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Sustainability
Report 2011-2012
APOLLO TYRES LTD Apollo House, 7 Institutional Area, Sector 32, Gurgaon, Haryana 122001, India

apollotyres.com

e may utilise the gifts of Nature just as we choose, but in Her books the debits are always equal to credits” Mahatma Gandhi

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Beautiful and delicate looking Dandelions are pioneer species living in damaged areas, repairing the soil. They are the first step in the transformation of a damaged area back to a forest. Our concept for the report this year is derived from this ability of Nature to create and re-create itself.

Sustainability Report 2011-12 01

Contents
Report Parameters.................................04

Chairman’s Message..............................06

Organisational Profile............................08

Corporate Governance...........................14

Management Approach..........................24

Economic Performance..........................36

Environment and Social Performance....40

Performance Indicators.........................80

02 Report Parameters 2011-12

Sustainability Report 2011-12 03

Report Parameters
Report Profile
Reporting Period of Report: April 2011 – March 2012 Date of most recent previous report: Sustainability Report 2010-11 (Internal Release) Reporting Cycle: Annual
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Report Boundary
Section
Economic

Coverage of Report
Consolidated report at corporate level

For the purposes of this report:
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Zone I refers to the manufacturing locations in India – Limda, Perambara, Kalamassery and Chennai Zone E refers to the manufacturing locations in Europe – Enschede Zone A refers to the manufacturing locations in South Africa – Durban and Ladysmith

Environment

Manufacturing locations in India, Europe and South Africa

Labour Practices and Decent Work

Manufacturing locations in India, Europe and South Africa

Defining Report Content
The methodologies and principles of the Global Reporting Initiative G3 Guidelines (2006) - Materiality Analysis, Stakeholder Inclusiveness, Sustainability Context and Completeness - have been used in preparing this report. These GRI G3 principles are considered while analysing the key issues that relate to sustainability in business operations, including identification of major stakeholders. The information on key indicators disclosed in this report have been researched, assessed and selected by Apollo Tyres Ltd. We engage with stakeholders on an ongoing basis as part of our everyday business. Since 2010-11, we have documented the formal and informal process of stakeholder engagement with material issues raised and priorities established. These have been mapped to the relevant aspects of this report. Efforts have been made to ensure disclosure on parameters which we consider to be significant and have a potential to affect the decisions of our stakeholders.

The boundary of this report includes Apollo Tyres Ltd's Chennai manufacturing location which was not included in our previous report in 2010-11. The report excludes the 2 manufacturing facilities of Apollo Tyres Ltd in Zimbabwe – Bulawayo and Harare.

Human Rights

Manufacturing locations in India, Europe and South Africa

Society

Manufacturing locations in India, Europe and South Africa

Data Collection
To effectively collect the economic, environmental and social efforts and achievements of Apollo Tyres Ltd, the data collection process was performed through onsite interactions within the scope of the report. Other than this, the data were researched and report developed through employee discussions and information consulting. Collection channels and computing methods were further optimized to make the whole process more effective and robust.

Product Responsibility

Manufacturing locations in India, Europe and South Africa

Contact Person: For questions related to the report, please contact: Name: Harshita Pande / Kanika Pal Email: [email protected] [email protected] Tel: +91-124-2383002

This report is only an internal release to a select audience within Apollo Tyres Ltd. However as the information is being tracked across various indicators, as specified in the GRI Index of this report, it can be made available to those interested.

04 Report Parameters 2011-12

Sustainability Report 2011-12 05

Apollo's Sustainability journey began in 2010. In 2011, we published our first report, in accordance with the Global Reporting Initiative Version 3 for a select audience. Bringing out a report has been a learning experience for the organisation. Most beneficial was the fact that the gaps identified in 2010, were taken on board and helped in defining and strengthening our internal systems relating to the environment and social aspects. Over the course of the next year, the process has matured; and is now evident in our performance in terms of disclosures on nearly all parameters. I am very happy to share with you that our approach and systems have ensured that we are positioned at a Level B reporting standard. Disclosures across our three regions have also improved significantly over the last year. Corporate Responsibility is actively discussed in our Supervisory as well as Management Board meetings. We aim to reach Level A across all our locations in the next two years. In the following pages you will read about our efforts in managing the environment and social issues related to our operations in India, South Africa and the Netherlands. We have focused on energy, water, health and safety issues in our manufacturing locations. We have extensively worked with our customers and developed products from the environment and health aspects. In India and South Africa we have helped vulnerable communities around our plants to become selfreliant. I hope this report gives you an understanding of our commitment towards sustainable development.

Treads of Responsibility
n our journey of business excellence we are committed to increasing our stakeholder value. Our ambition to be amongst the top 10 global players have a clear identified path based on the four key pillars of Business - Quality, Sustainability, Innovation and Culture.

I

Onkar S Kanwar Onkar S Kanwar
Chairman & Managing Director
06 Chairman’s Message 2011-12 Sustainability Report 2011-12 07

Chairman & Managing Director

Organisational Profile

pollo Tyres Ltd is a highperformance company a n d a l e a d i n g t y re manufacturer with headquarters in Gurgaon, India and operations in 3 continents.

A

Registered as a company in 1976, Apollo is a young, ambitious and dynamic organisation, built around the core principles of creating stakeholder value through reliability in its products and dependability in its relationships.

08 Organisational Profile 2011-12

Sustainability Report 2011-12 09

In the year 2006 the company acquired Dunlop SA. It holds brand rights for the Dunlop brand across 30 African countries. In 2009, Apollo acquired Vredestein Banden B V in the Netherlands (since renamed Apollo Vredestein BV), thereby adding Europe as its third crucial market. The company currently produces the entire range of automotive tyres for ultra and high speed passenger cars, truck and bus, farm, off highway, industrial and specialty applications like mining, retreaded tyres and retreading material. These are produced across manufacturing locations in India, Netherlands and South Africa. In terms of market presence, India is the largest accounting for 67% of revenues, Europe 23% and South Africa 10%; with exports to 100+ countries across the world.

Vision and Core Values
Vision
To be a significant player in the global tyre industry and a brand of choice, providing customer delight and continuously enhancing stakeholder value.

Manufacturing Locations
Enschede

Limda Kalamassery Chennai Perambra

The Apollo Way
As an organisation, Apollo Tyres Ltd believes that the key to sustainable success lies in making the lives of all its stakeholders better. This is Apollo's Noble Cause. In its journey of over 3 decades, Apollo Tyres has globetrotted and absorbed the hues and flavours of different cultures from across the world. The Apollo of today is an amalgamation of some of the best people and cultural ingredients that exist in any organisation. In addition, there are some distinct traits which are observed in, and expected of, all Apolloites. The 'Apollo Way' captures these values in their simplest and purest form, enabling the unique identity of Apollo and Apolloites in the mindscapes of consumers, business associates and all other stakeholders. These values are:

Ladysmith Durban

Zone I
Kalamassery

Shareholding as on March 31, 2012
Fll/NRIs/Foreign Body Corporate, etc 23.28% Financial Institutions Bank/Mutual Funds 11.13%

Government of Kerala/ KSIDC 1.98%

Products Manufactured:
Truck and bus cross-ply, Light truck cross-ply, Farm cross-ply and Re-treading material

Perambra

Care for Customer Business Ethics Care for Society Empowerment One Family Communicate Openly

Zone A
Products Manufactured:
Truck and bus cross-ply, Light truck cross-ply, and Farm radial & cross-ply

Ladysmith

Chennai

Zone E
Products Manufactured:
Passenger vehicle radial, and Light truck radial

Products Manufactured:
Truck and bus radials, Passenger vehicle radial

Public 16.67%

Promoters 48.94%

Enschede

Durban

Limda

Registered Office: 6th Floor Cherupushpam Building Shanmugham Road Kochi 682031, Kerala

Corporate Office: Apollo Tyres Ltd. Apollo House, 7 Institutional Area Sector 32 Gurgaon 122001, Haryana

Products Manufactured:
Passenger vehicle radial, Collapsible passenger car spare tyres, Agriculture tyres

Products Manufactured:
Truck and bus radial & cross-ply, Light truck radial & cross-ply, Farm and Off-the-Road

Products Manufactured:
Truck and bus radial & cross-ply, Light truck radial & cross-ply, Farm and Off-the-Road

10 Organisational Profile 2011-12

Sustainability Report 2011-12 11

Products
For Apollo Tyres, offering the right product to the right customer is essential. Special efforts are made to understand customer needs and segment the market accordingly. After which, products are developed for niche applications within a larger category to enable the company to provide fuel efficient and cost-saving products to each customer segment. Innovation has always been an integral part of the Apollo way of doing business, this applies as much to product development and marketing as to how the company as a whole is focused on challenging existing boundaries. Between the 6 key brands, manufactured in 3 countries, Apollo has tyres to suit nearly all kinds of vehicles, applications, usage and terrains. From working underground to extract mineral wealth, to enabling individuals and families move across destinations to create memorable experiences with their friends and loved ones, Apollo Tyres produces the entire range of automotive tyres for ultra and high speed passenger cars, truck and bus, farm, Off-The-Road, industrial and specialty applications like mining, retreaded tyres and retreading material.

Awards
Zone I (Apollo Tyres India)
Name of Award
2nd Largest Importer in the Vadodara Region TIA Hall of Fame Award (To Mr. Onkar S Kanwar, Chairman, Apollo Tyres Ltd) GBC Commendation for Community Investment State Pollution Control Award (for Large Factories)

Awarding Body
Container Corporation of India Ltd Tire Industry Association Global Business Coalition, Health State Pollution Control Board Dun & Bradstreet – Rolta Corporate Awards Annual Management Convention of Kerala Management Association Annual Management Convention of Kerala Management Association

Brand Portfolio
Top Company of the Year Award (Tyre Sector)

Global brand catering to vehicles across categories

Global niche brand for passenger car & specialty tyres

Brand for 32 African countries across vehicle categories

Best Innovative HR Practices for Perambara Plant Best Innovative Cost Management System for Perambara Plant

Zone E (Apollo Vredestein BV)
Global challenger brand for truck tyres Global challenger brand for passenger car tyres Global brand for truck bus & passenger car tyres

Name of Award
Best Employers Research

Awarding Body
Intermediair TCS

Product Portfolio

ADAC Summer Tyre Test Highly Recommended Rating for Apollo Amazer 3G Maxx Best Summer Tyre 2011 for Sportrac 3

ADAC ADAC Summer Tyre Test Good Score Rating
Passenger Vehicle Apollo Bicycle Vredestein 4x4 Apollo, Dunlop, Vredestein Agriculture Apollo, Dunlop, Vredestein

Best All Season Tyre 2011 for Quatrac 3 AutoBild AutoBild AutoBild Score Summer Tyre Test for Sportrac 3

Zone A (Apollo Tyres South Africa Pty Ltd )
Light Truck Apollo, Dunlop Off Highway Apollo, Dunlop Truck/Bus Apollo, Dunlop Specialty Apollo, Vredestein

Name of Award
South Africa's Most Iconic Tyre Brand

Awarding Body
TGI South Africa

12 Organisational Profile 2011-12

Sustainability Report 2011-12 13

Corporate Governance

esponsible corporate governance provides the framework for a company. It defines and ensures the manner in which the company works. The overall governance structure of Apollo has a supervisory board and a management board. They work with the objective of meeting the regulatory compliance and other standards to bring in stakeholder value.

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For Apollo Tyres Ltd, sustainable governance means integrating sustainability with the various aspects and ambits of company management. In keeping with best practices, Apollo Tyres seeks to execute the practices of Corporate Governance by maintaining strong business fundamentals and by delivering high performance through relentless focus on the values known as 'Apollo Way'. These include: Care for Customer, Business Ethics, Care for Society, Empowerment, One Family, Communicate Openly.

14 Corporate Governance 2011-12

Sustainability Report 2011-12 15

Board of Directors

Corporate Governance Structure
Apollo Tyres follows a two-tier management and decision making process to ensure incorporation of diverse viewpoints and complete impartiality before any major decision is executed.

Apollo Tyres Ltd

Supervisory Board (Board Of Directors)

Management Board

Audit Committee

Remuneration Committee

Shareholders' / Investors' Transfer / Grievance Committee

Risk Management Steering Committee

Board of Directors
The Apollo board consists of highly regarded professionals in their field and together lend their collective wisdom and chart the course for Apollo's future. Apollo Tyres' Board is committed to ensuring good governance. The Board of Directors is at the core of our corporate governance practices and oversees how the management serves and protects the long – term interests of all our stakeholders. We believe that an active, well-informed and independent Board is necessary to ensure highest standards of corporate governance. The Directors bring in expertise in the fields of human resource development, strategy, management, legal, finance and economics, among others. The Board provides leadership, strategic guidance, objective and independent view to the Company's management while discharging its fiduciary responsibilities, thereby ensuring that the management adheres to high standards of ethics, transparency and disclosure.
16 Corporate Governance 2011-12

Committees
Audit Committee
The primary objective of the Audit Committee is to monitor and provide effective supervision of the Management's financial reporting process with a view to ensuring accurate and timely disclosures, with the highest levels of transparency, integrity and quality of financial reporting. The Committee oversees the work carried out in the financial reporting process by the Management, the internal auditors and the independent auditor, and notes the processes and safeguards employed by each. All possible measures are taken by the Committee to ensure the objectivity and independence of the independent auditor.

Sitting left to right V P Joy
Secretary Finance Government of Kerala (Nominee Director)

Nimesh N Kampani
Chairman JM Financial Group

Onkar S Kanwar
Chairman & Managing Director Apollo Tyres Ltd

M R B Punja
Former Chairman IDBI

Dr S Narayan
Former Principal Secretary to the Prime Minister of India

U S Oberoi
Chief, Corporate Affairs & Wholetime Director Apollo Tyres Ltd

Standing left to right P N Wahal
Company Secretary Apollo Tyres Ltd

K Jacob Thomas
Managing Director Vaniamapara Rubber Co Ltd

Arun Kumar Purwar
Former Chairman State Bank of India

Neeraj Kanwar
Vice Chairman & Managing Director Apollo Tyres Ltd

Robert Steinmetz
Former Chief of International Business Continental AG

Sunam Sarkar
Chief Financial Officer & Wholetime Director Apollo Tyres Ltd

Not in picture Alkesh Kumar Sharma
Secretary (IP), Industries Department Government of Kerala (Nominee Director)

Shardul S Shroff
Senior Partner Amarchand & Mangaldas & Suresh A Shroff & Co

Sustainability Report 2011-12 17

Risk Management Steering Committee
The Company 's activities exposes itself to a variety of risks including market risk, sales risk, environmental risks, regulatory risks, product liability and liquidity risks. The Company's overall risk management seeks to minimize potential adverse effects on its performance. A Risk Management Steering Committee of the Company has been formed headed by Chief of India Operations as Chairman of the Committee and represented by the functional heads as Chief Risk o f f i c e r s . T h e C o m m i t t e e e m b ra c e s t h e identification, assessment, mitigation, monitoring and reporting of material risks faced by the Company. The Risk Management Steering Committee meets quarterly and discusses the updated profiles of major risks in each functional area together with possible mitigation controls and action plans. The objective is to assist the Board to maintain high standards of business conduct and to protect the Company's assets, achieve sustainable business growth and ensure compliances with applicable legal and regulatory requirements. The Board/Audit Committee periodically reviews the risks and opportunities and plans to mitigate the same.

