Organised Retail in Tyres: Global Examples

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The report gives a quick overview of leading names in global tyre market - their size, history, country of origin, and they products and services they offer. In cases where the companies are listed, their key financial numbers are also presented. IBR is positive on tyre retail business - we find retail margins are good, and it is possible to offer various other auto products and services from the same outlets. Hence there is scope to value add, and increase margins even further

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www.indiabusinessreports.com Organised Retail in Tyres: Global Examples Sector: Retail Sep 2013

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Index US 3 Europe 12 ROW 16 Transactions 20 www.indiabusinessreports.com Global Tyre Retail 2

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US www.indiabusinessreports.com Indian Dental Services Market

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Discount Tire unlisted • Started in 1960 • Claims to be the world’s largest tyre retailer with over 850 stores • The company remains privately owned • Has stuck to the knitting – sells only tyres and accessories like alloy wheels www.indiabusinessreports.com 4 Global Tyre Retail 1 7 36 209 418 790 850 1960 1970 1980 1990 2000 2010 2013 Store Count - Discount Tire

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TBC Corporation was listed now acquired • Traces origin to 1956 then called Cordovan Associates. • Cordovan Associates changed its name to Tire Battery Corporation in 1972 • Brands include Tire Kingdom National Tire and Battery and franchised stores under Big O Tires. Has close to 850 outlets • Markets and sells nine proprietary brand of tires • Also does tyre distribution through Carroll Tire wholesale distribution centers where it markets to independent tire dealers across the United States. • In 2005 TBC Corporation was purchased by Sumitomo Corporation of America SCOA in a 1.1bn transaction www.indiabusinessreports.com 5 Global Tyre Retail

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Les Schwab unlisted • Started in 1952 in Pinedale Oregon • Close to 450 stores present in nine states in Western USA • Employs 7000+ people highly regarded for its employee friendly policies • In addition to tires the company sells a variety of other auto parts and auto related services including brakes and shockers. • Privately held • Revenues reportedly around 1.6bn www.indiabusinessreports.com 6 Global Tyre Retail

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Monro Muffler Brake and Service Inc listed www.indiabusinessreports.com 7 Global Tyre Retail • Started in 1952 listed in 1991 • 935 stores in 22 states of which 397 tire stores are tire stores and the rest are service stores • Has the following business areas: Tyres 42 Maintenance 29 Brakes 15 Steering 10 Exhaust 4 • 2012 turnover - 686mn EBIDTA margin – 16.8 Net Margin – 8 • Tyres 42 of total sales from 434 stores. Has done 24 acquisitions in 11 years to build the tyre vertical. Aiming for 1300 tire stores • Market cap: 1.38bn. • Valuation www.finance.yahoo.com – EV/EBITDA: 14x – Price/Sales: 1.8 – P/E: 32 trailing – P/E FY15: 20x mn FY11 FY12 FY13 Revenues 637 687 732 Growth 12.8 7.8 6.6 EBITDA 101 116 101 Margin 15.9 16.9 13.8 Net Income 46 55 43

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The Pep Boys listed www.indiabusinessreports.com 8 Global Tyre Retail • Started in 1921 • Has 750+ stores in 35 states of US and 19000 employees • 12.8 million sft of retail space 7300 service bays • Apart from tires provides a variety of automotive repair services including: Scheduled maintenance services oil changes and tune- ups brake repair and replacement air conditioning financial services • Tires are 19 of revenue other parts and accessories are 60 and service is 21 • Market cap: 639mn. • Valuation www.finance.yahoo.com – EV/EBITDA: 7.8x – Price/Sales: 1.15x – P/E: n.a – P/E FY15: 18x mn FY11 FY12 FY13 Revenues 1989 2063 2091 Growth 3.7 1.4 EBITDA 83 66 12 Margin 4.2 3.2 0.6 Net Income 36 29 13

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TCi Tire Centers unlisted www.indiabusinessreports.com 9 Global Tyre Retail • A wholly owned subsidiary of Michelin North America Inc. • 58 retail locations • 77 wholesale distribution centers • 10 retreading plants • Has two divisions: distribution and commercial. – The distribution division serves passenger and light truck tire retailers across the country. – TCi supports its truck and earthmover customers from its 68 commercial centers located throughout the United States.

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SS Tire www.indiabusinessreports.com 10 Global Tyre Retail • Started in 1974 • Current size: – 8 Retail Tire Stores – 18 Commercial Truck Tire Centers – 3 Tire Retreading Plants – 10 Wholesale Tire Distribution Centers – Over 1 million square feet of inventory space • Does business in 15 states.

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Tire Distribution Systems TDS www.indiabusinessreports.com 11 Global Tyre Retail • 44 locations in 8 states • Formed in 1996 when Bandag world’s largest supplier of retreading materials acquired 100 percent interests in five Bandag dealerships through a newly formed subsidiary Tire Distribution Systems Inc. • In 1996 these dealerships had aggregate pre-tax earnings of 16 million net sales of approximately 366 million • Aggregate cash purchase price of the transactions was approximately 158.5 million • In 2006 Bandag itself got acquired by Bridgestone Americas Holding Inc. the U.S. subsidiary of Japan’s Bridgestone Corporation

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Europe www.indiabusinessreports.com Indian Dental Services Market

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Euromaster • Fully owned subsidiary of Michelin • Started in the 1967 in UK known as ATS then. • In 1991 the brand Euromaster is created ATS network became ATS Euromaster. • In 1992 the first center branded Euromaster is opened in France • Network now present in 17 countries and over 2200 outlets • Key countries: – UK: 476 – France: 408 – Germany: 352 – Spain: 350 – Italy: 105 – Netherlands: 101 – Sweden: 76 • In 2011 Euromaster reported turnover of €1872m and had 11500 employees • Sells over 9 million car tyres per year of all brands not just Michelin www.indiabusinessreports.com 13 Global Tyre Retail

