Comparative Analysis of Apollo tyres ltd. and MRF ltd.

Comparative Analytical Report of Apollo Tyres Ltd. & MRF Ltd.1 1. Introduction This project is about comparing the two nominated tyre companies (i.e. Apollo tyres ltd. & MRF ltd.) on the basis of goodwill, net sales, production, market shares, etc. Before comparing these two tyre companies, lets us first have a look on their history, foundation, plants, etc. APOLLO TYRES Apollo Tyres Ltd. is the world's 15th biggest tyre manufacturer, with annual revenues of Rs. 88.6 billion (US$ 1.99 billion) in 2010. It was founded in 1976. Its first plant was established in Perambra, Kerala in 1977. In 1994 it started selling tyres for 2-wheelers. In 2006 the company acquired ‘Dunlop Tyres International’ of South Africa. In 2009, Apollo Tyres acquired the Netherlands-based winter-tyre maker ‘Vredestein Banden B.V. (VBBV)’ for an undisclosed sum from Russia's bankrupt largest tyre manufacturer ‘Amtel-Vredestein NV’. The company now has four manufacturing units in India, two in South Africa, two in Zimbabwe and 1 in Netherlands. It has a network of over 4,000 dealerships in India, of which over 2,500 are exclusive outlets. In South Africa, it has over 900 dealerships, of which 190 are Dunlop Recognized Dealers. In March, 2010, it won an agreement with Volkswagen AG to supply the VW Polo assembled in India with Apollo tyres as Original Equipment. Apollo tyres ltd. gets 59% of its revenues from India, 28% from Europe and 13% from Africa. It is planning to become the 10th biggest tyre manufacturer in the world with annual revenues of $6 billion by 2016. Madras (now Chennai). & MRF Ltd. The main plant for production of tyres and tubes were established on 4 December 1962. In 1967.. The Company was given permission to export tyres having Mansfield trade mark to all world markets except U. is a major tyre manufacturing company located in Chennai. Mr. Mansfield. a rubber mill. and additional capital was issued in order to start the manufacture of automobile tyres and tubes in collaboration with the Mansfield Tire & Rubber Co. MRF ventured into the manufacture of tread rubber. the first machine. MRF established its first office at 334. The Company was incorporated as a private limited company on 5 November 1960 and was converted into a public company on 1 April 1961. were produced. After some time. In 2011. Madras Rubber Factory Ltd. and among the 12 largest worldwide. popularly known as MRF. It is India's largest tyre manufacturing company. . MRF became the first Indian company to export tyres to USA . was installed at the factory. opened a small toy balloon manufacturing unit in a shed at Tiruvottiyur.A. MRF Ltd crosses gross revenue mark of ₨ 10. and with that. inaugurated its 7th manufacturing facility at Ankanpally near Hyderabad. U. Tamil Nadu.the very birthplace of tyre technology. offered for sale out of its holding shares in the company. It exports to more than 65 countries. exclusively for radial tyres.S.Comparative Analytical Report of Apollo Tyres Ltd. In 1979. the Company crossed several milestones in its history and went into technical collaboration with BF Goodrich Tire Co. During this time. The name of the Company.M. USA in 1980.. enabling it to compete with the MNC's (Multinational companies) operating in India at that time. a variety of products. U. Although the factory was just a small shed without any machines. Tamil Nadu. In 1973. a young entrepreneur. India. K. Mammen Mappillai. non-blooming and cushion-backed tread-rubber. In 