Management Board
The Company has constituted a Management Board with a primary aim to follow the best practices of Corporate Governance with a view to maintaining strong business fundamentals and delivering high performance through relentless focus on the affairs of the Company including its India, South Africa and Europe Operations. The Management Board ensures uniformity and exchange of best practices across geographies, debates and finalises the growth plans of the company, and works to implement them. It upholds regulatory and legal compliances and works to ensure benefits accrue to all stakeholders, across all geographies. The objective of the Management Board thus is to:
n

Bring uniformity in policy making process for key functions undertaken at corporate level; Sharing & promoting implementation of process improvements and best practices and Analyzing certain key operational matters /new projects, to enhance stakeholders' value.

n

n

Governance-The Code of Conduct
In compliance with Sescurity Exchange Board of India (SEBI) guidelines apollo has framed three defined code of conduct :
n

Shareholders' / Investors' Transfer / Grievance Committee
Grievance Committee looks after the approval of transfer / transmission of shares / debentures issued by the Company, issue of duplicate certificates and certificates after split / consolidation / replacement. The committee is also responsible for looking into the redressal of shareholders' and investors' complaints and other areas of investor services.

Code of conduct for insider trading Code of conduct for directors and senior management Code of conduct of corporate disclosure practices

n

n

Remuneration Committee
The main responsibility of the committee is to review and grant annual increments, vary and/or modify the terms and conditions of appointment/reappointment including remuneration and perquisites, commission etc. payable to Managing Directors within the overall ceiling of remuneration as approved by the members.
18 Corporate Governance 2011-12

Note: For more information on Governance, Commitment and Engagement, please refer to the Corporate Governance Report in the Annual Report for the year 2011-12.

Sustainability Report 2011-12 19

Key Impacts, Risks and Opportunities
The impacts of the key risks and opportunities listed below have been identified through a formal process driven by Apollo Tyres Corporate Risk Management Steering Committee. Our approach has allowed for a systematic appraisal of the business environment we work in and has allowed up to respond to capitalise and maximize benefits to our operations.

In Europe, there is a dedicated market for winter tyres that allows for high profitability, but the seasonal nature of this market creates a risk on sustained profitability throughout the year. We have implemented financial safeguards and expanded our overall product range to compensate potentially low winter sales.

Environment Risk
n

Raw Material Availability Energy Consumption EU Tyre Label for energy efficiency of tyres

At Apollo Tyres, we know that a fundamental part of a motivated and skilled workforce centres on continuously providing opportunities for our workforce to develop themselves and enhance their capabilities and potential. In this regards, we provide employee trainings and enrichment programmes to ensure the presence of a skilled workforce in a facilitating environment to create mutual benefits for them and the organisation. In our Indian operations, we have developed and promoted a Behavioural Based Safety (BBS) programme. Our aim for creating a succession planning

framework is to develop a global management cadre that creates a pool of motivated and capable employees with guaranteed potential for growth and advancement within our organisation. Truck drivers are major consumers of Apollo Tyres products, due to our significant focus on tyres for heavy vehicles. Due to the circumstances of the work they do, there is a high incidence of HIV related cases among truck drivers. As part of our social responsibility practices, we have a full fledged HIV assistance program that provides awareness and support to truck drivers on the epidemic of HIV.

n

Economic Risk
n

n

Public Policy Positions
Corporate
Association Participation
An independent international organisation committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas.

Slow down in the economy in India, Europe & South Africa Currency fluctuation Changing business environment impacting profitability in India Seasonal requirement of winter tyres in Europe

n

n

n

Our business faces significant impacts through global and region specific economic risks and opportunities. The global economic downturn has led to a slowdown in the economy of our main market centres, India, Europe and South Africa. Apollo Tyres has focused its efforts to expanding product reach to new markets in a cautious and researched manner. The economic downturn has also led to currency fluctuation which can lead to a scenario where costs towards our overseas suppliers increase and profits on exported products decrease. Bearing this in mind, we have adopted a risk mitigation approach that focuses on limiting our exposures to currency volatility. In India, our biggest market, we have witnessed a change in the business environment with an increasing demand for radial tyres in heavy vehicles. To capitalise on this, we have focused on increasing our market share in the trucks and bus radial (TBR) tyres business. Our approach centres upon creating a dedicated brand for TBR tyres by capitalising on the shift in technology to meet customers' requirements, which will allow us to enter profitable markets.
20 Corporate Governance 2011-12

Raw Material availability is a key aspect of manufacturing industry. In tyre manufacturing this is especially so given the nature of raw materials used. Our focus lies in ensuring a sustained supply of raw materials for our production needs by developing alternative sources of raw materials mainly with regards to natural rubber. Energy consumption is another factor that is increasingly affecting all businesses today. Rising energy costs have a significant impact on overall profitability. At our locations we proactively engage in energy conservation and energy efficiency measures, and have also started to consciously increase our focus on renewable energy sources. The EU has introduced a framework for tyre labelling. The tyre labelling requires all tyres to be marked based on the energy efficiency they contribute to during product use effective from November 2012.

World Economic Forum

Issue of Participation: Interact with industry peers to influence global, regional and national policy decisions.

Level of Paticipation: Chairman, Vice Chairman & CEOs

Social Risk
n

The Brookings Institution is a non profit public policy organisation based in Washington, DC. Their mission is to conduct high-quality, independent research and, based on that research, to provide innovative, practical recommendations that advance democracy, economic and social welfare and secure a properous and cooperative international system. Brookings Institute Issue of Participation: Leverage thought and research to promote greater welfare on a global, regional and national level.

Providing skilled manpower with a safe working environment Organisational succession planning Providing awareness on serious diseases

n

n

Level of Participation: Chairman & Vice Chairman

Sustainability Report 2011-12 21

Public Policy Positions
Zone I
Association
Confederation of Indian Industry Federation of Indian Chamber of Commerce & Industry Automobile Tyre Manufacturers' Association National Institute of Personnel Management

Public Policy Positions
Zone A
Participation Association
Durban Automotive Cluster (DAC) Durban Chamber of Commerce and Industry (DCCI)

Participation
To create a platform to effectively and adequately communicate with and lobby all levels of government and other strategic stakeholders on behalf of the eThekwini business community. To promote and improve the commercial, industrial, civic and social welfare of the Town of Ladysmith and its trade area.

To work with government and industry partners to proactively develop a better business climate in India and bilateral trade relations outside India.

To work with government and industry partners to proactively develop a better business climate in India and bilateral trade relations outside India. To create a strong Indian tyre manufacturing sector, producing high quality products which address customer needs by leveraging the latest in research and development To interface with State and Central Labour Departments for conflict resolution and policy formulation

KZN Growth Coalition

To promote the image of KwaZulu-Natal (KZN) as the leading investment destination for investment in the country.

Ladysmith Chamber of Commerce

To promote and improve the commercial, industrial, civic and social welfare of the town of Ladysmith and its trade area

Kerala Management Association (KMA) Employees State Insurance Corporation (ESIC)

As member of KMA Governing Body, voice the issues of general management and concerns to government as well as to the public

Member of ESIC Regional Body, the policy making body of the ESIC

Manufacturing, Engineering & Related Services Education and Training Authority (merSETA New Tyre Manufacturers Employers Association National Association of Automotive Component and Allied Manufacturers (NAACAM)

To ensure National Skills Development Strategy is fulfilled through facilitating skill development in tyre manufacturing and plastics industries.

Indian Rubber Institute

Faculty support for trainings organised by the Rubber Board, a central government agency

To establish industry norms for wages and benefits in the tyre industry

To represent the interests of the automotive component manufacturers in South Africa

Zone E
Association
RecyBem

Participation
To promote the recycling and-reuse of tires in Europe. CEO of Apollo Vreidsten BV is the chairman of the organisation. RecyBem is an organisation that works to stimulate recycling and re-use in the field of tires in Europe

National Business Initiative (NBI) New Tyre Manufacturing Bargaining Council South Africa Tyre Manufacturers Conference (SATMC) South African Tyre Recycling Process Company (SATRP) Security Association of SA (SASA)

To promote sustainable growth and development in South Africa through partnerships, practical programmes and policy engagement

To negotiate Collective Agreements and serves as a forum between tyre manufacturers and Unions for purposes of negotiating benefits and wages

European Tyre & Rubber Manufacturers' Association Dutch Assn. of Rubber and Plastic Manufacturers

To work with government and industry partners on EU legislations for tyres

To look at industry issues and interface with the government on policy developments To promote effective waste management of tyres in South Africa through the SATRP Integrated Waste Tyre Management Plan

To work with government and industry partners on Dutch legislation for plastic and rubber. AVBV is a member of the steering committee on Innovation Products To work with government and industry partners on Dutch legislation for employment

AWVN

To promote awareness and act as a common voice to ensure businesses are compliant and abide by the laws that govern industry

22 Corporate Governance 2011-12

Sustainability Report 2011-12 23

Management Approach

inked to the vision statement, the o rg a n i s a t i o n ' s management is conscious of the responsibility it carries for all its operations and has initiated a journey on sustainability. The objective is to put in systems to integrate the triple bottom line approach as a way of doing business and involve, influence and impact its major stakeholders positively in the process.

L

Driving Sustainability
Sustainability at Apollo Tyres forms a part of the larger corporate strategy. The Apollo growth journey for the next five years is described as AGILE – Apollo Growth Innovation Leadership Excellence. Built around the key pillars of Quality, a Common Culture, Sustainability and Innovation, AGILE is a showcase of the management commitment towards driving sustainable growth across all its operations.

24 Management Approach 2011-12

Sustainability Report 2011-12 25

At our manufacturing locations, sustainability teams work with quality and management system teams to monitor compliance levels and sustainability performance based on planned activities, objectives and targets. These teams report to the local coordinator who ultimately reports to the corporate representative for sustainability. This process is followed in all operations in Zone I, E and A, respectively. The corporate sustainability team supports the unit level sustainability teams to strengthen the performance locally and across the organisation collectively. Currently we drive sustainability through existing systems in place such as our Integrated Management Systems. By utilizing available paths, we are able to ensure that we progressively build on our strengths to comprehensively integrate sustainability into our operations.

quality to reduce their negative environmental implications during use. As we expand and incorporate new units to the Apollo Tyres global operations, we will continue to implement Integrated Management Systems at new sites and streamline their operations by managing quality, environment and occupational health and safety in an integrated manner.

Human Resource
An organisation is defined by the human capital it holds. The bandwidth of experience, skills, innovativeness and dynamism makes it a living and breathing organism with human touch and feel. At Apollo, we are very conscious of the strength we possess as our employees. Our HR vision is ‘to be a strategic partner to the business and create value for the organisation by developing the human capital’. Apollo has a clear growth strategy marked for the next five years and people development and management is vital to this growth. We have been expanding our reach in new markets and geographies. With operations in South Africa and Europe, we have a multicultural, multilingual workforce. A culture which helps the organisation in bringing cross border teams together is the key for a sustainable growth. As part of the integration process a need to redefine and broad base the existing values (CREATE) was felt. A process to re look CREATE was initiated. Under AGILE cross functional and cross regional teams were formed. Common culture workshops were conducted to take the feedback of these teams to understand people sentiment and sensibilities across the regions. As a process all suggestions from all regions were incorporated and CREATE became The Apollo Way. The Apollo Way describes five simple values i.e. Business Ethics, Care for Society, Empowerment, One family and Communicate openly, as a way of life in the organisation. Going forward a series of workshops and communication is planned to now take this new value system across the company. In today's business environment businesses need to innovate constantly to keep pace with the challenges. To support our growth journey we have been working towards creating an integrated workforce that is future ready. Cross geography movements, training and development strategies, recruitment practices, reward & recognition and employee motivation strategies are the key focus areas.

Cross Geography Movement
With the oversees acquisitions Apollo has not only added profitable operations but a considerable talent pool. As a strategy, we have worked consciously at leveraging this talent pool. Cross geography movements help in developing leaders across borders. Knowledge and best practice sharing has brought in efficiencies from which the organisation has benefited.

Human Resource Development
Apollo Tyres' sustainability journey is driven by our employees, who are also one of our major stakeholders. We ensure that our workforce is skilled and qualified to drive our company forward, by providing them with capacity building and training opportunities that is aimed at creating a mutual benefit in developing our employees to enhance our business. To ensure a satisfied employee population we have to ensure that their work environment is safe, matched with monetary satisfaction and equally robust rewards and recognition schemes. We strive to push our employees to realize their potential and continually award them for their efforts in continuing the Apollo Tyres' growth.

Learning & Development
There is a structured process for training and development within the organisation at both corporate and local level. The skill requirements are mapped and the training calendar is developed as per the identified requirement. The trainings are both in the functional as well as soft skill areas. There is an established strategic leadership programme under the aegis of Apollo Laureate. Apollo Laureate has partnerships and tie ups with various institutes, universities and industry to build the learning culture. The programme is across middle to senior management level and spans all regions. For example for mid management level employees we have Advanced Learning Development Programme (ALDP) which is in partnership with IIM Bangalore in India and with Stallenbosch in SA. Similarly we have Enhanced Leadership Programme for Senior Management, which is a global program and is partnered with a global consulting firm like Nelson Cohen. We also have tie-ups with IMD Switzerland and INSEAD for top management programs. Along with management, there is focus on technical leadership programmes (TLDP) in partnership with global Universities and Industry experts encouraging the development of technical knowhow for the R&D team and for them to understand the latest developments in area of Tyre Design, Raw Material & Compound and Process technology.

Management Structure – Integrated Management Systems
The company's commitment towards continually enhancing stakeholder value is demonstrated by the Integrated Management Systems to continually improve its environmental and social performance. All operations of the organisation are certified to the I S O 1 4 0 0 1 s t a n d a rd f o r E n v i ro n m e n t a l Management Systems. Our India and South African Plants are also certified to the Occupational Health & Safety Management Systems of OHSAS 18001. By instituting an Integrated Management System for Environment and Occupational Health & Safety, we have engrained a systematic approach for continuous improvement on these 2 key areas of our work. Policies for Environment and Health & Safety (EHS) outline the commitment areas of the organisation along with targets to be achieved, in line with the overarching vision and strategy for EHS management and performance. Our activities on improving EHS performance derive from the aims of our EHS policy and a continuous process to build on previous objectives and operations. At Apollo, we are focused at going beyond statutory compliance with respect to environmental factors. This approach is demonstrated by investment in new facilities and technologies and extended to improving product

Monitoring and Review
The Board of Directors, at the time of review meetings discuss the status of the key challenges related to Apollo Tyres' sustainability journey. This is a key part of the management update, with special emphasis on the way forward, targets and timelines.

26 Management Approach 2011-12

Sustainability Report 2011-12 27

We also have an intensive Manufacturing Excellence program for our young engineers with NITIE – to understand the latest developments in the area of manufacturing and quality. Six Sigma workshops are being regularly conducted, certifying persons as Black / Green / Yellow belt. We have also tied up with Apollo Technical Education foundation for skill development of our junior team members from Manufacturing, Quality and Technical areas. With immense focus on functional and technical skill development, a lot of product knowledge workshops for sales & marketing team has been designed which would be conducted by our internal trainers. Our plants too, locally have a strong training calendar covering functional and behavioral workshops for the employees. The organisation in its effort to create and encourage a learning culture has online library and learning systems “KWENCH” in place. We have also recently launched our “E-Learning” drive wherein popular courses are assigned to employees individually, as per their training needs which needs to be completed online. This gives each employee the ability to self-learn at their own pace and addresses core skill area development.

