| GENERAL REVIEW |
| Total Revenues of the Company during the year under review increased by about 8% to Rs. 6005 Crore. Both major businesses, Tyres and Cement, recorded revenue growth. Operating margins, however, came under considerable pressure owing to spiralling input costs. These, in turn, impacted financing costs, which too showed a steep increase during the year. |
| Brief commentaries on the performance of the Tyres, Cement and the Rayon businesses are appended : |
| Tyres |
| The year under review was pervaded by several challenges making it perhaps the Tyre Business's most difficult year since inception. |
| Revenues grew by 9% to Rs. 3922 Crore. However, inordinate pressure on margins forced the Business's EBIDTA to decline significantly. Consequently, negative EBIDTA stood at Rs. 428 crore during the year under review as compared to a negative EBIDTA of Rs. 15 crore in the previous year. |
| Margin pressure was exerted on the Business during the year as a result of sharp volatility in raw material prices and energy costs. Although prices of finished products (i.e. Tyres) moved up, these increases were not entirely commensurate with the higher input costs. Moreover, given a stagnant demand situation, price enhancements and productivity gains that the Business strived for during the year were insufficient to offset the sharp increases in input costs. |
| The Tyre Business focusses essentially on the Truck and Bus Tyre categories. This market remained flat during the year. The previous year had seen a 23% increase in industry wide production of Truck and Bus Tyres from 12.8 Million in 2009-10 to 15.6 Million in 2010-11. During 2011-12, on the other hand, this category rose by only 2.5% to 16.1 Million. In view of the stagnant demand during 2011-12, sales to the profitable replacement market segment also remained flat. |
| To stem the decline, the Tyre Business put in place several key initiatives during the second half of the year under review. The more significant of these were as follows : |
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calibrated changes were made to the sales mix so as to increase sales of the more profitable products. For instance, increased focus was put on marketing of two and three wheeler tyres. |
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a number of measures were taken for raising productivity on the shop floor as well as in product development. |
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the Passenger Car Radial Tyre Project at Balasore with a per day production of 80MT is currently under implementation. |
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the Business continues its focus on quality and has the distinction of being certified for ISO 9001, TS-16949, ISO
14001, SA-8000, OSHAS-18001 and TPM. |
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