Established in 1976, Apollo Tyres Ltdis India’s leading tyre manufacturer, with operations in three continents, and headquartered in Gurgaon, outside India’s capital city of New Delhi. The equity shares of the company are widely held and with 61% of shares are held by the public, government entities, banks and financial institutions. The company manufactures the entire range of passenger car, SUV, MUV, light truck, truckbus, agriculture, industrial and off­the­road tyres; retreading material, retreaded tyres and alloy wheels the company operates through a vast network of branded, exclusive and multi­product outlets. For the year ended 31st March 2017, the company achieved 4 total revenue of ₹100,590 million and profit after tax of ₹8,028 million compared to ₹99,639 million and ₹10,021 million respectively in the previous year. The statement of profit and loss and the balance sheets of the company for the years 2016–17 and 2015– 16 are summarized below: 

Balance Sheet as on 31st March 2017

Statement of profit and loss for the year ended 31st March

Questions for Discussion

1. Calculate profitability ratios for the two years. What are the key reasons for the fall in the profits of the company?

2. Comment upon the dividend policy being followed by the company.

3. Analyze the capital structure of the company with appropriate ratios. Is the company in a good position to service its debts?

4. Critically analyze the working capital management by Apollo Tyres Limited.

5. Calculate the return on equity for the company for the last two years and analyze the same using DuPont Analysis.

6. Using the information above determine earnings per share, market capitalization, market value to book value ratio, dividend yield and price earnings ratio.

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Particulars ASSETS Non-current assets Property, plant and equipment Capital work-in-progress Intangible assets Financial assets (i) Investments (ii) Loans (iii) Other financial assets Other non-current assets. Total non-current assets Current assets Inventories Financial assets (i) Investments (ii) Trade receivables (iii) Cash and cash equivalents (iv) Bank balances other than (iii) above (v) Loans (v) Others (to be specified) Other current assets Total current assets Total assets EQUITY AND LIABILITIES Equity Equity share capital Other equity LIABILITIES Non-current liabilities Financial liabilities (i) Borrowings (iii) Other financial liabilities Provisions Deferred tax liabilities (net) Other non-current liabilities Total non-current liabilities Current liabilities Financial liabilities (i) Borrowings (ii) Trade payables (iii) Other financial liabilities Other current liabilities Provisions Current tax liabilities (net) Total current liabilities Total equity and liabilities 2017 47,709 6,215 242 10,049 17 824 1,945 67,001 17,294 3,945 3,865 1,341 53 1,755 255 3,295 31,803 98,804 509 52,803 53,312 8,340 48 57 5,153 2,885 16,483 7,840 10,408 4,874 1,294 3,564 1,029 29,009 98,804 2016 32,869 4,164 129 10,043 13 1,259 2,505 50,982 10,197 5,018 2,928 2,868 42 18 524 2,618 24,213 75,195 509 46,069 46,578 2,573 70 4,445 741 7,829 3,737 8,566 3,067 1,370 2,759 1,289 20,788 75,195