1952. Madras (now Chennai). The name was later changed as "Manorama Rubber Factory". Ohio. ranging from balloons to industrial gloves and contraceptives. MRF soon became the only Indian-owned unit to manufacture the superior extruded. In 1946.A. Thambu Chetty Street. in the same year. 2 MRF TYRES Madras Rubber Factory. MRF Ltd launches premium truck tyre Super Lug 50-FS in 2007.S. and Canada. the Mansfield Tire & Rubber Co.A. MRF is mainly involved in making vehicle tyres. India in 1947.000 crores in the same year (2011).. MRF Ltd. MRF scored a major breakthrough by being among the very first in India to manufacture and market Nylon tyres.S. was changed to MRF Ltd. The reputation he acquires is known as goodwill in accounting terminology. we calculate the goodwill of the two above mentioned companies (i. In other words.42 219. So. March 07 – March 11) on the basis of Average profit method on 3 years purchase.e. ‘Apollo Tyres ltd. In order to find out the goodwill of the two mentioned companies.  Calculation of Goodwill during last five years (i. but it can be calculated. 3 2. The term was originally used in accounting to express the intangible but quantifiable "prudent value" of an ongoing business beyond its assets. etc. we must need their net profits during last five years. & MRF ltd.) during the last five years in order to know which one is better in goodwill comparison.12 415 198. Year 2006 – 2007 2007 – 2008 2008 – 2009 2009 – 2010 2010 – 2011 Net Profit (Amount in crores) 113. reasonable prices.e.30 108.’ on the basis of average profit method. Apollo tyres ltd.e.  APOLLO TYRES: Below is the table showing the Net profits of ‘Apollo Tyres Ltd. Goodwill is an accounting concept which means the value of an entity over and above the value of its assets. & MRF Ltd. first. which it acquires by providing good quality goods.’ & ‘MRF ltd. resulting perhaps from the reputation. Goodwill Calculation and Comparison Goodwill: Every business entity has its own reputation. which the firm enjoyed with its clients.’ during last five years after all appropriations have been made. i.Comparative Analytical Report of Apollo Tyres Ltd. better services. Goodwill is an intangible asset.30 . 4 Calculation of Goodwill: Goodwill is to be calculated by average profits multiplied by no.828 x 3 632.12 crs. + 108.14 5 210. of years purchased. of years 113. + 219. Total profits = = 1054.14 crores Average profits = 1054. & MRF Ltd. Year 2006 – 2007 2007 – 2008 2008 – 2009 2009 – 2010 2010 – 2011 Net Profit (Amount in crores) 171. + 198.32 353.97 256. + 415 crs.78 141.42 . Average profits = Total profits No.  MRF TYRES: Below is the table showing the net profits of ‘MRF ltd.3 crs.e.Comparative Analytical Report of Apollo Tyres Ltd.98 619. 3) = = 210.42 crs.’ during last five years after all appropriations have been made.828 crs .30 crs. = Goodwill = Average profits x No. of years purchased (i.484 crs. 3) = = 308. & MRF Ltd.97 crs. + 619.694 x 3 926. From above calculations.e. 5 Calculation of Goodwill: Goodwill is to be calculated by average profits multiplied by no. it is concluded that the MRF is better than Apollo as its goodwill is higher by 293. + 256.47 crores Average profits = 1543.082 crs.598 crores  The Comparison of Goodwill between the two is also shown in Graphical Representation on the next page. Average profits = Total profits No. of years purchased. of years 171. + 353.98 crs. Total profits = = Goodwill = Average profits x No.694 crs .47 5 308. .32 crs. = 1543.42 crs. + 141. of years purchased (i.78 crs.Comparative Analytical Report of Apollo Tyres Ltd. GRAPHICAL REPRESENTATION Profit Comparison 700 600 500 400 300 200 100 0 2007 2008 2009 2010 2011 Apollo MRF Amount in crores Years Graph showing net profits comparison between Apollo tyres Ltd. . & MRF Ltd.Comparative Analytical Report of Apollo Tyres Ltd. & MRF Ltd. 6 3. ’ & ‘MRF Ltd.Comparative Analytical Report of Apollo Tyres Ltd. & MRF Ltd. 7 Goodwill Comparison 1000 Apollo Goodwill ( in crores ) 800 MRF 600 400 200 0 Above is the graph showing goodwill comparison between ‘Apollo Tyres Ltd.’. . which is already calculated above on Average profit method basis after compiling last five years profit. 23 5.731.31 10. from March 07 – March 2011.781.559. by: 1273.45 5. & MRF Ltd.01 4.63 6.83 crores in 2009  2665. Sales Calculation Given Below is the chart which determines the sales of Apollo tyres Ltd.054.04 4.74 crores in 2010  4619.19 crores in 2007  1476.104.644. (Amount in crores) Year Apollo Tyres Limited MRF Limited 2007 2008 2009 2010 2011 3.59 crores in 2008  1604.86 It is concluded from the above tabulated chart that the sales of MRF Ltd.20 5. 8 4. and MRF Ltd.41 crores in 2011 . Is higher than the sales of Apollo Tyres Ltd.164.06 8.Comparative Analytical Report of Apollo Tyres Ltd.255.025.57 6.438. Comparative Analytical Report of Apollo Tyres Ltd. Sales Comparison 12000 10000 8000 (Amount In Crores) Amount 6000 4000 2000 0 2007 2008 2009 2010 2011 Apollo MRF Years . from March 2007 – March 2011. & MRF Ltd. & MRF Ltd. 9 Given Below is the graph which determines the Net sales of Apollo tyres Ltd. 228.23) (3.01) (166.490.68 (4.38 ) 414.Comparative Analytical Report of Apollo Tyres Ltd.734.35) (263.719.81) (194.66 (4.43) (147.25 .065.71) (87. & MRF Ltd.48) (98.51) (74. from March 2007 – March 2011.30) 219.62 (3.099.900.88) (122.29 (3.12 2010 5.4) (2. Net Profits Given Below is the chart which determines the Net Profits of Apollo tyres Ltd.960 19.99 2011 5. (Amount in crores) Year Total Income Total Expenditure Depreciation Interest & tax Other adjustments Net Profit 2007 3.42 2008 3.88) 8.959.30 2009 4.311.2 108.86 (2. 10 5.23) (161.31 198.215.75) (2.47) 113.7) (296. 42) _____ 171.82 (4711.01 crores in 2010  MRF ltd.9) (249.62 (4759.75) (242.95) 0. is greater than Apollo tyres ltd by 58.69 (6784.63) (367.3 141.32 2010 7641.98 2011 10064.82 353.97 2009 5476.42 It is concluded from the above tabulated chart that the Net Profit of.67) 11.6 (9234.78 2008 5147.Comparative Analytical Report of Apollo Tyres Ltd.  MRF ltd.76) (153.2crores in 2009  Apollo tyres ltd is greater than MRF ltd.92) 404.52) (135.33 crores in 2008  MRF ltd. from March 2007 – March 2011. is greater than Apollo tyres ltd by 148.96) (169.41) (138. by 61. (Amount in crores) Year Total Income Total Expenditure Depreciation Interest & tax Other Adjustments Net Profit 2007 4499.37 (4035.17 crores in 2011 .54) (247. & MRF Ltd. is greater than Apollo tyres ltd by 421.83) (260.08) ____ 256.32) (211.9 619. 11 Given Below is the chart which determines the Net Profits of MRF Ltd. by 77.36 crores in 2007  Apollo tyres ltd is greater than MRF ltd. 94 (B) Public Shareholding Institutions NonInstitutions Total Public shareholding (B) 216 116.050 253.729.002.024. OF SHAREHOLDERS TOTAL NO.770 489.15 53. OF SHARES TOTAL NO.91 17.00 100.242 1.535 -------- ------- -------100.977.586. & MRF Ltd.859 .097 86. OF SHARES AS A % OF (A+B) AS A % OF (A+B+C) (A) Shareholding of Promoter and Promoter Group Indian Foreign Total shareholding of Promoter and Promoter Group (A) 17 1 234.729.94 46.535 504.000 234.54 0.00 (C) Shares held by Custodians and against which Depository Receipts have been issued Sub Total -------116.431 267. 