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Kwik Fit • Started in 1971 • 1218 directly-managed tyre fitting centres in the UK France and Holland. • Market leader in UK and Holland • In 1995 Kwik Fit Insurance Services was launched to offer Kwik Fit branded motor insurance on behalf of a panel of leading insurance companies. • The Group’s turnover in 2010 was £875 million of which the Group’s major business Kwik-Fit UK with 673 centres represented £561 million Ownership changes at Kwik Fit • 1999: Acquired by The Ford Motor Company for more than 1billion • 2002: Ford divests to CVC Capital Partners • 2005: Acquired by PAI Partners which sold sold its German subsidiary Pit- Stop and also sold Kwik Fit Financial Services to Fortis UK. • 2011: Acquired by Itochu Corp www.indiabusinessreports.com 14 Global Tyre Retail

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Vianor Tyres • Owned by Nokian Tyres a leading Nordic tyre manufacturer • Vianor is the biggest tyre chain in terms of size and reach in the Nordic countries Russia and the CIS countries. • In year-end 2012 the chain comprised 1037 sales outlets in 26 different countries in Nokian Tyres’ core market regions. • The Nokian Tyres Group owns 182 Vianor outlets while the rest operate on a franchising/partnership principle. • In 2012 the chain grew with 127 new outlets. • Net sales in 2012 was Euro 315 mn • Apart from tyres and related accessories like rims its outlets sell other car parts like: car batteries shock absorbers exhaust pipes oils and other car parts. • Its service selection includes tyre storage oil change air conditioner service brake adjustment and adjustment of steering angles. www.indiabusinessreports.com 15 Global Tyre Retail

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RoW www.indiabusinessreports.com Indian Dental Services Market

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Canadian Tire Corp listed • Started in 1922 • 490 tire outlets all in Canada • Has moved much beyond tire retail into areas like gasoline retail home products garments • Does not disclose tire revenue separately. Total retail revenue was C10.4bn in 2012. • Market Cap: 7.5bn • Valuation www.finance.yahoo.com – EV/EBITDA: 12x – Price/Sales: 0.68 – EV/Sales: 0.88 – P/E: 15 trailing www.indiabusinessreports.com 17 Global Tyre Retail Cmn 2011 2012 Revenues 10387 11427 Growth 10.0 EBITDA 762 803 Margin 7.3 7.0 Net Income 467 499

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Beaurepaire unlisted • Started in 1922 • Australias leading tyre retailer with approximately 300 stores nationwide. • Merged with Dunlop Group in 1980 www.indiabusinessreports.com 18 Global Tyre Retail

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Bob Jane T Mart unlisted • Started in 1965 • Has 156 outlets currently through Australia • Apart from tyres sells car batteries as well www.indiabusinessreports.com 19 Global Tyre Retail

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Transactions www.indiabusinessreports.com Indian Dental Services Market

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Japanese conglomerates entering US Europe www.indiabusinessreports.com 21 Global Tyre Retail TBC Corp – Sumitomo Corporation • In 2005 TBC Corporation was purchased by Sumitomo Corporation of America SCOA in 1.1bn transaction • Was listed on Nasdaq prior to this Kwik Fit – many —Itochu Corp • Sold in 1999 by the promoter to the Fort Motor Company for US 1.6b. • Ford sold in 2002 to CVC Capital Partners • In 2005 Kwik Fit was sold for £800m to PAI Partners a leading French-based private equity firm. • The Kwik Fit Financial Services arm of the business was sold by PAI to Fortis Insurance UK now Ageas UK Limited for a figure of £215m in 2010 while the tyre retailing and service centre business was sold to ITOCHU Corporation for 1bn

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Acquisitions by Tyre Cos www.indiabusinessreports.com 22 Global Tyre Retail Pirelli’s several acquisitions • Däckia Holding AB Sweden 2011: Acquired Sweden’s multi-brand tyre distribution from the private equity group Procuritas Capital and minority shareholders for 625 million kronor or approximately 70 million euro. • Campneus Brazil 2012: Acquired 60 54 outlets • Abouchar Brazil 2013: Abouchar had 29 outlet Michelin - TCi • Michelin acquired USA’s largest commercial tyre retailer and retreader TCi in 1999 • At that time TCi had revenues of around 500mn from 163 locations

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Disclaimer www.indiabusinessreports.com Global Tyre Retail 23 Copyright© 2013 India Business Reports • All rights reserved. No part of this publication may be reproduced or utilized stored in a retrieval system or transmitted in any form or by any means electronic mechanical photocopying recording or otherwise without the prior permission of India Business Reports “IBR” Legal Notices and Disclaimer • None of IBR its partners employees affiliates representatives or advisors make any representation or warranty expressed or implied as to the accuracy or completeness of any of the information contained herein including any opinion or any other written or oral communication transmitted or made available. Each recipient of such information expressly disclaims any and all liability relating to or resulting from the use of such information and communications by a recipient or any of its affiliates advisors or representatives. In particular no representation or warranty is given as to the achievement or reasonableness of any future projections estimates or statements about the future prospects of any of the companies. • This document is for the use of the persons who receive it directly from IBR. Recipients agree that all of the information contained in it is of a confidential nature and that they will not directly or indirectly disclose any such information without the prior written consent of IBR. Confidentiality • In consideration of you receiving a copy of this document you agree to keep confidential the contents of this document and shall not without the prior written approval India Business Reports “IBR” disclose to any person the whole or any part of the information contained in or associated with this document.

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