Employee Engagement
We believe that an engaged employee is a happy employee who will contribute more to the organisation. With this, several employee engagement activities are done both at corporate level and at plant / field level. One of our core values is “One Family” – encouraging this each location has their own family day wherein employees come together with their families for a day long celebration. They interact with each other; get to know each other's families and thereby strengthening the bond between themselves and the organisation. Some of these engagements include children programmes during summer break, corporate sports tournament and local birthday celebrations. We also have a robust reward & recognition program at Apollo. Ranging from “pat –on –back”; instant recognition schemes to long term service recognition, we have a full kitty of innovative schemes to keep an employee motivated and to recognise the efforts put in by an individual. These rewards range from cash rewards, coupons, foreign trips, domestic trips, certificate of recognition and other goods. Along with this, equal importance is given to employees health and wellness. We have a strong Group Hospitalization policy, wherein each employee and his/her family are covered for medical aid up to a pre-set amount. An employee therefore in cases of emergency and medical aid can opt to take from the GHS at Apollo. This helps the employee to address any of his/her medical needs, which requires hospitalization with a stressfree mind. Our locations – Head Office and Plants have an in-house doctor who is there for any employees immediate health problems. This is given as a benefit to the employee – free of cost to him for the betterment of his health. Along-side we have regular health camps and talks on a better life at each premise. Safety too is of paramount importance at Apollo – as we believe an employee's life is an extremely critical and sensitive to be taken lightly. With this, various safety sessions are held at the plants and field wherein employees are coached on how to safely manage their lives during and after office hours – this includes things like road safety too for field employees.

Purchase
Purchase is a centralized function at Apollo, based out of it's Corporate Office and is mainly responsible for global purchasing of raw materials, capital equipment and machinery. representation consisted of Apollo's vendors for raw materials, outsourced materials, indirect materials, capital equipment and machinery.

Partner Code of Conduct (PCC) Performance Enhancement
“To be a strategic partner to the business in the Apollo Growth Innovation Leadership Excellence (AGILE) journey through leadership in cost, quality and service leading to customer delight” At Apollo, we believe that the policy can be implemented in spirit only through sustainable practices throughout our value chain. The issues relating to environment and health are emerging critical to the businesses. We have designed our Partner Code of Conduct to bring in sustainability practices with in our supply chain. Apollo expects its business partners to show concern on social and environmental responsibility as they conduct their business. Apollo's endeavor is to work jointly with Partners to promote and encourage compliance with Apollo's PCC and integrate environmental, occupational health and safety, human rights and labor policies, and ethics into their business and decision-making processes. Approximately 95% of Apollo's raw material and capital equipment vendors have accepted the Partner Code of Conduct.

Purchasing Policies
Apollo considers its vendors as long term business partners and works together with them on environmental, economic and social aspects to enable sustainable business practices. Apollo is professional, fair and transparent in all our dealings with vendors who are our business partners. It is our policy to deal directly with the manufacturers.

Performance Enhancement
The performance philosophy at Apollo Tyres seeks to drive excellence across the organisation while ensuring alignment of employee efforts with company goals and maintaining the integrity of the performance management system. The performance and competency enhancement system (PACE) was a result of partnership with Mercer India. PACE is an online system and brings in the transparency in the entire performance and evaluation system. It helps aligning the objectives of operations and regions with the corporate objectives; further streamlining it with department and individual key result areas. PACE currently operates in India and South Africa operations. Going forward in our sustainability journey, the company is focusing on strengthening system, processes and policies to manage and develop talent. We are working on a company wide structured succession plan and focus on more horizontal cross functional and cross region movements.
28 Management Approach 2011-12

Vendor Partnerships
The joint partnerships with vendors exist in various spheres of working like Memorandum of Understanding (MoU) for purchasing volumes, joint technical projects, quality workshops with natural rubber producers and processors, CSR partnerships etc. Apollo also seeks technical collaboration from its vendors through active participation in various technical seminars and Apollo's Technical Leadership Development Programs. Apollo conducts periodic partner meets with its vendors every 2 years. Approximately 150 participants had participated in the Global Partners' Summit, which was held at Chennai in February 2012, representing 85 companies from across the globe. The

HIV-AIDS Awareness Workshops for Supply Chain Partners
Stakeholder dialogue and management is essential to the growth of any organisation. At Apollo we have worked on the engagement aspect with our supply chain partners on a proactive basis. Apollo conducts HIV-AIDS awareness workshops on a periodic basis to spread awareness at the vendor plants on HIV AIDS prevention. These workshops are conducted jointly by Corporate Purchase and Corporate Social Responsibility teams. These sessions are typically a day long, with representation from both the managerial staff and the workmen. These strategic initiatives are in line

Sustainability Report 2011-12 29

with Apollo's risk minimization strategy by integrating social and environment performance with business strategy, and thereby also create synergy with Corporate CSR initiatives. Till date, 26 vendor plants have been covered under this initiative by Apollo Master Trainers, directly training approximately 550 participants from vendor organisation. They have in-turn conducted workshops at their end and further imparted trainings to approximately 10,000 persons in their operations respectively.

As a part of risk mitigation policy for raw materials, it is an endeavor to develop at least one active alternate source for all the raw materials. In case of a single source for any raw material, a new vendor development plan is initiated, wherever possible.
n

Research and Development
The R&D vision of Apollo is to develop sustainable technologies and products ensuring interest of all stakeholders. This helps in formulating business strategies that reduces risk and increases shareholder value. With the mission to develop tyres by “doing good to sustain our environment”, R&D efforts have been able to improve the conversion costs, achieve reduction in waste, better frequency distribution of outgoing product quality and enhancement of production capacities. improvement measures, adding experienced manpower. Specialization through education, training and exposure to application is accordingly imparted and planned for the respective personnel.

New material selection

While selecting new materials, such materials are adopted which satisfy various requirements related to reduction of environmental burdens.
n

New vendor selection

Some of the key R&D sustainability focus areas at Apollo include:

Green Procurement
Apollo is committed towards establishing green procurement standards in its procurement activities and endeavors to achieve a society with healthy environment, thereby supporting sustainable development. Apollo strongly recommends that all vendors must develop their environmental systems in compliance with the requirements of ISO 14001 and to get their systems certified by a third party. Apollo's raw material vendors have pre-registered for REACH compliance and/or are in the process of registering for REACH compliance, as applicable. In addition to this, in order to partially cover the Apollo's future requirement for Natural Rubber, Apollo Tyres is exploring opportunities in rubber plantations. Apollo is geared up to meet all the raw material related requirements with respect to usage of Polycyclic Aromatic Hydrocarbon (PAH) free materials for supply of tyres to Europe and other markets. Apollo is also geared up to meet all the current and future tyre labeling requirements, as and where applicable.

A new vendor evaluation process consists of a robust stage-wise evaluation and approval system, which ensures that all aspects related to a vendor's capability assessment, vendor's product quality, product validation, etc are fully ascertained before a vendor is approved.
n

Development of Low RR Tyres
When a tyre rolls on the road, mechanical energy is converted to heat as a result of the phenomenon referred to as rolling resistance. Effectively, the tyre consumes a portion of the power transmitted to the wheels, thus leaving less energy available for moving the vehicle forward. RR therefore plays an important part in increasing vehicle fuel consumption. In this remarkable journey, we were able to reduce the rolling resistance of tyres by adopting compounds containing silica fillers without any loss of traction characteristics.

Our R&D philosophy, thus, is based on ‘The Four Principles’:
n

Vendor Audits

Vendor audits are conducted at the time of selection of new vendors as per standard audit guidelines developed by Apollo. These are also conducted regularly with the existing vendors. The scope of the vendor audits covers various elements like – Quality Management System, Environmental standards, Occupational Health and Safety standards, and other aspects as per the Apollo's Green Procurement Standards and Apollo's Partner Code of Conduct.
n

Eliminate or reduce our contribution to the exploitation of non renewable materials from the Earth by using biomaterials or green materials in tyre. Eliminate contribution to the progressive build up of chemicals or compounds/waste (for example, dioxins, PCBs, and DDT) Eliminate our contribution to the physical degradation and destruction of nature and natural processes. Eliminate our contribution to conditions that undermine people's capacity to meet their basic human needs (for example, unsafe working conditions).

n

n

Mass Reduction & RR Improvement for Cross-ply Tyres
We were successful in designing truck bus crossply tyres with reduced number of plies using special quality nylon tyre cords. This resulted in saving of precious petroleum derived raw materials, energy reduction (by manufacturing less material) and thereby reduced CO2 emissions. Marginal improvement in RR was also observed by this activity.

n

Vendor Performance Evaluation

Vendor Performance evaluations are conducted periodically consisting of technical ratings, delivery and service ratings, which are communicated to vendors, leading to continual improvement of vendor performance.

Vendor Management
Other things being equal, preference is given to domestic vendors considering the benefits like proximity to Apollo plants, lower lead time / transit time, inventory, lower carbon footprint etc. Import vendors are developed for cost benefits, as an alternate vendor, for technical partnerships, in cases of capacity constraints with domestic vendors.

Our commitment continues in our collaboration with our customers to roll out products with reduced fuel consumption by achieving low rolling resistance (RR) and thereby reduced carbon footprint. To cater emerging needs of the organisation in its next ambitious journey of AGILE, R&D is emphasising and evaluating lot of sustainable innovation in the areas of new materials, compound development, design and simulation. This will make our products more competitive, environmental friendly and a preferred brand. For this, the department is geared up by up-grading its facility and skills, adopting various efficiency

Utilisation of Powdered Tyre Crumb /Devulcanised Rubber in Compounds
Usage of powdered tyre crumb/ devulcanised rubber help to eliminate waste that would otherwise go to landfills; therefore, reducing the progressive physical degradation and destruction of nature and natural processes. Usages of 450g of rubber
Sustainability Report 2011-12 31

30 Management Approach 2011-12

powder is equivalent to saving of 10 KWh of electricity. R&D has thus suitably developed and implemented several compounds for utilising powdered tyre crumb/ devulcanised rubber and partially avoid the use of virgin materials that are extracted from the earth's crust. This includes oil or gas needed to make synthetic rubber as well as carbon black, silica and many other additives used in a typical tyre compound that are derived from oil. Powdered tyre crumb/ devulcanised rubber help avoid the increase in the amount of industrial and consumer waste, as well as carbon dioxide.

new construction will lead to significant power saving (for not running squeegee calendar) besides material cost saving (approximately Rs 45/tyre). In addition to this, new manufacturing process will eliminate fabric waste generation at squeegee application (approximately 30% of the total fabric waste) and release extra production capacity at squeegee calendar.

being free of SVHC's (Substances of Very High Concern) and PAH (Polycyclic Aromatic Hydrocarbon).

Way Forward
In the coming 5 years the reduction of RR without compromising on Safety will be focus points in all our developments. This will be tracked through the grading levels of our European products. New polymers and required processes will be implemented. A new mixing technology will be installed in Zone E. Further, there will also be increased focus on the development of Green materials such as:
n

Health and Safety
Health and safety is duly considered during all process of tyre manufacturing and distribution – production, marketing and promotion, storage distribution and supply, use and service, and finally disposal, reuse or recycling. All kind of carcinogenic and toxic materials have been identified and substituted. The product is evaluated and certified by independent agency keeping health and safety norms in mind. The usages pattern in different product categories are closely studied, according to which the safety of the product is developed. Educating customers for correct usages, maintenance and fit to application has enhanced health and safety aspect of the product.

Process Energy Savings
n

Single pass Banbury mixing of compounds Mixing rubber compounds for tyre manufacturing are performed in multiple stages, 2 or more stages in internal 'Banbury' mixer. An innovative mixing technique has been developed for some of the high volume compounds by completing entire mixing in a single step in place of conventional two steps inside the banbury mixer. This is done by a method called, Sequential Programmed Addition of Ingredients or SPAI. This mixing process has been implemented in soft compounds and the time saving achieved is approximately 1.0 minute per batch, which on total volume of selected compounds will translate into a saving of 400 minutes of Banbury time per day. This translates into huge amount of energy saving and thereby reduced CO2 emissions.

Alternate sources of natural rubber such as Guayule & Dandelion Material having the potential of higher cut growth resistance, better wear properties and low RR such as, rice husk silica Utilisation of Nano Calcium Carbonate as new generation filler, having huge potential of reducing rolling resistance and better barrier properties, without usage of coupling agent. Utilisation of Vegetable oil: Exploring possibility for replacement of petroleum based oil as process aid. Epoxidation of NR for increasing the polarity of the polymer, glass transition temperature and improving silica interaction, thereby eliminating the use of coupling agent.

n

n

n

Key health and safety initiatives include:
n

Elimination of volatile organic compounds (VOC) from process - Elimination of outer lube for green tyre (unvulcanised/ uncured tyre) - Implementation of water base inner lube for cross-plytyres

n

n

Adoption of optimized squeegee construction
n

Conventional bias tyre construction is with full width squeegee application on all the plies. The tyre construction was modified with a 'special squeegee less' lay out with narrow width squeegee strips only at the turn up area, thus eliminating full width squeegee from all other inner plies. This has helped to reduce the number of squeegee in the tyre, eliminating squeegee application process substantially. More than 15,000 number of truck tyres are being produced every month with this special construction. Performance of tyres so far has been very encouraging. Complete implementation of this

Compliance to REACH regulation for all radial products

In our approach we take the EU legislative requirements as the leading edge, since they are currently the most stringent in the world. We work closely together with the European tyre industry in the European Tyre and Rim Technical Organisation (ETRTO) and the European Tyre and Rubber Manufacturers Association (ETRMA). Examples of those EU legislations are REACH and the labeling directives that are closely followed and fully supported. All our radial tyres are REACH compliant. There is also periodic testing and certification carried out for our radial products
Sustainability Report 2011-12 33

32 Management Approach 2011-12

Stakeholder Engagement
Stakeholder Method of Engagement
Function evaluation meeting Employee Satisfaction Survey Bilateral meetings Works council Information to employees (eg financial / results / sales versus budgets) Collective bargaining discussions with unions (India only) Formal meetings of New Tyre Bargaining Council (South Africa Only)

Stakeholder Materiality
Frequency
Annual Annual Ongoing Monthly Biannually
Pe ic om ce on an Ec rm rfo

New Prod uct Developm ent

G

CE AN RN VE O
n Tra
g Reportin

PR OD

T UC

Quarterly

Co

La

be

lin

Biennial

Qua

lity

Employees

g

spa ren cy

mp

lia

nc

Customers (OEM) Consumers (Replacement) Dealers

Customer interactions for requirements Dealer interaction (India Only) Customer satisfaction surveys (India only) Customer and dealer regional meets (India Only) Continuous dialogue with OEMs and dealers through face-to-face meetings, email and telephone Disclosure between OEM and Apollo Tyres Ltd Market survey to investigate expectations, developments to future tyre specs from customers

As and when required Daily Annual Quarterly As and when required As and when required Annual
Hum an Ri ghts

e

En

f dO

Lif

e

Comm

unicat

ion

AL SOCI

Training

Material U
y
EM

se

H

eal

S th &

afet

S: I

SO

Emissions

e Wast ent agem

ollo

Suppliers

Investors & Analyst

Analyst interaction through calls, meetings and conferences Business performance updates to investor community Communication with shareholders through letter and report Annual General Meeting

Weekly & monthly Quarterly & annually

Shareholders

Annual Annual

Stakeholders
Local Community Shareholders Supply Chain Customers Employees
Sustainability Report 2011-12 35

Regulatory Bodies

Compliance to applicable statutory requirements

As per statutory requirements As per planned frequency of events/ projects

Community

Interaction before conducting and during community development events/ programmes

Regulatory Bodies / International Requirements Investors

34 Management Approach 2011-12

Habi

Annual / Biannual

Man

Pre-business interactions through site visits between suppliers and Apollo Tyres Ltd Global partner conference Natural rubber meet (India Only) Joint technical partnership programme (India Only) Purchasing meetings Vendor rating system

As and when required Biennial Annual As and when required Annual / Biannual

Th e Ap Apo oll llo oV W alu ay es

t en ec ing D rk t n Wo me n o vir En

140

01

En

er

gy

Us

e

ter Wa e Us

tAt A p

Economic Performance

conomic sustainability is a critical driver of growth. At Apollo, economic value creation is the main consideration while taking any decisions, as opposed to financial growth alone.