12 6.91 17.067 35.451.301 116.571.977.792 1.06 35.54 0.15 53.517 181.017 74.859 100. Apollo tyres ltd.528 179. OF SHARES HELD IN DEMATERIALIZED FORM TOTAL SHAREHOLDING AS A % OF TOTAL NO.06 Total (A)+(B) 116.563.091.453. APOLLO TYRES LTD: CATEGORY OF SHAREHOLDER NO. Shares in Market Following are the statements representing Shares Structure of the two tyre manufacturing giants in market.594.00 -------100.166.770 489.792 46.39 46.000 46.075.00 Total (A)+(B)+ (C) 504.39 18 236.024.Comparative Analytical Report of Apollo Tyres Ltd.242 236. and MRF ltd. 73 72.73 72.448. OF SHARES HELD IN DEMATERIALIZED FORM TOTAL SHAREHOLDING AS A % OF TOTAL NO.143 2.07 57.087.131.525 637. & MRF Ltd.993 21.80 Total (A)+(B) 30.814 21.936 -------4.344 3.07 57.Comparative Analytical Report of Apollo Tyres Ltd.244 100.706 30.69 0. OF SHARES TOTAL NO.153.51 114 1.181 2.625 26.00 ------100.357 1.00 100.625 1.207.244 -------100. OF SHARES AS A % OF (A+B) AS A % OF (A+B+C) (A) Shareholding of Promoter and Promoter Group Indian Foreign Total shareholding of Promoter and Promoter Group (A) 107 7 1.51 26.996.69 0.143 -------2.20 27.822 639.439 27.129.00 Total (A)+(B)+(C) .241.844.805 15.618 1.151. OF SHAREHOLDERS TOTAL NO.20 (B) Public Shareholding Institutions NonInstitutions Total Public shareholding (B) 116 30. 13 MRF LTD : CATEGORY OF SHAREHOLDER NO.448 1.241.80 15.996.936 4.00 (C) Shares held by Custodians and against which Depository Receipts have been issued Sub Total -------30. 06% of total shares are withheld by public as compare to MRF’s 72.16 lakh public shareholders holds 26. MRF has dominated over Apollo by creating the humongous sales difference of 4619. i. both have their unique and strong bases in the world of tyre making. it is found that from last five years (2007 – 2011) which are the study period taken for comparison reveals that MRF leads Apollo by 293. MRF tyres Ltd. goodwill and shares in the market. & MRF Ltd. “Comparative Analytical report of Apollo tyres Ltd. 72. Conclusion: Apollo & MRF.e. As far as my study is concerned i.6 crore shares.80%. has upshot market with increase in proportionate sales by every passing year. in Apollo 1. MRF’s total goodwill has very much impact due to high net profits in 2009. .94% of total shares.8 thousand shareholders.Comparative Analytical Report of Apollo Tyres Ltd.7 crores making it 53. Apollo tyres has very strong base hold over their company as only 53. MRF has the upper hand. 46.80% of total shares while as. On the conclusive note. which reveals the basic analytic parameters on which they can be compare from each other.06% of total share. Public shareholding of MRF comprises 30. only in 2011. In 2011 only. Their products are acclaimed world widely due to quality and functional utility. & MRF Ltd.2010.20% of its total shares while as Apollo on the other hand has only 18 shareholders of promoter group which holds the 23. net profits. which owns 30 lakh shares. taken 400 crores lead over Apollo ltd. Contrary to above facts. MRF has 114 shareholders comprising its promoter group which holds over 11 lakh shares making the tally of 27.41 crores.e.e. MRF ltd. These parameters includes.”. 14 7. sales. both the companies are prospering with respect to their previous records but in comparison to each other. On the conclusion.598 crores. i. 15 . & MRF Ltd.Comparative Analytical Report of Apollo Tyres Ltd.