Business Sensitization LTS2011-12

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Welcome

toBusiness Sensitization

Workshopfor

Union officer bearersand

DR·s



Contents«

1. Your Contribution : just outstanding and Marvelous!!!

2. Apollo·s Contribution in life !!!

3. Understanding of Business cycle

4. LPG and it·s impact on Business

5. Current Business Scenario (Tyre industry)

6. Key Business challenges

7. Mantras to meet challenges

8. Your role as a Business Partner

9. Success stories : EICHER ,TATA



Your Contribution

Just outstanding

and

Marvelous !!!



Thank you !!!



Apollo Journey from 1991-2010

Key Achievements

1991 : Bias plant started

2000 : Radial plant started

2009 : IMS certification

2007 - 2010 : Mfg Excellence Awards : Limda Bias2007 - 2010 : HR Trophy for Innovative HR Practices @ Limda

2008 -2009 : Won Shram shri Award-twice

2009-2010 : Excellence Award to QC Team @ International Competition

2010 : IMEA Gold Category Award by Frost and Sullivan

Participation in various Employee Development Initiatives Participation of QC teams at Regional, State and National level and won prestigious

Awards

Always setting New Benchmark of productivity

Shouldered in all adverse situation as ONE TEAM



Apollo·s

Contribution

In

Lif e !!!



Apollo·s Contribution in Life !!!

Where we were ?

Vs

Where we are today ?

Progress from Individual to family

Identity changed

Societal status ² reputation and credibility

Emotional development Economic capability-Wealth generation

Living standard -uplifted



Understanding

of

Business Cycle



Understanding of Business cycle

Four Stages of Business

Stage :1 : Start-up/Creation

Stage :2 : Growth

Stage :3 : Maturity

Stage :4 : Recession/Decline



Liberalizations, Privatization

Globalization

and

it·s impact on Business



LPG and it·s impact on Business

Need for Liberalization/Privatization/globalization :

In 1980·s Indian Economic was based on government control and acentrally operated market.

No consumer oriented market and foreign investments

Economic condition of country was poor and standard of living didn·t goup

Initiatives of Liberalization / Privatization / Globalization

1990·s LPG started by Congress government

Devaluation of Indian Currency by 18-19 % to resolve BOP crisis Disinvestment of Public Sectors

Dismantling of The Industrial Licensing regime

Allowed Foreign Direct Investment

Removed restrictions on imports etc



Recession

and

it·s impact on Business



Recession take place when Consumer loose confidence in the growth of

economy and spend less which leads to decreased demand of goods and

services and in turn leads to decrease in production, Lay-offs and rise in

unemployment.

Recession started in 2008-2009 and affected strong countries like America,

Europe and Japan

Recession remains for min 6 months to 2 yrs

Facing severe crisis of liquidity and credits

US is facing major crisis because Home loan defaults, Rise in oil prices,

Global inflation, High unemployment rate, declining dollar value.

Recession and it·s impact on Business



Recession and it·s impact on Business

US recession Impact on India:

Industrial growth declined, Exports declined

Outsourcing projects are on hold

Foreign investors pulled out of stock market

New projects and ventures are on hold Severe liquidity crisis

US Recession Impact on Tyre Industry :

Automobile industry affected badly

Reduction in domestic market affected operating margin OEM requirement reduced drastically Tyre export business declined Freight and Cargo movement declined as a result replacement

market hampered



Current Business Scenario

(Tyre Industry)



Current Business Scenario

Tyre Industry in India

Total Value Rs.25,000 cr

Highly Raw Material intensive

Predominantly a Cross Ply (or Bias) tyre Manufacturing industry.

Indian tyre industry is highly concentrated wherein 10 large

manufacturers account for over 95% of the total tonnage

production of 11.35 lacs M.T. on an average,

55% of the production is for replacement market, followed by

29.8% sold to OEMs directly and the remaining is exported.



Apollo, 16%

MRF, 24%

JK, 20%

Ceat, 3%

Goodyear, 13%

Bridgestone, 20%

Others, 3%

Current Business Scenario (Tyre Industry)

Competitive Scenario

Truck and Bus Tyres

Apollo, 27%

MRF, 22%JK, 20%

Ceat, 14%

Birla, 15%

Others, 3%

Light Truck Tyres

Apollo, 28%

MRF, 22%JK, 19%

Ceat, 7%

Birla, 4%

Others, 19%

PCR Tyres



Business Challenges



K ey Business Challenges

Hikes in Raw Material prices ( Constitutes 75% of production cost)

Natural Rubber Cost

Difficult to pass on increased RM Cost to Customer

115.91

179.42

108.6797.47

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00

200.00

Price (Rs/kg) 97.47 108.67 115.91 179.42

2007-08 2008-09 2009-10 2010-11



Fuel Cost

24 24.5

23.5821.86

0.00

10.00

20.00

30.00

Price 21.86 23.58 24 24.5

2007-08 2008-09 2009-10 2010-11




Power Cost/kwh

7.07 7.1

7.04

5.84

0.00

2.00

4.00

6.00

8.00

10.00

Price 5.84 7.04 7.07 7.1

2007-08 2008-09 2009-10 2010-11




Rs/kg (Bias)

12.92 12.9912.89

11.9

0.00

5.00

10.00

15.00

Rs/kg(Total) 11.9 12.89 12.92 12.99

2007-08 2008-09 2009-10 2010-11




Key Business Challenges

Radialization

Approx. 60% of Apollo·s production is Bias Truck and Bus Tyres.

Passenger car Tyres are fully Radialized

Truck and Bus Tyres are 12% Radialized but the change to radials ishappening fast

As Radialization increases, threat from imported tyres will increase, which

may affect Apollo·s profitability

Unresolved Tax regime :

Import duty on natural rubber is 20% but import duty on finished tyres is as

low as 10%



Key Business Challenges

Dumping from China and South east Asian Countries :

Increased dumping low cost tyres from China

Increased Retreading :

worn out tread of the old tyre is replaced with a new tread.

Retreading costs approximately 20% of a new tyre and is

therefore gaining popularity, especially in Southern part of thecountry



Mantras to Meet Challenges

Productivity : High

Quality of the product : Best of the Best

Operational Cost : Very low

Delivery of the product : On time

Services to customers : Prompt

Employee Morale : High



Your role as a Business Partner

Union le

aders

and

DR¶s s

hould :

Have good understanding about Business

Have collaborative approach

Respect workmen opinion and give feedback

Encourage workmen to participate in various development activities

Take responsibilities and play key role in efficiency and productivityimprovement.

Take a lead and encourage workmen to participate in Quality and safetyinitiatives

Ensure healthy and harmonious relationship between union and Mgt

Be a Role Model for others



Case study

Companies f aced challenges, survived and grew:

Bajaj auto Ltd.

KEC Ltd.

TATA

Companies could not f aced challenges and demolished:

Premier Auto Mobile (FIAT)

Mafatlal group

Sarabhai group



Case studyInnovative ways adopted by companies and unions for

settlement

Wage settlement for 10years : suzlon, lubrizol, port and doc workers

No settlement concept : EICHER

Stoppage of increment : Garware wall ropes

Ceiling on DA : Hochest, Nicholas Piramal

Canteen and Transport subsidy reduced : VOLTAS, GODEREJ AND OSWAL

MOST adopted : Mahindra and Crompton

Bajaj Auto produces 10 lacs bikes 850 workmen instead of 2200 workmen

TATA produces 2 times production with more than 50% reduction inManpower



Principles of KARMA

The Art of Living life by way of

God K rishna



Thank U

Sun Never Set !!

Business Sensitization LTS2011-12

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