E

To ensure this Apollo has robust processes and structures in place to meet the business and quality goals. The year 2012 saw introduction of more advanced products across customer segments.

36 Economic Performance 2011-12

Sustainability Report 2011-12 37

Financial Performance
Economic Performance 2012 as per EC1 of GRI G3
150000 121,533 120000

Significant Financial Assistance from Government
Zone I (Apollo Tyres India)
We have received the following significant financial assistance from the Indian government:
FY 2010-11

90000

88,677

FY 2011-12
All figures in million Rs.

n

R&D expenditure: Rs 194.58 million Deduction U/s 80IA of Income Tax: Rs. 50.39 million Investment grants, R&D grants, and other relevant types of grants: Rs. 272 million Advance Licence Benefit: Rs. 753.26 million Imports under EPCG Scheme: Rs. 340 million

n

60000 1,730 1,908

n

n

30000 10,160 0

11,987

4,401 4,099

n

Cash n Cash Equivalents Net Profit

Net Sale

EBIDTA

Zone E (Apollo Vredestein BV)
We have received the following significant financial assistance from the Dutch government:
n

NOTE: For detailed information on economic performance please refer to Annual Report 2011-12

Economic Value Generated and Distributed
128,607 150000 121,533

Subsidies: Rs. 106,116 million Investment grants, R&D grants, and other relevant types of grants: Rs. 16,676 million

n

120000

Zone A (Apollo Tyres South Africa Pty Ltd)
We have received the following significant financial assistance from the South African government:
n

Million Rupees

90000

88,828

92,654

Financial Incentives: Rs. 26,925 million

60000

Direct Economic Value Generated Economic Value Distributed

30000

Significant Financial Assistance from Government as per EC 4 of GRI G3
India Significant Financial Assistance Rs. 1,610.23 million Europe Significant Financial Assistance Rs. 122,792 million South Africa Significant Financial Assistance Rs. 179,067 million
NOTE: The total significant financial assistance in Europe and South Africa has been converted from Euros and South African Rand, respectively, to Indian Rupee using the exchange rate conversion as on March 31, 2012.

0

FY 2011-12 FY 2010-11

Details of Economic Value Distribution in 2011-12

Operating Costs 74.88%

Employee Wages and Benefits 10.38%

Community Investments 0.03%

Payments to Providers of Capital 2.43% Payments to Government 12.28%

38 Economic Performance 2011-12

Sustainability Report 2011-12 39

Environment and Social Performance
(Geography Specific)

he year 2011-2012 has seen increasing focus on our environmental and social performance. Efforts on improving product quality, new product development, alternative material, energy and water efficiencies and reduction of emissions have been the driver of our environment journey.

T

Increasing focus on safety and occupational health of our workforce, community development and ethical practices in our operations have been the social agenda for us. In the next few pages the achievements on environment and social parameters have been disclosed.

40 Environment & Social Performance 2011-12

Sustainability Report 2011-12 41

ZONE I
ENVIRONMENTAL PERFORMANCE Environmental Management
At Zone I, we aim to ensure minimal impact to the environment from our operations. Under integrated management system we are certified for ISO 140001 for all our manufacturing locations in India. We work throughout our value chain – upstream and downstream – to develop products with a view of mitigating the hazardous environmental impacts. For example, our partnership with various car manufacturer such as Tata Indica and Mercedes Benz has led to customising tyres in order to reduce their weight and increase performance. This not only leads to lesser raw material usage but also increasing energy efficiency. The total environment management expenditure in the reporting period was Rs 22.29 million.

Raw Material Consumption as per EN1 of GRI G3 (Indexed)
Fabric 6.67% Steel Tyre Cord 6.59%

Energy Consumption as per EN 3 & 4 of GRI G3
Furnace Oil 15.11% Natural Gas 30.51% Diesel 0.42%

Material Consumption
Raw material security is a key area that is important for our manufacturing activities. In India operations we aim to address this by developing and improving alternate supply channels for key raw materials, primarily natural rubber. The major consumer of natural rubber is the tyre manufacturing industry, which is the main component in our products. The use of synthetic rubber is not as predominant in India due to abundance of natural rubber that is grown within the country. Despite this, changing weather patterns have been found to affect natural rubber growth making it crucial for us to develop alternative supply paths for materials. Reduction of specific material consumption is another area for addressing raw material security, which we practice by ensuring efficient use of materials in our processes. Listed below are key achievements towards in our Indian operations towards enhancing material consumption efficiency:
n

Bead Wire 4.11%

Chemicals 8.96% Carbon Black 24.91% Rubber 48.77%

Recycled Materials
Rubber, in the form of crumb rubber, is the main material that is recycled in our Indian operations. This is restricted primarily due to the nature of tyre manufacturing, wherein most of the raw materials are mixed to create a compound through heat and pressure, rendering it difficult to recycle all the excess materials from the manufacturing process. A total of 1,646,733 kg of rubber was recycled in all our locations.

Electricity 21.91%

Wind 2.6%

Coal 29.44%

Total Indirect Energy Consumption 758,001 GJ

Environment Management Expenditure
Pollution Prevention 10% Waste Management 12%
n

Reducing resource depletion by decreasing tailings generation from 110 kg / day to 3 kg / day from Extruder mixing mills Reducing resource depletion by decreasing tailings generation from 90 kg / day to 3 kg / day from Calender hold on mill 50 % reduction of compound degradation by preventing lumpy compounds in calendering process Reduction of tread cement spillage Reduction of Naphtha consumption from 5.9 litres / Mt to 5.0 litres / Mt

Energy Consumption
The primary source of energy for our plants is natural gas and coal, followed by grid electricity. There has been a shift from furnace oil to coal for boiler facilities, as a business decision. The organisation is consciously exploring clean energy mix in our consumption. For example, renewable sources such as wind have also been utilised for power generation in one of our plants. The focus now is to increase this mix year on year.

n

Total Direct Energy Consumption 2,701,251 GJ

n

n

Indexed Raw Material Consumption

Note: Refer to the Material Consumption Table given on page-45

Material
Material for packaging purposes Strapping Rolls & Tyre wrapping material (kg) Strapping Rolls (numbers)

Quantity (%)
92.89 7.11

Water Management 10%
42 Environment Performance 2011-12

Energy Management 68%

Sustainability Report 2011-12 43

Energy Efficiency
Energy efficiency remains at the core of our operations. Our approach is built around upgrading the technologies of our processes and integrating that with innovative IT software for monitoring and maximizing efficiency. These initiatives focus on thermal and electrical efficiencies and improvements. For thermal efficiency, our primary focus is on the use of steam. In addition to reducing leakage, we aim to reduce the quantity of steam required for key activities such as boilers. Thermal energy is primarily used in the component preparation phase, where vulcanization occurs and where the tyre compound is formed; and the curing process where the uncured or green tire is processed to become the final product. Electrical energy is present throughout most processes due to the high level of automation adopted by our operations. In our newest facility in Chennai, we have installed an energy management software, ELNET, to

monitor the electrical energy consumption in the plant. In this plant we have achieved savings of 13,222 GJ. Total energy savings achieved across all plants was 99,990 GJ

Green House Gas (GHG) Emissions
For the purpose of this report, we have considered emissions under Scope 1 and Scope 2 as defined by The GHG Protocol. The GHG emission factors for the different energy sources, used to calculate our GHG emissions, are based on the following standards:
n

GHG Emissions as per EN 16 of GRI G3
197,049 200000 160,175

Tonnes of CO2 Equivalent

150000

Energy Saved Due to Conservation and Efficiency Improvements as per EN 5 of GRI G3
Conversion and Retrofitting of Equipment 95.59%

100000

Diesel, Furnace Oil and Natural Gas - IPCC Guidelines Coal – India National Communication to UNFCCC (2007) Electricity - Central Electricity Authority, Government of India

50000

n

n

0

Scope 1 Furnace Oil 20.60%

Scope 2 Diesel 0.55%

Process Redesign 4.33%

Others 0.08%

Air Emissions
The main sources of air emissions are boilers where SOx and Suspended Particulate Matter (SPM) are main air pollutants emitted. To address these issues, we have implemented wet scrubbers, electrostatic precipitators and mechanical dust collectors at our plants to reduce emission levels. Also, CFC free refrigerants are being used in our operations in a phased manner to prevent ozone depleting emissions.

Natural Gas 30.11%

Details of Energy Savings due to Efficiency Improvements as per EN5 of GRI G3

Energy Efficiency Activity
Maximising energy efficient screw chiller Process Redesign Recovery of heat from contaminated condensate to heat boiler feed water Additional compressor at stage loading Automation of coal feed control based on steam pressure in coal fired boiler Replacement of header steam trap from Floatthermostatic (FT) & Thermodynamic (TD) to efficient Inverted Bucket (IB) Conversion and Retrofitting of Equipment Steam cutoff installation over 4 idle hours in steam trap Leak correction cold water transfer in curing Installation of Variable Frequency Drive for feed mills of Dual Extruder and Roll Calendar Application of thermal insulation paint on hand hole flanges of tyre curing presses to reduce radiation losses
44 Environment Performance 2011-12

Energy Savings (GJ)
1,900

Coal 48.73%

1024

NOx, SOx, and Other Significant Air Emissions by Type and Weight as per EN 20 of GRI G3
432.2 Particulate Matter

950
NOx SOx 500

12,550
Ambient Air Pollutants Concentration (ug/m3)

13,818

400 284.0

5,922

300

34.0

16.7

100

15.7

1,900

57.0

22.9

41.7

20.4

35.1

48.2

2,534

200

Perambara Kalamassery

1.127

0 Chennai

Baroda

Sustainability Report 2011-12 45

131.2

Water Consumption
Off the total water consumption in the reporting period 2011-12 of 2,046,708 m3, our primary water consumption (96%) is through surface water. The remainder is from groundwater (3%). The organisation is consciously working towards water conservation projects. Currently we reduce, recycle and reuse the process water in different manufacturing and non-manufacturing processes. For example, the installation of hot water deaerator systems allows us to reduce the water consumed as feedwater for boilers. Deaerators are primarily used to remove the presence of oxygen and other dissolved gases from the feedwater to prevent corrosion damage to the steam systems. Besides efforts to reduce the quantity of water used in manufacturing processes, we reused or recycled 14.29% of the water consumed in our facilities back into operations and activities. A common practice across all our plants is reusing the treated water from sewage and treatment plants for gardening purposes. A reverse osmosis plant in our Limda facility treats water from processes to be used back again in the system, while the reject water is used within the effluent treatment plants for chemical dosing, cleaning and backwash. Innovative systems for water conservation have been implemented in our Chennai facility. As a result, the specific water consumption has been reduced from 5.12 litres / kg of product output to 3.32 litres / kg. A key feature in this plant is a zero discharge effluent treatment plant where the effluent outlet is recycled back to the processes through ultra-filtration systems and reverse osmosis plants.

Water Discharge Quality
At all our locations we have installed effluent treatment plants (ETP) and sewage treatment plants (STP). The treated discharge from these plants is used for various purposes including:
n

Waste Generation
As per the requirements of ISO 14001, a proper waste management system has been implemented in all the plants. Under this waste segregation and reduction has been the focus area for the year 2011-12. Waste rubber and scrap tyres are the main sources of waste material generated in our facilities, reflective of the main raw material in our operations. All waste products are disposed-off in a responsible manner that is in compliance with legal requirements either to authorized contractors or to the common disposal facilities for hazardous wastes.

Environmental Compliance
Apollo Tyres India takes all necessary approvals from the relevant government authorities, such as Pollution Control Boards, before embarking on any project. The applicable environmental requirements are monitored at all stages during project execution at the manufacturing facilities to ensure compliance with environmental legislations. During the reporting period, no incident of noncompliance was reported and no fines were imposed.

Reuse back into the process Gardening Fire fighting purposes Land perculation

n

n

n

Total Water Discharge from STP and ETP was 341,271.46 m3 / year. The discharge quality of the ETPs and STPs are regularly monitored towards compliance standards. Contaminant levels throughout the reporting period were found to be well within the limits prescribed by regulatory authorities.
Note: Refer to the Water Discharge Quality Table below

Total Weight of Waste as per Type and Disposal Method as per EN 22 of GRI G3 (Indexed)

Non-Hazardous Waste
Waste Materials Beads removed from cut tyres (tons) Quantity(%) 5.32 6.17 27.63 3.76 8.77 9.90 34.18 4.27 Disposal Disposal through authorized contractors Disposal through authorized contractors Disposal through authorized contractors Disposal through authorized contractors Disposal through authorized contractors Disposal through authorized contractors Disposal through authorized contractors Disposal through authorized contractors

Biodiversity
Our facilities in Limda, Kalamassery, Perambara and Chennai are not located near any area within or adjacent to protected areas and areas of high biodiversity value outside protected areas. Consequently none of our operations or products have any significant impacts on biodiversity in protected areas and areas of high biodiversity value outside protected areas.

Other Rubber Wastes (tons) Scrap Cut Tyres (tons) Bladders (tons) Workaway and rubber compound (tons) Rubberised Fabric (tons) Other Non-Hazardous Wastes (tons) Empty oil drum (nos)

Hazardous Waste
Quality of discharged water from ETP and STP as per EN 21 of GRI G3
Waste Materials ETP Sludge (tons) Baroda 7.608 43.83 16.125 4.29 Used Oil (tons) Scrap rubber compound (tons) Assorted Hazardous Wastes (tons) Used Containers (tons) Quantity(%) 10.30 11.95 53.50 7.27 16.98 Disposal Disposal to Common TSDF facility Disposal through authorized contractors Disposal through authorized contractors Disposal through authorized contractors Disposal through authorized contractors

Water quality parameters
pH TSS (ppm) BOD (ppm) Oil & Gas (ppm)

Limits
Kalamassery 5.5-9.0 100 30 10 7.3 42.3 mg/L 20.6 mg/L 1.0 mg/L

Concentration
Perambara 7.35 24.69 22.65 0.9 Chennai 7.09 BDL 3 BDL

46 Environment Performance 2011-12

Sustainability Report 2011-12 47

SOCIAL PERFORMANCE
Under integrated management system we are certified for OHSAS 18001 in all our manufacturing locations in India. The focus area for the year 201112 has been Safety, wherein we have continuously worked towards providing a safe work environment at all our manufacturing locations. We have also developed programmes focusing on health and livelihood generation around our manufacturing locations, demonstrating our commitment to sustainable development.

leaving the Company at the rate of 15 days salary (last drawn salary) for each completed year of service. The plan liabilities are met by a fund maintained with the Life Insurance Corporation of India. There is no contribution made by the employee towards the Gratuity scheme. The contribution is made only by the employer to the Life Insurance Corporation of India to the extent of deficit in the value of fund assets with respect to gratuity liability as at the balance sheet date.

Collective Bargaining
In Zone I, collective bargaining is applicable to Limda, Perambara and Kalamassery units. The Chennai plant, being a different organisation structure, is not covered under collective bargaining. The entire staff in Chennai is unaffiliated with any trade unions.

