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There is no greater motivation for us than your faith and trust in the company. At Apollo Tyres, we have always believed in You–First. Behind each of our milestones and achievements, lies a story where Apolloites won the day through sheer perseverance, grit and doing things differently – all this with an aim to deliver quality products and higher services levels to our customers.
You would recently have read about our indirect acquisition of 100% of the shareholding of Cooper Tire & Rubber Company through a wholly owned subsidiary in an all–cash transaction valued at approximately USD 2.5 billion. This deal is expected to close sometime in the second half of 2013 making your company the 7" largest tyre company globally with strong presence in high–growth end– markets across four continents. The acquisition of Cooper will provide access to the strong US and China markets and de–risk the dependence on the Indian market which is going through a corrective phase. I will, of course, come back to you with more details once the transaction closes, and until then let us take a look at some of the key achievements of your company during the course of last year.
A most heartening development is that your company's efforts are now gaining global recognition. To begin with, Apollo was conferred with the Tire Manufacturer of the Year 2012 award by Tire Technology International. Enterprise Asia honoured Apollo Tyres at the Asia Responsible Entrepreneurs hip Awards (AREA) 2012 South Asia, with an award in the health promotion category, for the HIV–AIDS initiative and Giugiaro Design won the Good Design Award 2012 from the Museum of Architecture & Design and the European Centre for Architecture Art Design & Urban Studies for the company's Ultrac Vorti project.
On the financial front, Apollo Tyres has once again gained further strength at a time when the global automotive industry is plagued with a slump. I am happy to report that the company's net profit for FY13 stood at Rs. 6.1 billion, a growth of almost 50% over the previous year. While net sales saw a modest growth of 5%, climbing to Rs. 127.9 billion in FY13 from Rs. 121.5 billion in FY12, a tight rein on cost and creating operational excellence helped your company to post an operating profit growth of 29% to reach Rs. 15.5 billion. Further, the Board of Directors at Apollo has recommended a dividend of 50%.
In pursuit of sustainable growth, Apollo is actively seeking newer avenues for value creation. The company has already established its marketing hub in Bangkok, Thailand – much like its Middle East Operations in Dubai, UAE–to take care of the interests of its consumers in the region. At the same time, it is exploring new export markets in Africa, Europe, Australia and South America.
We have also initiated the process of reorganising our African business, which is expected to contribute towards improving operating margins at the consolidated level. To this effect, Apollo Tyres has entered into an agreement with Sumitomo Rubber Industries (SRI), by which Sumitomo will take over the operations of Apollo lyres South Africa including the Ladysmith plant, Dunlop brand rights in 32 countries in Africa, employees of the head office and sales & distribution team. We have retained the Durban plant and will manufacture and distribute Apollo Tyres' brands – Apollo and Vredestein.
Continuing its product and technology leadership in the commercial vehicle segment, Apollo Tyres once again pushed the industry benchmarks a notch higher by launching new cross ply Steer Axle tyres, XMR, for extra mileage and durability. Additionally, staying true to its collaborative approach, Apollo specially developed tyres, with low rolling resistance, for Mahindra & Mahindra's electric car E20. At the 11th International Mining & Machinery Exhibition 2012, in Kblkata, your company introduced Apollo XTRAX 40.00–57, the largest tyre produced in India. On the raw material sustainability front, the company manufactured the first tyre made of alternate forms of natural rubber – extracted from Russian Dandelion and Guayule.
Looking ahead, I am certain that team Apollo will do justice to its legacy by creating new benchmarks with its dedicated projects on operational efficiencies, expansion opportunities and a range of new products. I look forward to updating you during the course of the year of the status of our transformational acquisition and making your company into a truly global entity.
Wishing you all the very best
Onkar S Kanwar
Chairman & Managing Director