Analyzing the DuPont Ratios of India's Tire Industry: A Comprehensive Report

Extract

[...] The DuPont shows that there is a decrease of 30% with almost 25% decrease in Return of sales and decrease in Asset turnover. Their current strategy is to remain leaders which occupies a leading position in most product segments in India (passenger vehicle, two- and three-wheeler, agriculture and OTR tires). With having a competitive pricing for vehicles and keeping a high end brand image for Passenger vehicles. For the future as the market to book ratio is increasing, It can be seen as a gradual growth. [...]

[...] In 2016, the company entered the 2 - 3 wheeler tire market by completing acquisition of Cavendish Industries. This movement also adds manufacturing capacity in the commercial vehicle radial tire segment. The turndown in the ROS is due to the decrease of the net profit because sales in 2017 and 2018 were stable with a little increase, but the net profit decreased by 84%. The input cost during this year increased 17% but we can infer that the main driver of this important decrease is due to price. [...]

[...] Also, second reason it was a wrong strategy because there are two very big competitors CEAT as raw material grower (price war) and TVS as 2-3 wheel specialist (price war) Plus, it also invested 40000 in Hungary and had a huge expansion plan to Europe which resulted in decrease of asset turnover. Also, Input cost up by 18% resulting in less ROS. Q2. On the basis of Dupont ratios (for years 2017 and 2018), present the strategy of tire-makers in India. [...]

[...] M , then it is significant. SEGMENT 4 Commercial/OEM/cross ply There is a clear leader in this segment, so the segment is solid. As we identified several KFs contributing to differentiation (Quality, Cost long life time) we have placed it in the quadrant above. SEGMENT 5 Commercial/Replacement/radial There is a leader with key players having very similar market share, As it lies in the commercial and radical segment the quality is higher and for replacement brand reputation is very important too. [...]

[...] In 2017 it had a net profit of 1496.9 million rupees and decreased in 2018 to 1173.4. In 2017 its sales were 21355.3 million rupees and increased to 22181.3. In terms of profitability, TVS Srichakra had a relatively high return on investment (ROI) of 10.76% in 2017 and 8.23% in 2018, indicating that the company was able to effectively utilize its assets to generate profits. Its return on sales (ROS) was 7.01% in 2017 and 5.29% in 2018, which was lower compared to other tire makers like MRF, but still demonstrated growth. [...]