Health and Safety
Safety has been a key focus area for us at Zone I. To bring in a culture of Safety all across, a new initiative called Behaviour Based Safety (BBS) was launched in the year 2011-12. This initiative has been launched in a phased manner, starting from Limda. Under this training was undertaken with the top management at Limda following up with further training across the entire plant workforce – including contractors and supervisors. BBS compliments and enhances the Occupational Health & Safety Manageent System as per OHSAS 18001:2007. There is an IT based compliance dashboard to monitor behaviour based safety. Currently the dashboard is being revised with new features inorder to monitor the on-time compliance along with the adherence to the defined specifications/parameters with respect to each compliance, wherever applicable. The fatality rate reported in 2011-12 was zero. The total mandays lost through injuries, occupational diseases and accidents for the manufacturing location in India was calculated at 5,839 mandays. Together with OHSAS and BBS, our focus is to bring down the lost mandays rate year on year. The joint management-worker Health and Safety committees are present Limda, Kalamassery and Perambra . The topics covered and reviewed under these committies are as per the formal agreements with trade unions. For Chennai, the Health and Safety committees are as per the new organisation structure covering management and operators. Some of the key health assistance programmes for employees and their families undertaken across plants includes:
n

Percentage Of Employees Covered Under Collective Bargaining as per LA 4 of GRI G3
Not Covered Under Collective Bargaining Agreements 27%

Training and Development
In line with Apollo Tyres human resource philosophy, there is a formalised system in place for continuous training, skill development and upgradation for all employees. The training needs are identified as per the functional or behavioural aspect. These are then subsequently provided as per the training calendar identified. This is followed up with a review mechanism to understand the effectiveness of the trainings imparted. Career and performance reviews are applicable only to management employees and does not account for workers. Out of a total of 4,068 management level employees, 69% receive constant and continuous performance and career development reviews.

Labour Practices
The majority of the workforce in Zone I is employed on permanent basis. 78% of our labour force is permanent; balance 24% of the work force comprises contactors and casual labourers. Our labour practices work towards ensuring a sense of job security and comfort through benefits applicable to permanent employees. Currently the gender composition of the workforce is primarily male dominated. However, the organisation is consciously working towards recruiting female workers/ employees to bring in the gender balance.

Total Workforce: 10,526 Employees Attrition rate of Permanent Employees: 13.41% Extent of liability: Rs 603.76 million

The Average Hour Of Training Imparted per Employee per Year by Category as per LA 10 of GRI G3
2.14 2.5

Covered under Collective Bargaining Agreements 73%
Note: n The graph does not include management, executive and operational personnel. n The 27% not covered by collective bargaining agreements are contract workers who are affiliated to third party contractors.

Employee Benefits
Apollo's labour policies comply with statutory and regulatory requirements for the payment of wages and benefits. Payment of minimum wages prescribed by the relevant authorities is 100% for all employees. Statutory benefits like provident fund, gratuity and medical care are provided. Employees are provided with the benefits such as life insureance, health care, disability/ invalidity coverage, maternity/ paternity leave, retirement pension. The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service receives gratuity on
48 Social Performance 2011-12

2.0

1.72

Minimum Notice Period for Operational Change
As per statutory requirements of The Factories Act, 1948, we follow the requirements of providing a minimum notice period of 21 days for all significant operational changes of our employees. Freedom of association is not at risk at any location of Apollo Tyres Ltd. There is no published policy regarding the same. However all operatives are members of Trade Unions and right to freedom of association and collective bargaining are legal rights available to the workmen.

mandays/ year

1.5

HIV-AIDS awareness across all plants
In June 2006 a workplace sensitization programme on HIV-AIDS was rolled out in partnership with International Labour organisation. The programme targeted employees across India operations. The programme targeted employees across India operations. The programme covers basics and prevention aspect of HIV. It also focuses on the behaviour change and de-stigmatization. Regular and contract employees are reached
Sustainability Report 2011-12 49

1.0

0.5

0.0
Workers

Management

through more than 500 peer educators and 40 master trainers. Apollo has also a workplace policy on HIV-AIDS. The policy encompasses all the ten principles of ILO code. Currently positive employees and their families are benefiting under the policy.
n

programme was launched. In partnership with TTK Hospitals, a training programme for supervisors was undertaken targeting alcoholism at workplace. The programme has helped the officers to have technical knowledge of how to deal with the alcoholism in workforce, if any. This also helped to improve the personal knowledge level of officers. The counseling and awareness generation through the training sessions has overall contributed in safeguarding the families from the psychological impact of alcoholism, reducing absenteeism and thereby improvement in the quality of work.

The programmes are planned to make the women self reliant and to develop entrepreneur skills. These programmes cover topics such as:
n

Product Information and Labelling
Apollo Tyres Limited is committed towards providing its customers adequate and accessible information on the sustainability impacts of its products and services. All such information is disclosed to keep the customers well-informed. Product information and labelling is particularly disclosed for the safe use of the product. These include:
n

Leadership workshops Session on Gynaecology Session on health & nutrition Organic farming Session on Parenting Home visits

n

Tobacco Chewing awareness in Chennai
In order to curb the habit of tobacco chewing among the contract labourers and employees, preventive programme for awareness generation on tobacco chewing was undertaken. Structured workshops were conducted in partnership with T.T. Ranganathan Clinical Research Foundation. After one of the awareness programmes, an employee came forward to seek guidance in treating their family members in de-addiction centers. An employee also came forward to understand how to quit smoking. Similar training sessions have been organised in Permabra plant in Kochi as well.

n

n

n

n

A total of 53 women were reached through the first phase of the engagement.

DOT, ECE, ISI & SNI Markings on each tyre where it is required and applicable Brand Name, Size of Tyre, Speed Rating & Load Index on each tyre Tyre Wear Life Indicator, Ply Rating and Construction of Tyre Type of the tyres (Tube Type or Tube less) on each export tyres

n

A total of 76 people were reached through this programme in the first phase.
n

Human Rights
We do not have a dedicated policy on human rights. However, principles of human rights are embedded in our vision, values and code of conduct. The Apollo Way provides the guidance on business ethics and governance. We ensure that across all our operations basic human rights are respected and no violation with respect to discrimination, child labour, forced labour and security personnel, as per applicable law is undertaken.

n

n

Anti-Alcoholism drive in Perambra and Kalamassery
Alcoholism has been identified as a reason for absenteeism in Perambra and Kalmassery. In order to reduce absenteeism at workplace, increase productivity and strengthen family relations of the workers, Alcoholism awareness

General health check up camps focusing on lifestyle diseases such as blood pressure, pulse rate, health of the heart, weight check-up etc across all plants Women Forum in Perambra, Kalamassery and Limda

n

Customer Satisfaction
In order to ensure customer satisfaction with respect to on-time delivery On Time In Full (OTIF) tool is used. OTIF in supply chain describes the logistic service level. The OTIF is fulfilled if the product is delivered to the customer according to the OTIF principles. It implies the percentage of company's deliveries that are made on-time and in full. It is also indicative of customer satisfaction. The greatest value in measuring OTIF is to allow a company to gauge its performance. Analysing the reasons for OTIF moving up or down helps identify issues to be addressed with respect to customer satisfaction. OTIF is a companywide report card. The system requires takeoff and order entries to be exact, appropriate inventory levels maintained, and correct handling, staging and loading of materials. As a result of OTIF, the efficiencies in our supply chain have improved and resulted in customer satisfaction. Also, Apollo Tyres participates in a Vendor Rating scheme whereby client carmakers rank the level of performance of the vendor organisation based on qualities including quality and delivery performance. The Vendor Rating ranks a company from 1 to 400, where an organisation achieving a rating of 1 is recognised as a highly trusted and valuable member. Over the reporting period,
Sustainability Report 2011-12 51

n

With the objective of improving the family relation and also to improve the quality of life of our employees we started the programme in Kochi and Limda.

Product Responsibility
Health & Safety Impacts of Products
At Apollo we have a dedicated Research & Development department that performs extensive research and testing in order to meet customer's expectations and provide them with highest quality products and services. In line with the R&D work conducted at a corporate level, our Indian operations work towards enhancing the product performance by monitoring health and safety impacts, on a continual basis, of its products at the following life-cycle stages:
n

Education, Training, Counselling, Prevention and Risk Control Programmes as per LA 8 of GRI G3
Education / Training Kalamassery Employees Employees' families Employees Perambara Employees' families Employees Baroda Employees' families Community members Chennai Employees Counselling Prevention / Risk Control Treatment

Development of product concept R&D Certification Manufacturing and production

n

n

n

50 Social Performance 2011-12

Apollo Tyres has been able to generate a significant rise in its image and performance amongst our clients. We achieved a high average delivery performance score of 233 out of a maximum of 300, and correspondingly elevated quality performance score of 648 out of a maximum of 700.
Note: Refer to the Vendor Satisfaction Rank Graph below

Society
HIV-AIDS Awareness & Prevention
The biggest and most comprehensive initiative under company's CSR work is on HIV-AIDS prevention and awareness. As per NACO, an estimated 2.31 million people are living with HIVAIDS in India. Of these more than 88% infections occur in the age group of 15-49 years. The HIV prevalence among different populations is considered to be highest among injectable drug users, men who have sex with men, female sex workers, migrant workers and truckers. For Apollo Tyres Ltd, 70% of our revenues come from the sale of commercial tyre vehicles. Truckers form our largest consumer base. Noticeably, however, they are at a high risk of contracting the HIV virus. Apollo thus recognizes HIV-AIDS as a business and development issue having a potential of affecting not just truckers but all our stakeholders. The company has targeted interventions in the form of Health Care Centres in transport hubs focusing on truck drivers, commercial sex workers, and migrant labour in that location; a workplace programme; and a supply chain programme.

Health Care Centres for Customers (Truckers)
Targeted Interventions operate in the form of 'Health Care Centres' (HCC) in large trans-shipment hubs in 20 locations across the country. The current states and cities boasting of these clinics are Delhi, Udaipur, Jaipur, Kanpur, Mumbai, Nalagarh, Barmana, Kolkata, Ahmedabad, Surat, Madhavaram, Poonamallee, Namakkal, Krishnagiri, Tuticorin, Kochi, Ludhiana, Vijaywada, Agra and Indore. HCC are staffed with well qualified doctors, paramedics, counselors and outreach workers. The services (detailed below) include doctors' consultation at a nominal fee, free medicines and counseling facility:
n

and strategic points within the transport hubs. The outreach workers and peer educators also emphasize and educate the truckers on the correct usage and disposal of condoms.

HIV Programme Deliverables
Coverage through outreach activities Clients treated for STI HIV Testing 449732 4701 13366

Customer Privacy and Compliance
There has been no instance of breaches with customer privacy and loss of customer data during the reporting period. Apollo Tyres Ltd takes all necessary approvals from the relevant government authorities before embarking on any project. The applicable environmental requirements are monitored at all stages during project execution at the manufacturing facilities to ensure compliance with relevant legislations pertaining to customer health and safety, product and service labelling, marketing communications and the use of our products. During the reporting period, no incident of non-compliance was reported and no fines were imposed.

Integration with Supply Chain
Small and medium corporate partners, from where Apollo sources its raw materials, are identified and prioritized to carry out the HIV sensitization and awareness programmes. The programme typically involves advocacy on the issue through a day long sensitization session in the partner's premises. Till date the programme has covered 21 companies with approximately 420 peer educators trained, who have in turn reached out to approximately 7000 employees.

Sexually Transmitted Infection (STI) Diagnosis and Treatment
The patients are given health registration cards for a month at a nominal fee of Rs 15/-, which is valid across all health care centres in the country.

n

Counseling
A patient who walks in, prior to and post the medical check-up goes through a thorough counseling session. The counselors at clinics also look at partner's treatment and various linkages with government agencies and people living with HIV –AIDS (PLWHA).

HabitAt Apollo
Paper Recycling
HabitAt Apollo is Apollo Tyres umbrella environment programme to make eco-friendly behaviour, or green thinking, a matter of habit within the organisation. Under this programme, the focus is on conserving 3 key resources of paper, energy and water; to be achieved through reducing the usage of these resources, promoting reuse and recycling. The first initiative under the HabitAt Apollo programme is related to recycling of paper. All efforts are being made to ensure that every scrap of paper which is used in Zone I is recovered and recycled as far as possible. Championed by the employees themselves, the initiative also attempts to create a behaviour change, which goes beyond the workplace and leads to employees adopting eco-friendly practices even in their personal lives. In just a few months, colleagues across head office and all plants have collectively recovered 10, 433 kg
Sustainability Report 2011-12 53

n

Peer Educators (PEs)
Given the geographical spread of the transport hubs and the migrant and mobile nature of truckers, Peer Educators become effective messengers of HIV-AIDS awareness and referrals to the clinics. The PEs normally constitute the mechanics, barbers, tea shop owners etc in these transport hubs and remain in close contact with the truckers on a day to day basis.

Vendor Satisfaction Rank

Cumulative Vendor Rank

401 351 301 251 151 101 51 1

306 285 202

281 289 208 198 135 114
n

Behaviour Change Communication (BCC)
BCC aims to increase awareness and knowledge about the spread and prevention aspect of HIVAIDS among truckers and allied population in the transport hubs. BCC activities would be carried out by the outreach workers and a network of peer educators through one-to-one and group sessions along with various infotainment activities.

96 85

73

2011-03

2011-04

2011-05

2011-06

2011-07

2011-08

2011-09

2011-010

2011-011

2011-12

2012-01

2012-02

Year - Month
Note: The above graph recognises rating of 1 as being highest trusted and valuable.

n

Condom Promotion
Condoms are made available at various outlets

52 Social Performance 2011-12

of office paper and channelised it into proper recycling stream rather than being sent to landfill. The programme also complements the movement towards use of less polluting and non-fossil fuel sources of energy like gas, steam and wind power at the manufacturing facilities. Mass awareness activities are undertaken on world observance days such as World Environment Day across all locations.

waste can have. This has led to an increased understanding among the people about the ill effects of plastics and waste dumping. The next phase of the project will look into mobilization efforts for putting waste disposal and recycling systems in place.

Sustainable Agriculture
In order to strengthen farmers' capacity (including their knowledge, skills, and expertise) to apply appropriate agricultural practices, programme on sustainable agriculture was started for the farmers in Limda village. The aim of the programme is to enable farmers to acquire new knowledge and skills in modern crop practices and outputs expected in the next 3 years (base year 2011-12); increase awareness about modern techniques of farming; raise agricultural productivity; providing access to improved varieties of seeds; improving agricultural practices with increased crop yield. In the reporting period a total of 160 farmers were trained.

Community Programmes
Around its manufacturing locations in India so far the company had been organising several health check-up camps and skill development workshops for village community, alongside lending support to infrastructure development. However, from 200910 onwards formal needs assessment surveys have been undertaken across manufacturing locations to gauge the precise requirements of the community. This is now being followed with the roll out of a plan of action with specific focus on addressing issues of health, sanitation, domestic habits and behaviours, and environment.

Organic Vegetable Garden
From the basic idea of Habitat Apollo to look at conservation and recycling of resources in the most effective way and there by ensure that 'Green' becomes a matter of habit at Apollo, organic garden was undertaken as a pilot project at guest house at Perambra plant. The success of the pilot project done at guest house and the report of the canteen surveillance audit became the main driving factor to launch the project in both the Kochi plants – Perambra and Kalamassery. The main objective of the garden is the proper utilization of waste land, effective use of the slurry from biogas plant and the efficient use of recycled water; use of organic vegetables in the canteen such as tomato, cabbage, pumpkin, and plantain, there by improving the health of all. Limda guesthouse also has similar programme running at the backyard where vegetables like onion, tomato, cabbage, cauliflower, carrot, coriander leaves, green chili, radish, spinach etc are grown.

