAL EXPENDITURE products and renew capabilities to meet dynamic customer needs. FY2018 was a year marked with many 8.5% ROE milestones and achievements. Right from the inauguration of the new plant in Hungary and announcement of a new Greenfield facility in India to high-decibel football sponsorships, `7.24 bn we are inching closer to achieving the NET PROFIT Company’s 2020 vision – ‘To be a premier tyre company with a `17.68 bn diversified and multinational presence.’ EBITDA With the new plant in Hungary, Apollo Tyres has progressed and expanded supplies to Original Equipment Manufacturers (OEMs) in Europe. This marks our transformation in the region from a strong replacement tyre supplier to diversifying into the OEM market. About this report The APMEA business recorded a noteworthy J10,000 crore growth figure, a significant milestone for the Company. This Annual Report is aimed at meeting both financial and Closer home, we ramped-up our Chennai plant’s capacity by non-financial information 50% and our Bias business saw a huge resurgence fuelled requirements of all our stakeholders, by a massive quality improvement programme. This year, including investors, customers, we also laid the foundation stone for our next Greenfield suppliers, dealers, employees and plant in Andhra Pradesh, which will help expand our contractors, to help them take informed capacity for Passenger Car Radial (PCR) tyres and later for decisions regarding the Company. Truck and Bus Radial (TBR) tyres. Based on the requirement of SEBI – LODR of 2015 and the circular released In FY2018, we paved a new path for ourselves with the on ‘Integrated Reporting’, in 2017, we support of every single member of the Apollo One Family. are following the guiding principles and As we embark on the journey to achieve our long-term content elements of the International goals, we stay committed to our business vision of growing Integrated Reporting (IR) Framework. responsibly. At Apollo, we believe that the conservation of The Report presents information on the our natural resources and growth of our communities is Company’s value-creation process, its central to business sustainability. strategic framework, the key risks, the key resources and capitals used, the Hence, as we match the dynamic pace of the market inter-linkages and the material issues, environment, we remain rooted to our core objective of thereby narrating our ‘integrated sustained value creation for all our stakeholders. thinking’ process to our stakeholders. Chairman’s Message On a Firm Growth Trajectory Dear Members, Since the inception of Apollo Tyres, it has been my resolve to deliver value to all our stakeholders, including employees, shareholders, customers, partners and other relevant communities. In this journey, your Company has imports. I thank the Government for tappers’ wives. The rubber sheet unit had to think and act differently as enforcing the duties and helping provide will be run by a group of women, who compared to others. We invested in a level playing field in the country. have been trained by us and the Rubber the Chennai plant when conventional The implementation of the Goods and Board on tapping, sheet making, sheet wisdom dictated to avoid any Services Tax (GST) further aided all tyre smoking and general entrepreneurial investments during recessionary times manufacturers in India to provide safe skills. Another initiative in this area or made international acquisitions and tested products for the customers, was the launch of our Mobile Medical when we were told to cover our flanks as against unsafe low-cost imports. Unit for checking the health of truckers. in India. Of course, going against the This step has helped us expand the Over the years, one of my key tide would not have been possible reach of our healthcare initiative endeavours has been to build the without the faith of our team and to truckers who do not enter the Company as a strong institution. We you, our shareholders, along with the transhipment hubs where we provide have worked hard to create efficient dedication and hard work put in by each healthcare facilities. processes and robust policies. member of the Apollo Family. Recognising the culture created in Looking at FY2019, I continue to be Led by our long-term vision to become the Company, the Great Place to bullish on our key markets – India, a global leader in the industry and Work institute named Apollo Tyres Europe and ASEAN. The economies guided by our values, we continue to as one of India’s Best Workplaces in have displayed strong growth and have an agile and dynamic approach to Manufacturing. The institute rated with fundamentals in place, I see adapt to changing market realities. Yet us highly for our transparency in the them moving northward. While I am at the core, we continue to pursue our performance management process, aware that we will face challenges in profitable growth strategy focussed on especially the variable pay, and the each market, I am confident that your a three-pronged approach – consolidate employee development programmes. Company is on a firm growth trajectory. market position in existing markets Another feather in our cap was the This confidence is due to the trust and seek new markets/segments, recognitions we received from various continuously reposed by each one of continue investment in both the brands vendors, including Hyundai and Maruti you, our valuable shareholders. I would – Apollo and Vredestein – and capacity Suzuki. also like to thank our bankers, various expansion via Greenfield facilities; and financial institutions and the various In pursuit of its strategies, your seek other growth opportunities. State and National Governments where Company never loses sight of its we operate, network partners and Looking back at FY2018, I see it as commitment to social responsibility business partners who have allowed a year of continuous efforts around and sustainability. We have ensured us to surpass the goals we had set for our strategy, with a focus on capacity that these efforts are embedded into ourselves. expansion and building the brands. We our commercial activity or business inaugurated our sixth manufacturing strategy and hence are an intrinsic Of course, the journey would not plant in Hungary, added capacities in our part of our business as usual. Even happen but for our employees. It plants in India and announced another as we continue to win laurels for our is with pride that I talk about the Greenfield in India. The latter part of Corporate Social Responsibility (CSR) strong culture in the Company where FY2018 saw the Company announcing activities, I feel that the real joy for our individual accomplishments a deeper connect with football in India, me and the team is to see the positive are directed towards achieving the the UK and Hungary. From an industry impact we are able to bring in the lives Company milestones and marching perspective, the big heartening news of our stakeholders. During FY2018, together to fulfil our Vision 2020. On was that the Government of India acted we reached out to our rubber tapper behalf of the Board of Directors, I upon the industry’s plea to impose community and co-created income- would like to acknowledge every single custom duties on the low-cost Chinese generation opportunities for the rubber employee for having stood by Apollo and actively contributed to its success. Yours sincerely, Chennai Plant Hungary Plant Onkar S. Kanwar Chairman and Managing Director 2 Corporate Overview / Statutory Reports / Financial Statements Looking at FY2019, I continue to be bullish on our key markets – India, Europe and ASEAN. The economies have displayed strong growth and with fundamentals in place, I see them moving northward. Apollo Tyres Ltd Annual Report 2017-18 3 Vice Chairman’s Message Pushing the Envelope and Always Going the Distance on ‘New Roads’ Dear Members, On a New Road. Always – this is not just the theme for the year’s Annual Report but raison d’etre of your Company’s profitable and sustainable growth journey and behind each of its milestones and achievements. 4 Corporate Overview / Statutory Reports / Financial Statements Vice Chairman’s Message For Apollo Tyres, FY2018 was a year of big achievements as our FY2018 was a year marked with frantic activity APMEA business achieved at Apollo Tyres. Commercial production of the new plant in Hungary, announcement of a new a significant financial Greenfield facility in India, high-decibel football milestone of ` 10,000 sponsorship in India… I am sure that as you read through the pages, you will see the efforts taken crores and Europe achieved by your Company to achieve its 2020 vision – ‘To its own record growth be a leading and premier tyre company with a diversified and multinational presence’. We target. It was a synergistic continued to push the envelope and always go flow across the regions to the distance on New Roads with enthusiasm and exhilaration.