Apollo Tyres

Dear Member,
 
 These are challenging times. The global economic downturn has impacted
 businesses worldwide. Our operations and profitability also have been
 affected but I strongly believe your company has the management depth
 and resource to ride out this storm. This years annual review focuses
 on the ongoing challenges and how your company plans to turn adversity
 into an opportunity.
 
 The high price of crude and natural rubber in the first quarter of
 fiscal year 2008-09 was a precursor to the slowdown that was seeded by
 the sub-prime crisis in the USA. The steep fall in demand by both OEMs
 and the replacement market resulted in higher inventories. This coupled
 with the steep price of raw materials, eroded what could have been a
 very profitable year. Despite the fall in raw material prices over the
 third quarter, the average procurement cost remained high but we were
 still able to register a profit due to judicious planning and sales.
 
 Your company has been quick to react to the changing environment and we
 have aggressively liquidated our inventories, as a result of which we
 are uniquely poised to take advantage of the softer raw material prices
 in the coming year.
 
 The 6% excise cut announced by the government, which was passed onto
 the consumers, helped rally sales and coupled with other government
 initiatives, market sentiment picked up in the latter half of the year.
 
 This year our challenge is to react to the slowdown in the industry and
 prepare ourselves for increased competitiveness in the market place.
 
 We have increased our operational efficiencies and fine- tuned our
 manufacturing processes. The awarding of the Gold Certificate to Apollo
 at the India Manufacturing Excellence Awards is a reflection of our
 endeavours.
 
 As part of our efforts to be more efficient, the management team had
 identified 40 Profit Improvement Projects with a savings target of Rs
 520 million. These savings are over and above our ongoing efficiency
 improvement initiatives. A new R&D facility at Frankfurt will add a
 technological edge to all our products ensuring that we remain globally
 competitive not only in price but also in emerging technologies.
 
 Apollo has made significant inroads into the passenger vehicle tyres
 segment. The passenger vehicle tyre production capacity is slated to
 increase from 10,500 tyres to 16,500 tyres per day in our Limda plant
 from January 2010 in view of the estimated increase in market demand.
 We have also progressed on our partnerships with Leading automakers in
 India, including a few gLobal players who have recently entered the
 Indian market. This showcases our ability to manufacture tyres and
 supply the right blend of technology, quality and price.
 
 I am happy to inform you that your company has also commenced
 development of new technologies in the passenger vehicle tyre segment
 like run-on-flat and winter. We will also be Launching the third
 generation of the popular Amazer tyre, called Amazer 3G in the coming
 year.  In the commercial vehicle radial tyre segment various
 developmental activities have been initiated. New application- led
 patterns, designs and the use of environmentally friendly materials are
 but some of the new activities in focus.  Manufacturing processes have
 been further tweaked to refine quality levels even further.
 
 Your company featured in the top 20 Best Companies To Work For in
 India this year in a survey conducted by Business Today in partnership
 with Mercer Consulting and TNS. This is a tribute to the importance of
 human capital in Apollo.
 
 Through continuous training, job enhancement, cross- functional working
 and multi-tasking we have reached a stature where each ApoLloite stands
 tall and proud in the Indian tyre industry.Added to this, the Apollo
 One Family culture makes working at Apollo Tyres truly unique and
 mutually enriching for the organisation and the team member.
 
 Today your company stands on the threshold of a new world. A world
 where the Apollo brand is determined to stand out and be counted.
 Reaching out to world markets by systematically setting up global scale
 operations; marketing, distribution and manufacturing. This is part of
 our strategy and will enable us to be seen for who we really are -
 young, ambitious, Indian and proud of it!
 
 While product acceptability is the ultimate test, the right visual look
 and feel and visual differentiation is the coat that showcases the
 brand attributes that we stand for - competent, credible and confident.
 During the course of the year your company unveiled a new corporate
 identity.
 
 This has been a major step taken by us after depicting ourselves in a
 certain way for 33 years. The new Apollo reflects to the outside
 world what we actually are - a modern youthful company that blends
 Indian values with a global perspective. lam confident you will find
 the change appealing and in tune with the brand objectives.
 
 At the end I would like to conclude by reaffirming my commitment to
 ensure that your company achieves its vision of being a global player
 of significance and a brand of choice.  On behalf of the Board of
 Directors of Apollo Tyres Ltd., I thank all our customers, partners,
 investors and other stakeholders for your support and confidence in the
 management of your company.
 
                                                         Best Regards
 
                                                      Onkar S. Kanwar
 
                                          Chairman & Managing Director