Promotion of Health & Sanitation
As per the identified needs of the community in Mathur and Oragadam villages, Sriperumbudur taluk around the Chennai plant, project on health and sanitation has been undertaken. The idea is to change the habit of open defecation among the community people including that of children in balawadi or crèche. Special emphasis also needed to be given to the hygiene issues for women, so as to avoid associated problem of infections of the urinary track. A total 0f 2944 people were reached out in the community. As a result, the community itself constructed 7 toilets. The panchayat has also renovated and painted the Balwadi toilet and veterinary hospital.

Project U – Livelihood Generation
As part of the identified need, income generation and livelihood projects have been a focus area. The aim of these projects is to empower, underprivileged youth and women groups of the communities around our plants so that they can grow and lead better lives. Project U, a programme focusing on skill up-gradation and job placement for the youth has therefore been launched in all locations. Depending on the need of the community the programme focuses on modules such as retail, computer operation, mobile repair, beauty course, flower arrangement making, driving, apparel, and housekeeping. In order to carry out these activities, we have partnered with technical expert organisations which carry out training and certification activities. In Limda the partnership is with SAATH (an NGO based in Ahmedabad), in Chennai with Everonn, and in Kochi with Rajagiri Outreach. In the reporting period total 432 men and women were enrolled.

Waste Management in Community
As per the needs assessment, waste management has been identified as one of the prioritized needs of the community of the Mathur and Oragadam villages, Sriperumbudur taluk around Chennai plant. Increased use and open dumping of plastics and other wastes by the community, along with deforestation, has lead to environmental imbalance. The community thus needed to be sensitized about this issue such that there is a proper waste disposal system put in place, with provisions for plastic recycling made. Currently in the first phase of this programme, mass awareness activities have been undertaken to sensitize the community on the issue and the associated health impacts that open dumping of
54 Social Performance 2011-12

Sustainability Report 2011-12 55

ZONE E
ENVIRONMENTAL PERFORMANCE
The regulatory framework in Europe is clearly defined with respect to environment aspects. For Apollo Vredestein BV (AVBV) focua areas for the year 2011-12 have been: designed for external communication.
n

System Boundaries: environmental impacts from cradle to grave of product

5% reduction in the quantity of materials used can reducevulcanization times and potentially lead to energy savings of up to 10%. At the same time, the new QuatracLite meets all premium quality and safety standards. Our QuatracLite product line is clear evidence of the results from our intensive R&D work to reduce the environmental impacts of our products during their use.

improving their reuse during production stages. In the year 2011 we already realised 50% of the project-target. A significant decrease of raw materials is already visible. The project will be continued in 2012-2013

Packaging Material Used
All efforts are being taken to use wood free or reusable packaging at the upstream. Foldable steel packaging, for transport of raw materials, is used multiple times. Natural rubber is usually transported in crates, while carbon black and silica is transported through silo trucks. Transportation of the materials from supplier is in full truck load. A milk run is adopted in circumstances where a full truck load is not attainable. Apollo Vredestein tyres are usually carried in plastic pallets which are reusable, and do not require any special packaging. Customers within 400 km range receive the tyres loosely without any packaging. At greater distances, they are placed in foldable racks before loading in the trucks and are delivered to the customers. The use of foldable racks has helped Apollo Vredestein to reduce the transport of air. Vehicle routing is usually done on the basis of full truck load principle in order to avoid transportation of air. A total of 139,835 kg of packaging material was used last year by AVBV. As all transport of materials is outsourced, we have not engaged in directly reclaiming the packaging material, but do reuse items such as pallets which are reusable.

Reducing Environmental Impact of Products
An important outcome of environmental management activities in AVBV operations is to create a product that has reduced environmental impact associated with it. In our European Operations we also extend this further to translate these enhancements to our tyres during their use, by focussing on the following areas:
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Material Consumption
The majority of rubber consumed in our European operations is from synthetic rubber. Synthetic rubber, manufactured through polymerisation from crude oil, is used due to the lack of availability of natural rubber production near the European operations. At AVBV, we have partnered in the EUPEARLS initiative to research into production and extraction of natural rubber from a plant that can be grown in European climate. Across all our operations, rubber is the only material that is recycled and reused back into our processes, to alleviate the pressures of virgin rubber consumption. In addition to reducing consumption of materials, we also engage in reclaiming the products we sell. In our PC Tires product category, we manage to reclaim 97.8% of the tires that we manufactured.

Life Cycle Assessment of European Tyres
Apollo Vredestein BV (AVBV) is participating in the Life Cycle Analysis (LCA) study of Tyres conducted by the European Tyres & Rubber Manufacturers' Association (ETRMA) based on tyres produced in Europe. The study intends to use the LCA principle to assess the environmental impacts associated with all the stages of product's end of life cycle. Right from raw material extraction (cradle) through materials processing, manufacture, distribution, use and disposal or recycling (grave) issues are addressed to minimize the environmental impact. The LCA will assist Apollo Vredestein to understand the full range of environmental effects attributable to our products and will be used as a foundation for improve our products and processes towards a People, Planet & Profit Philosophy. The results of the LCA will be available by the end of 2012.

Improvement in Rolling Resistance: Lower rolling resistance in tyres improves a significantly beneficial aspect of improving fuel efficiency, and reducing emissions related to fuel consumption such as CO2. Weight Reduction of Tyres: Reduces the quantity of resources that goes to manufacture the product, reduces the waste generated at the end of the product life cycle and enables lower rolling resistance during use. Improved Life of Tyres: Improving the life span of tyres involves increasing the durability of tyres and enables multiple benefits including reduction of the overall resource consumption by enabling consumers to use their tyres for longer before acquiring a replacement.

n

n

Reduction non Vulcanized Downgraded Rubber
We have a continuous project to reduce the amount of non-vulcanized downgraded unusable rubber by

Energy
All our direct energy consumption is through natural gas, which is one of the cleanest forms of fossil fuels, and used predominantly in boilers and heaters.In the past year, our quantity of manufactured products has steadily increased, but through better insulation of the plant and vulcanization presses we have been able to reduce the quantity of direct energy and indirect energy – electricity – required to manufacture one unit of product, increasing our overall energy efficiency. This trend is expected to continue as we employ energy efficiency measures and activities as listed.

Objectives of LCA
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Updating the Life Cycle Assessment: Update information concerning the environmental impact of tyres. Evolution of the Impact of Tyres: Understand how the environmental impact of a tyre has evolved in the past 10 years. Product Improvement: Provide updated information in order to reduce the environmental impact of tyres. Communicate with Stakeholders: the study and the results should be available and

QuatracLite: A 'green' product line
Apollo Vredestein BV has introduced the latest addition to the Quatrac family, the revolutionary QuatracLite. This first 'green' all season tyre meets all the environmental regulations due to be implemented across the European Union in 2012, including the EU Tyre Label, and is focused on fuel efficiency. An upgrade from the Quartrac3, the QuatracLite has lowered rolling resistance by 15% from the norm, uses 10% fewer materials and has an extended lifespan by up to 30%. On average a

Non-vulcanised Rubber used as Recycled Input Materials as per EN 2 of GRI G3
6%

Non-vulcanized Rubber

n

%wrt Production Volume

5% 4% 3% 2% 1% 0% 2005 2006 2007 2008 2009 2010 2011

n

n

56 Environmental Performance 2011-12

Sustainability Report 2011-12 57

Energy Consumption as per EN 3 & 4 of GRI G3
Total Indirect Energy Consumption 221,264 GJ

Energy Efficiency
AVBV has embarked upon a proactive energy efficiency approach. As a result we have been able to realise energy savings of 109,312 GJ – about 20% of the total energy consumption within our facilities. We achieved this primarily through process redesign, in particular our focus to rework rubber waste, tire compounds with minor structural defects that is still suitable for tyre manufacturing after being re-mixed.
Note: Refer to the Energy Efficiency Table below

Green House Gas (GHG) Emissions
The total GHG emission for Scope 1 and 2 for the reporting period were 47,984 million tons of CO2e. Natural gas, our scope 1 emissions, accounts for 36% of total CO2 emissions while accounting for 58% of the energy consumption. Usage of natural gas allows us to reduce our environmental impacts including our GHG emissions. This GHG emission figures has been calculated and submitted along statutory requirements of the Emission Trading Scheme developed by the Dutch government, the Dutch Emissions Authority (NEa), to improve the living environment. In the Netherlands there are two emissions trading systems, one for emissions of carbon dioxide and one for emissions of nitrogen oxides.The ETS requires AVBV to develop a CO2 monitoring plan that is certified annually by an authorized organisation. The Scope 2 emissions attributed with electricity generation has been calculated based on the defined emission factor for grid electricity, 0.5 kg CO2/Kwh of electricity generated.

n

The supervisor: in the Netherlands, the Nea supervises these two systems.

GHG Emissions as per EN 16 of GRI G3
Scope 2 64%

Energy Saved Due to Conservation and Efficiency Improvements as per EN5 of GRI G3
Total Direct Energy Consumption 304,826 GJ
Consumption of Natural Gas and Electricity MWh/tonne of end product NM3/tonne of end product

CO2 emission (kg/tonne end product)

Scope 1 36%

Process Redesign 87.34%

Conversion and Retrofitting of Equipment 12.6%

400 350 300 250 200 150 100 50 0 2006

CO2 Emissions

2007

2008

2009

2010

2011

350

Air Emissions
As mentioned above, AVBV participates in the Emissions Trading Scheme developed by the Dutch Government through the Dutch Emissions Authority (NEa). The ETS is a flexible policy instrument used to improve the living environment through two emissions trading systems, one for emissions of carbon dioxide (CO2) and one for emissions of nitrogen oxides (NOx). Greater detail of the ETS is given in the section on GHG emissions. Nitrous Oxide emissions are generated through combustion of Natural Gas at a rate of around 37 grams per GJ of fuel consumed, estimating the total NOx generation at 11.3 tonnes in 2011-12. Similarly, the use of silica in our manufacturing process led to emission generation of volatile organic compounds (VOCs) estimated at 13 tonnes.

250

150 2005 2006 2007 2008 2009 2010 2011

Characteristics of Emission Trading Scheme
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Target for natural Gas Target for Electricty

Consumption of natural Gas (Nm3) Consumption of Electricty (MWh)

Others 0.07%
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An emission permit: obligatory participants draw up a monitoring protocol that they then submit for approval to the NEa. In the event of approval, the director of the NEa issues the company with an emission permit. Receiving emission allowances: licensed companies are allocated emission allowances by the government. Monitoring: during the emissions year companies monitor their emissions in accordance with a monitoring protocol. Verified emission report: at the end of an emissions year, companies with an emission permit report their emissions to the NEa in an emission report. They have this report checked by a verifier. Turning in of emission allowances: companies compensate the quota laid down in the emission report by turning in emission allowances to the registry.

Details of Energy Savings due to Efficiency Improvements as per EN5 of GRI G3

Energy Efficiency Activity
Conversion and Retrofitting of Equipment Repaired air leaks Rework rubber waste

Energy Savings (GJ)
270

n

n

95200

Nox Air Emissions by Type and Weight as per EN 20 of GRI G3
Nox Emission (kg/tonne End Product)

Nox Emissions
0.2 015 0.1 0.05 0 2006 2007 2008 2009 2010 2011

Energy Efficiency Activity
Process Redesign Frequenty controled pump New mixer

Energy Savings (GJ)
n

270 13500

58 Environmental Performance 2011-12

Sustainability Report 2011-12 59

Ozone Depleting Emission
Ozone Depleting substances are only present in our European operations through emissions of HCFC from leakages in the air conditioning system. This amount was calculated at 0.7 kg for the entire year.

and water saving shower heads. Also the replacement of defective steam traps has helped us to reduce the drinking water consumption. Discharge from municipal water supplies is sent to a common sewage treatment plant for treatment before being discharged.

Water
The total water consumption in AVBV for the reporting period 2011-12 was 3,899,564 m3. Surface water, our main source of water consumption is sourced from the Twente Canal, located near the plant. Surface water is used only for cooling purposes and conducted through a closed pipe system. 100% of surface water consumed in the European operations is discharged back to the source in compliance with the relevant regulations. The increase of Canal water is caused by a combination of higher average temperature and a serious increase of produced number of tyres. The consumption of drinking water has been reduced by better monitoring, directly responding to excesses

Quality of Water Discharge
The quality of water discharged from our facilities is regularly monitored and check by government agencies, with the result that we have experienced no violations with legislations and rules relating to this. We have initiated the implementation of a water quality monitoring system, for us at AVBV to be able to continuously monitor our water quality internally. The system is planned to be in operation by December 2012.

wastes. As a result of an intensive improvement program involving the whole production organisation the number of waste compound was reduced by more than 500 MT in one year. In 20112012 different project teams worked on the reduction of our scrap levels. This resulted in a decrease of the scrap levels. A special cutter is installed to cut ply material to the right dimension preparing them for reuse, instead of disposing the rolls resulting in substantial ply scrap savings. Recycling of waste for other purposes is generated such as the case of vulcanized waste which is exported to an authorized agency as a fuel source. The waste products are disposed of in a responsible manner that is in compliance with legal requirements either to authorized contractors and common disposal facilities for hazardous wastes. AVBV has partnered with a local waste processor Van Gansewinkel to identify opportunities to reuse residues and waste. Since October 2011, the goal of this partnership has been towards:
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Transportation
Our general policy is to minimize the transport movements required for the delivery of our products to our customers. The transportation mode is based on cost as well as environmental efficiency. Reverse logistics is basically being employed at both upstream and downstream of the supply chain. In upstream the plastic bins and crates are transported back to the suppliers whereas in upstream the foldable racks are transported on a regular basis. Tyres meant for recycling are collected on a regular basis using the reverse logistics mode. The key KPI used for green logistics performance of Apollo Vredestein are: total logistics cost, percentage of waste recycled, carbon emissions, air pollutant emissions and energy consumption. A few of the green practices have direct impact on the logistics performance, for example the use of foldable racks have greatly helped in reducing transportation cost per tyre. Our general policy includes maximizing the usage of sea/barge transport over road transport, using full containers and full (high cube) trucks, maximizing direct shipment and using shared-users services for

Waste
Our main focus revolves around minimizing the quantity of waste generated with regards the quantity of products manufactured. Over time we have tailored our processes towards this, and seen a significant reduction in the specific waste generation of hazardous and non-hazardous

Optimization of waste resources Ensuring adequate visibility and optimum placement of means for waste collection Efficient collection of the various substances

n

n

Total Water Withdrawal by Source as per EN 8 of GRI G3
Municipal Water Supplies 2%

Total Weight of Waste as per Type and Disposal Method as per EN 22 of GRI G3
% WRT Production Voulme Non-Hazardous Waste
3%

Surface Water 98%

Non-Hazardous Waste
Waste Materials Solid compounds (tonnes) Quantity 1407 1896 1858 1346 Disposal Reused through authorized recyclers / re-users Recycled through authorized recyclers/ re-users Used by authorized recyclers and exported as a fuel source Disposed to local incinerator

0% 2005 2006 2007 2008 2009 2010 2011

Other Non-Hazardous wastes (tonnes) Vulcanized waste (tonnes)

Consumption of Tap Canal Water in M3/Tonne of End Product
3.00 100.000

7

Environmentally Hazardous Waste

KG/Tone of Production Volume

6 5 4 3 2 1

Domestic waste (tonnes)

2.00

50.00

Hazardous Waste
Waste Materials Chemical waste (tonnes)
2005 2006 2007 2008 2009 2010 2011

1.00 2005 2006 2007 2008 2009 2010 2011

0.00

Quantity 219

Disposal Exported abroad for treatment, segregation, storage and disposal

Target for Canal Water Consumption of Canal Water

Target for Tap Water Consumption of Tap Water

60 Environmental Performance 2011-12

Sustainability Report 2011-12 61

transport solutions. GHG emissions caused by transport by truck and inland barges, based on actual tonne-kilometers and Dutch norms were found to amount to a total of 3.65 tonnes of CO2 equivalent.

SOCIAL PERFORMANCE
The main driver of social performance in EU is decent workplace agenda and fair labour practices

workforce with higher age due to the raising of the retirement age and the elimination of early retirement in the Netherlands. The attrition levels of our employees is as exceedingly low 3.67%, highlighting the high level of job satisfaction that our employees experience for them to continue working with us to develop themselves and grow with the company. This is a clear indicator of Apollo Tyres' role as an organisation that looks out for the people that enable success. Employees are provided with the following benefits according to Dutch Statutory requirements. These benefits are provided to both permanent and nonpermanent employees

n

Pre-Retirement Planning for Intended Retirees: AVBV has its own pension fund and regulations Retraining for those intending to continue to working: We also organize on a regular basis early retirement meetings with Aegon Severance pay: In Dutch law there can be a severance pay in two cases: - If AVBV chooses to terminate the employment through courts - Reorganization resulting in reduction of employee numbers

n

Environmental Compliance
AVBV takes all necessary approvals from the relevant government authorities, before embarking on any project. The applicable environmental requirements are monitored at all stages during project execution at the manufacturing facilities to ensure compliance with environmental legislations. During the reporting period, no incident of noncompliance was reported and no fines were imposed.

Labour Practices
Secondary and higher staff corresponds to those that are employed at management and executive levels, while general staff includes workers and operators. At AVBV, labour and decent work is conducted based on defined working conditions for secondary and higher staff, through the MIHO agreement, and for general staff through the CAO agreement. When joining the company, employees are required to sign the applicable agreement to acknowledge their adherence to follow the stipulated working conditions. The majority of our workforce is workers and operators. Like in India, our hiring policy focus is on employing staff as permanent employees to strengthen the notion of job security which given the economic situation in Europe, is a pressing issue in the Netherlands. The economic downturn has also impacted labour conditions leading to a

n

The named factors are included. If Severance pay is provided, it takes into account the employee's age and years of service
n

Total Workforce: 1,303 Employees Employee Turnover: 3.67%

Job Placement Services Assistance on transitioning to non-working life

n

Local Hiring Policy
Specific to the job roles that we look to cover, AVBV practices local hiring practices for operators and management personnel. Operators: We aim to employ the operator from the local community and provide them with a one year probationary contract. After one year, if management deems the operator to be good at his role, a long-term contract is provided to him and a skill development program is charted out for him. Management: Any vacancy in management positions starts with an internal search for suitable employees. If no person can be found to fit the expected job role, then external persons will be brought in.

AVBV also started the Technical Leadership Development Programme. This intensive training programme, which brought together specialists from different areas, started with a three-day technology symposium. The symposium provided a platform for exchanging insights in the development and production of tyres, including the latest technologies. In addition to the participation of in-house specialists from different areas, the event also featured presentations by suppliers. Our philosophy of lifelong learning is embedded in our ABC training courses and in the operator training in order to have our employees think explicitly about how life-long learning is related to the concepts of career, mobility and vitality. The next generation of employees and managers has been trained in the principles and methodologies of Lean Six Sigma and has participated in the various Black, Green and Orange Belt training courses. 91% of our employees are provided with regular performance and career development review. Performance and career development reviews are provided to all levels of employment categories at AVBV, management and workers, but especially towards those employed in direct roles to the company's activities.

Total Workforce by Employment Type, Employment Contract, and Region as per LA 1 of GRI G3
General Staff 82% Secondary and Higher Staff 17%

Others 1%

Training and Development
At AVBV we have a long term HR policy from 201115 that details out the following for the employees and specific job roles at AVBV:
n

Fixed Term/ Temporary 32%

Policy career development & mobility Yearly education plan

n

Permanent 68%

Together with charting out a career development path for our employees we also offer the following career development assistance programs:

62 Social Performance 2011-12

Sustainability Report 2011-12 63

Collective Bargaining
100% of full time and part time employees at both management and worker levels are covered under collective bargaining agreements. Through a proactive HR policy within our company, we aim to improve the employability and vitality of our staff through collective labour agreements that aim to implement of sustainable employability at Apollo Vredestein BV.

Health and Safety
Employee health and well being is a critical consideration of our employee engagement programme. Under this we have we provide health assistance programs on risks related to life-style diseases such as obesity, heart disease, lung diseases, high blood pressure; and occupational health related diseases like vision and hearing and repetitive strain injury. In particular, physical therapy was actively promoted in 2011-2012. Employees with recurring musculoskeletal disorders followed a training course over 15 weeks to minimize the symptoms and learn how to deal with the symptoms. In 20122013, we will evaluate the physical therapy policy and if it has proven to be successful, we will continue this therapy. We have three health & safety committees at different levels of the organisation:
n

Product Stewardship
Health & Safety Impacts of Products
EU regulations mandate that we account for and address health & safety aspects throughout the life cycle of our products. 100% of all types of our products are accounted for during the following stages of a product life cycle: Development of product concept R&D Certification Manufacturing and production Marketing and promotion Storage distribution and supply Use and service Disposal, reuse, or recycling

Product and Service Information
We work towards providing our customers with adequate and accessible information as required by regulatory requirements and based on voluntary commitments of AVBV. We have progressively moved into disclosing information relating to sustainability performance and indicators to keep customers well informed of our activities and initiatives. In the light of procedures for product and services information and labelling, AVBV clearly takes into account the following product and service information.Tyre engraving, a key part of product information, is always checked through the involvement of employees and is in compliance to regulations and codes.

Minimum Notice Period
As per Dutch Statutory requirements we have differing notice period for:
n

n

n

n

n

Works council – Notice period to be at such a time that influence is still possible Unions and employees – Notice Period of 3 months

n

n

n

n

n

The Works Council is a participatory and representative body within AVBV. It consists of employees on behalf of the staff who consult with the management of AVBV on company policy and staff interests.

Purpose
The sourcing of components of the product or service Content, particularly with regard to substances that might produce an environmental or social impact

Product information disclosed
n n

Committee management and labour representation Safety committee Staff committees (each individual department)

Reach-statements, Certificates of Origin, Reach-statements, Certificates of Origin Winter Information Brochure informing users how and when to use winter tyres. Tyre info display, offered to dealers in Zone E informing customers what are important parts of a tyre and focus on choosing a tyre. Campaign concerning checking your tyre pressure station in Enschede and distributing tyre pressure sheets to all dealers and fuel stations. Team in RTL Autowereld (television), which explains that a tyre is so much more than just a piece of rubber. Participation in the Tire-change-week-campaign of the VACO, which reminds customers that it is time to switch from summer to winter tyres. Campaign concerning checking your tread depth regularly, including placing a high tech tread depth measure station Item in Autoblog, in which we showed the viewer the difference between an A-brand tyre and a discount tyre, to create awareness of the importance of investing in a good tyre. Documents regarding our participation in the Used Tyres Group of the ERTMA. Documents regarding our participation in Vereniging Band & Milieu Other (explain)1. Brochure regarding the EU tyre Label, in which we inform dealers and consumers what this label contains and how the label values are determined.
Sustainability Report 2011-12 65

n

Occupational Health & Safety
Safety is a priority area in our operations. Highlighting the effectiveness of the safety culture, we have achieved a low injury rate and no incidents of occupational diseases during 2011-12, despite the increase in the workforce. Our common goal is to continuously bring this number down to zero.

n n

n

The Health & Safety topics below are specified in our collective labour agreements with employees:
n

n

Personal protective equipment Joint workinggroups with employees and management Participation of employees in labour inspections, audits and accident investigation Education and training Addressing complaints Refuse unsafe work Periodic inspections Compliance with ILO rules Structure for troubleshooting
n n n

n

n

n

Rates of Injury and Lost Days as per LA 7 of GRI G3
30 26.04

n

n

Safe use of the product or service

n

n

n

25

n

n

20

n

15

Human Rights
1.81

10

5

0

Lost Day Rate

Injury Rate

At AVBV we ensure that there are no instances of human rights violation with respect to discrimination, child labour, forced labour and security personnel, as per applicable law. In the event any discrimination is reported, we have a formal system to address the issues that have been raised.

n

Disposal of the product and environmental/social impacts
n n

Other (explain)

64 Social Performance 2011-12

Customer Satisfaction
Customer satisfaction practices are conducted to understand customers' perception to AVBV as an organisation, and pertaining to the specific tire products we manufacture. AVBV assures that the performance matches the customers' expectations. Our target is “customer delight” by exceeding the customers' expectations. AVBV experiences that customers are more and more interested in environmental aspects - REACH compliant statements and ratings regarding recycling. AVBV fully complies with the current REACH regulations and gives its REACH statement on request. Customer satisfaction levels are monitored on a regular basis. All marketing and sales departments have regular quarterly meetings. The reasons for dissatisfaction are determined and actions for improvement are planned. Follow-up is done on a quarterly basis. We establish and maintain important characteristics to gauge customer satisfaction including:
n

Society
Anti-Competitive Behaviour
We do not partake in any anti-competitive, antitrust or monopoly practices. We have consequently faced no legal actions relating to these practices.

ZONE A
ENVIRONMENTAL PERFORMANCE Environmental Management
At Apollo Tyres South Africa Pty Ltd (ATSA) the management of environmental performance is fundamental to our operations. At ATSA, we aim to ensure minimal impacts to the surrounding areas from our manufacturing activities. Our focus areas of investment listed here are restricted to external environmental management services employed at our Durban and Ladysmith facilities. The total recorded external services investment amounted to 2.799 million South African Rand, with an exchange rate conversion to Indian Rupee as on March 31, 2012. This information is only intended to be indicative of our efforts and focus areas and does not constitute the total extent of the environmental management investment in our South African plants. Managing our environmental impacts has also allowed us to reduce costs associated with environmental management. In Durban, we have employed a waste management approach wherein almost 88% of our total waste management cost is recovered through income received through recycling of wastes. The total environment management expenditure in the reporting period was Rs. 18.61 million.

Material Consumption
In South Africa, we use a mixture of natural and synthetic rubber to manufacture tyres, at a proportion of 58% and 42% respectively. This is used to alleviate the issues regarding natural rubber supply that is present in the tyre manufacturing industry, and which has been covered within our Indian and European operations. The materials consumed in our operations are not re-used back into our processes within their original state, but we do rework the rubber compound that is generated from the raw materials.

Social Engagement
Every year AVBV determines a number of events and organisations to support by donating money or sponsoring events to benefit the society and community where we are located in. In the year 2011-2012 donations included to:
n

Het Roessingh, a rehabilitation center in Enschede Retired former AVBV employees

n

Sponsorships:
In terms of sponsoring events we cooperated with several local, national and international initiatives:

Quality Fair prices Good customer handling skills Efficient delivery Serious consideration of consumer complaints.

Raw Material Consumption as per EN1 of GRI G3 (Indexed)
Natural Rubber 36.97% Synthetic Rubber 27.23%

n

Local
The Good Cause Rally - giving children with cancer a carefree day

n

n

n

National
Alped'Huzes - a bicycle ride, aiming to collect money for further research for cancer

Marketing Communication
Marketing communication activities are conducted in compliance with regulations to provide factual, timely and reliable information during marketing of our products. We have instituted internal standards to complement the statutory requirements that we adhere to. In addition to continuous monitoring, we conduct internal and external audits of our compliance status to the below codes and standards.

International
n

Ride for the Roses - a bicycle ride, aiming to collect money for further research for cancer FBK Games - international athletics-contest, held in the Enschede-area Amstel Gold Race - international cycling race

n

n

Carbon Black 35.80%

Indexed Raw Material Consumption

Environment Management Expenditure

Code or Standard for Marketing Communication
Dutch Advertising Code Committee Law on Gambling Promotion General Media Law Vredestein Brand Book

Frequency of Monitoring
Continuous Continuous Continuous Continuous

Waste Managment 68.52%

Water Managment 31.05%

Material
Material for packaging purposes Pentathene (metres) Bags (numbers)

Quantity (%)
85.15

Pollution Prevention 0.43%

14.85

66 Social Performance 2011-12

Sustainability Report 2011-12 67

Energy
Due to easy availability and accessibility of coal in South Africa, it is the most used fuel for the generation of direct energy in our manufacturing processes. 37% of indirect energy consumption is used in steam generation. Steam is used in the manufacturing process in activities such as curing of the tyres after the building process. Indirect energy consumption exceeds direct energy consumption. Thus our energy efficiency initiatives are focused towards reducing this along with steam usage in our processes.

Energy Efficiency
The energy savings initiatives focus on reducing energy consumption. Indirect energy savings – through steam consumption, electricity consumption and air leakage from utilities – have been achieved, but the actual energy savings through these measures have not been documented. This has been identified as a gap and subsequent systems to document energy savings is being worked upon. Both our factories have initiated energy projects with emphasis on reducing steam usage. Projects included the recovery of steam at our large domes in Truck Bus Radial (TBR) and Off The Road (OTR) manufacturing process, as well as making use of only one boiler instead of two during periods where demand for steam is lower than required. At Ladysmith and Durban, through a systematic process accounting steam consumption, electricity consumption and air reduction in utilities, we have been able to initiate the below activities towards achieving energy savings.
Note: Refer to the Energy Savings Table given on page-69

purchased electricity (Scope 2) have been accounted. The GHG emission factors for the different energy sources, used to calculate our GHG emissions, are based on the following standards:
n

GHG emissions as per EN 16 of GRI G3
Fuel Oil 21.65% Diesel 0.85%

Diesel, Furnace Oil, Natural Gas and Coal IPCC Guidelines Electricity – Journal of Energy in Southern Africa

n

Energy Consumption as per EN 3 & 4 of GRI G3
Electricity 55.53% Coal 32.60%

Coal is the primary source of fuel for the grid electricity in South Africa, contributing to a higher emission factor. In our direct energy consumption mix, coal accounts for about 75% of consumption, while its GHG emissions contribution accounts for almost a correspondingly similar figure. Likewise fuel oil, which is 25% of our direct energy mix, is responsible for 20% of the GHG emissions through direct energy consumption.

LPG 0.30.%

Coal 77.19%

GHG Emissions as per EN 16 of GRI G3
100000 92415

Air Emissions
At Durban and Ladysmith, there are no listed activities on either site regulated by the National Environmental Management Act: Air Quality Act. Despite this, we continuously track our NOx and particulate matter emissions in particular, to reduce the air emissions generated from our operations. NOx and Methane emissions given below are attributed from consumption of high fuel oil and diesel for energy sources.

80000

Diesel 0.46%

n

Tonnes of CO2 equivalent

Steam Consumption
n n

Install 124 new steam traps to replace old ones in Moulding. Repair of major air leaks. New cooling towers installed to increase the efficiency of chilled water system. Installation of power factor correction equipment. Repair of Major air leaks. Upgrade to high efficiency compressors. Installation of cooling radiators.

60000

HFO 11.22%

LPG 0.19%

40000 26521

Electricity Consumption
n

Nox, SOx, and other significant air emissions by type and weight as per EN 20 of GRI G3
NOx Methane Particulate Matter 0.049 tons 0.247 tons 51.79 mg/cm3

Total Indirect Energy Consumption 366,001 GJ

20000

n

n

Air Leakage in Utilities
n

0

Scope 1

Scope 2

Total energy savings achieved through conversion and retrofitting of equipment was 582.9 GJ

Details of Energy Savings due to Efficiency Improvements as per EN5 of GRI G3

Energy Efficiency Activity
Installation of Variable Speed Drives for pumps and fans Conversion and Retrofitting of Equipment Energy saver light fittings Installation of Variable Speed Drives on cooling towers

Energy Savings (GJ)
558 9.4 15.5

Total Direct Energy Consumption 293,147 GJ

Green House Gas (GHG) Emissions
For this reporting period, combustion of direct fuels (Scope 1) and indirect emissions from generation of

68 Environmental Performance 2011-12

Sustainability Report 2011-12 69

Our activities to reduce air emission focus on maintaining machinery and equipment that contribute to air pollution include:
n

operations or products have any significant impacts on biodiversity in protected areas and areas of high biodiversity value outside protected areas.

Transportation of Hazardous Wastes
Hazardous waste is transported from the Durban facility to the local Shongweni Landfill site for effective treatment and disposal of the following h a z a rd o u s w a s t e . A n a u t h o r i s e d w a s t e management firm to manage the hazardous waste generated from our locations and ensure safe disposal of the waste.

Weight of Hazardous Waste Transported to Authorised Disposal Site / Vendor

Installation of BSF Plug and socket in Mixers and Boiler House Stack to measure atmospheric emissions Installation of spray booths in Moulding Spray Painting Machine Install of new filters in Mixers Repair of all dust collector systems for all Mixers

Waste
At Durban and Ladysmith, we aim to reduce the quantity of solid waste disposed through the vigorous pursuit of recycling:
n

Hazardous waste transported
Contaminated Packaging Sludge (Mix of oil, water, carbon black, soil, grease) Paint, chemical and grease containers plus thick and dry sludge Crushed fluorescent tubes Sump / trap / oil separator waste Compound calendered tyre steel beads

Weight (kg/tonnes)
98.9 54.3

n

n

n

We also aim to ensure that noise pollution is kept at a minimum in the work environment to ensure that it does not exceed 85 dBa.

Employment of waste management contractors for waste handling, segregation and recycling. Construction of Waste Yard storage bay for liquids to direct any spillage to the sump Re-construction of Waste Yard to include water trap and closure of all storm water drains

36.5 0.15 17.55 118.2

n

n

Water Consumption
All water consumed is sourced from the Municipal Water Supplies of Durban and Ladysmith. This includes water for steam generation and cooling purposes. During the year we have embarked on several small projects to reduce water usage. A project was initiated whereby we replaced all shower heads with water saving shower heads as well as reducing the cold water pressure resulting in water savings of 500kL at our Durban Factory. In Ladysmith, new dry type air-conditioning coolers are used to conserve water. We have also commissioned a project to investigate water capture from our large roof surfaces over the factory which will be further developed into a viable project for 2012. The total water withdrawal for the reporting period for ATSA was 470,190 m3 / year. 26% of the water consumed is recycled and reused within the organisation.

At all our locations the treated discharge is sent to common facilities for effluent and sewage treatment that is run by the local municipal corporation. At our Durban facility, only oil separation, through an oil separation sump, is conducted before the effluent is transported to the common effluent treatment plant run by the Durban municipal body. Sludge is pumped out of 5 sumps (pump-house, 2 open wash-bay, mill grease trap and waste yard trap), in both locations twice monthly or if they fill up.
Note: Refer to the Waste Table given on page-71

Total Weight of Waste as per Type and Disposal Method as per EN 22 of GRI G3 (Indexed)

Non-Hazardous Waste
Waste Materials General Waste Rubble Recyclables Production Waste Quantity (%) 0.04 0.01 59.64 39.52 0.79 Disposal Disposed to local landfill Co-Disposal Recycled through authorized recyclers/ re-users Recycled through authorized recyclers / re-users Recycled through authorized recyclers / re-users

Recycling
Our Durban Factory uses pentethene plastic film as part of the production process. This is a by-product of the production process, and not used in the final product. The waste collected is further recycled by the waste removal company as LDPE plastics which can be made into garbage can liners, floor tiles, film and sheet, bins, landscape timber and piping. At our Ladysmith Factory, our scrap tyres are shredded, granulated, and finally crumbed and bagged. The crumb is then mixed into bitumen which is utilised in tarring road surfaces.

Scrap Tyres

Hazardous Waste
Waste Materials Sludge Packaging Crushed fluorescent tubes Sump / trap / oil separator waste Compound calendered tyre steel beads Dry Hazardous Waste Chemicals Blasting Grit Quantity (%) 27.77 14.64 0.02 2.60 17.49 36.00 0.30 1.17 Disposal Sent to authorized agency for treatment and disposal Sent to authorized agency for treatment and disposal Sent to authorized agency for treatment and disposal Sent to authorized agency for treatment and disposal Sent to authorized agency for treatment and disposal Sent to authorized agency for treatment and disposal Sent to authorized agency for treatment and disposal Sent to authorized agency for treatment and disposal

Water Discharge Quality
Total water discharge from STP and ETP during the reporting period 2011-12 was 124,011 m3 / year.

Biodiversity
Our facilities in Ladysmith and Durban are not located near any area within or adjacent to protected areas and areas of high biodiversity value outside protected areas. Consequently none of our

70 Environmental Performance 2011-12

Sustainability Report 2011-12 71

Significant Spills
During the reporting period we have experienced two significant spills:
n

SOCIAL PERFORMANCE
People power is the core of Zone A operations. Excellence through people innovation drives the social agenda and policies for the region.

Local Hiring Policies
In SA we are governed by the Employment Equity Act. This act creates the framework for the prohibition of unfair discrimination in the workplace and creates a framework for the planning and advancement of previously disadvantaged groups and their advancement in employment in South Africa.

Diesel spilt from Engen delivery truck tank during decanting into our underground diesel tank. The volume of the spill was around 50 litres and led to contamination of a cement area and storm water drain located adjacent to the diesel tank. Powder chemicals (Resorcinol and Stearic acid blend) were spilt from a contractor's truck led to contamination of the cement area near the raw material store.

Labour
On the Industrial Relations front, management, employees and the trade union, have put together a draft recognition agreement which has the purpose of regulating the relationship and parameters within which business will be conducted. In line with our company policy, we practice hiring predominantly permanently contracted employees to promote job security and enhancement of their work through benefits applicable to permanent employees. The attrition level of our employees is low indicating the high level of job satisfaction. The majority of the attrition is from workers,

framework for developing the broad skills of the South African workforce by creating the compulsory deduction from employees and payment into the skills development levy, which in turn funds the various skills development programmes (namely learnerships and SETAS) under the Skills Development Act. At Zone A, the entry level employees' remuneration is at an average of 9% above the local minimum wage .

n

Employee Benefits
As per South African statutory requirements, employees are provided with Health Care benefits, Disability / Invalidity Coverage, Maternity / Paternity Leave and Retirement Pension. These benefits are provided only to permanent employees, who constitute 97% of our total workforce

The average hour of training imparter per employee per year by category as per LA 10 of GRI G3
4.53 3.80 Operators and Workers Management Sustainability Report 2011-12 73 5

Appropriate measures were undertaken to address the spill, minimize the impact of the spill and to prevent re-occurrence of the event. We undertake practices to prevent land pollution from occurring and to continuously monitor and check for pollution levels in the ground. These include:
n

4

mandays/ year/ person

Training and Development
Zone A strongly believes in ensuring training and skill development for its workers and management employees, imparting them with the highest technical knowledge and practices to further develop their capabilities and capacities to sustain the organisation in its place as one of the top companies. The training programmes focus both, on general practices and technical expertise. We also provide sponsorships for external programs. During the reporting period, 244 employees participated in these training and development programmes. 32% of our employees are provided with regular performance and career development reviews. Performance and career development reviews are provided primarily towards management and operational employees of Apollo Tyres South Africa. The key career development assistance programs offered at Zone A are :
n

3

Conduct sampling and analysis of the ground water at locations of underground diesel and chemical tanks Testing and treatment of soil samples for pollutants Monitoring of underground water supply for diesel contamination

Total Workforce: 1,765 Employees Attrition rate of Permanent Employees: 9.57%
Weight of Hazardous Waste Transported to Authorised Disposal Site / Vendor
Workers and Operaters 94%

2

n

n

1

0

Environmental Compliance
ATSA, obtains prior approval from the relevant government authorities before embarking on any project. The applicable environmental requirements are monitored at all stages during project execution at the manufacturing facilities to ensure compliance with environmental legislation. During the reporting period, no incident of noncompliance was reported and no fines were imposed.
Management 6% Temporary 3% Permanent 97%

Collective Bargaining
100% of our operator level workers are covered under collective bargaining agreements. We conduct dealings with trade unions through respect and compliance with Centralised Bargaining Structures, as well as all Collective Agreements. Freedom of Association is protected under SA Constitutional Law, as well as Labour Relations Act. There has been no risk of collective bargaining at our South African locations during the reporting period. With regards to the Tyre Industry Bargaining Council, the company has spear-headed a process

Pre-Retirement Planning for Intended Retirees Retraining for those intending to continue to working Severance pay Assistance on transitioning to non-working life

n

n

n

The Skills Development Act and the Skills Development Levies Act create a regulatory

72 Social Performance 2011-12

of regulating all agreements from a macro perspective. Historically, numerous and sometimes conflicting agreements were reached at the Tyre Industry Bargaining Council. The purpose is to ensure clarity is reached and all parties have an explicit understanding of the meaning of various agreements. The increase for the second year of our three year wage increase agreement took place during this period.

Rates of injury and lost days as per LA 7 of GRI G3
0.20 0.172

n

Safety, Health and Environmental Reviews/ Meetings SHEQ Policy Weekly Safety Talks

Zone E reflecting standardised approach of the organisation. These stages are:
n n n n

n

n

0.15

Some of the key health programmes undertaken are: HIV AIDS - Education, Testing, Counselling is conducted for employees. Employees families also Counselled in the event of positive testing

n n n

Development of product concept Research and Development Certification Manufacturing and production Marketing and promotion Storage distribution and supply Use and service

Minimum Notice Period
0.10

Product and Service Information
At Zone A we are conscious of our responsibility for fair and transparent communication. We ensure that required information is disclosed with respect to our products and activities and our sustainability performance. Product information is provided on:
n

As per South African statutory rules, we have differing notice periods for operational change:
n

Sexually Transmitted Infection - As and when symptoms are detected among employees, specific protocols are followed Tuberculosis - Part of annual Wellness programmes, specific protocols are followed when TB is detected among our employees Risk Assessment - Risk Assessments are conducted by occupational hygienists to identify hazards relating to health of our employees Occupational Diseases - As and when lung, ear and other biological diseases related to occupational diseases occur among employees, specific protocols are followed

Restructuring – 90 days Dismissal based on operational requirement –90 days Outsourcing – 90 days
0.00 Lost Day Rate Injury Rate Occupational Diseases Rate 0.05 0.013 0.011

n

n

The sourcing of components of the product or service Content, particularly with regard to substances that might produce an environmental or social impact Safe use of the product or service Disposal of the product and environmental/social impacts

Health and Safety
Zone A is certified under OHSAS : 18001 . Appointed SHE Managers and Officers ensure that the company complies with relevant Safety, Health and Environmental legislation. The company has periodic internal and external audits performed annually on Safety and Health.

n

Health and Safety Topics
We have constituted four health and safety committees at different levels of the organisation:
n

n

n

SHE Internal Management Review Risk Management Steering Committee SHE Security and Insurance Sub-Committee SHE Area Committees

Human Rights
At ATSA there is no defined policy specifically on human rights. The fundamental principles of human rights are part of various policies governing the organisation. In the year 2011 -2012 there were no instances of non compliance with respect to discrimination, child labour, forced labour and security personnel. The company also supports the Broad Based Black Economic Empowerment framework to ensure equitable opportunities for the disadvantaged in SA.

Customer Satisfaction
The company conducts a customer satisfaction survey every 2 years. The last survey was conducted in 2010 and we are planning to conduct the next one during 2012. In 2006 and 2010, independent research was undertaken with Objectivity to quantify levels of awareness and perceptions held regarding the delivery of orders and efficiency with a cross section of all tyre dealers. The first survey in 2006 confirmed the view held by a major competitor's logistics partner that Apollo was considered the benchmark tyre company with respect to logistical services. The second survey held in 2010, showed that Apollo had maintained its leadership status but that competitors were closing the gap. The survey results were shared with all sales and branch employees with a view to implementing a strategy to further strengthen Apollo's logistics competitive advantage.

n

n

n

The Health and Safety topics below are specified in our collective labour agreements with employees:
n

Safety, Health, Environment and Quality (SHEQ) Agreement

Health Assistance Programmes
Education / Training
Employees Employees' families

Counselling

Prevention / Risk Control

Product Stewardship
Treatment
Our regulatory framework requires that we account for and address health and safety aspects throughout the life cycle of our products. The product development stages are similar to as mentioned in the previous regions i.e. Zone I and

74 Social Performance 2011-12

Sustainability Report 2011-12 75

ATSA also conducts annual regional customer seminars where customers are briefed on the Company strategy at a macro level, as well as communicated with regards to new products and products innovations. Feedback is also elicited from these customers and strategic action plans put in place to address any customer concerns which may be highlighted. Market research with regards to how end consumers perceive our Brands are also conducted every 2 years. Research is conducted every 2 years since 2007 though an independent research company TNS (previously Research International) the largest research company in South Africa and globally. Research is undertaken to gain insight into the South African tyre market as a whole, but more specifically to protect and grow the Dunlop brand, identify consumer buying behaviour patterns and evaluate our offering, to track the Dunlop brand saliency and brand equity, to measure the effectiveness of brand communication and to measure the awareness of the Dunlop Zone Network.

Local Suppliers
We define local suppliers as those that are located in and operate from South Africa. As part of the corporate purchase initiative, 71 suppliers signed the "Partner Code of Conduct" with Apollo Tyres SA covering Human Rights issues. We base our selection of local suppliers on the following criteria:
n

Society
Broad-Based Black Economic Empowerment (BBBEE)
Broad-Based Black Economic Empowerment (BBBEE) is a form of Economic Empowerment initiated by the South African government to distribute wealth across as broad a spectrum of South African society as best possible. Apollo Tyres SA Ltd. supports the intent and purpose of BBBEE whilst striving to ensure that equitable opportunities are created and offered to predominantly historically disadvantaged South Africans in its pursuit of achieving the goals and targets set by the Broad Based Black Economic Empowerment Act. In this pursuit of compliance with broad based black economic empowerment, the company has contracted with various consultancies on the appropriate measures to be implemented, as published by the DTI (Department of Trade and Industry). As such the Company has already achieved level 5 status, with a score of 80% on the Broad Based Black Economic Empowerment Balanced Scorecard from the Codes of Good Practice

involvement in these activities. Indicative of the action we have taken to address these incidents, there have been no incidences of non-renewal of contracts with suppliers and customers due to corruption.

Political Funding
We do not provide any monetary contributions to any political party

Price BBBEE Status SARS Tax clearance UIF Compliancy WCA Compliancy

n

n

n

Anti-Competitive Behaviour
We have faced one case on anti-competitive action. The case was brought to the South African government and was resolved with a settlement with the government. We have not faced any instances or legal actions relating to anti- trust or monopoly practices.

n

Zone A actively encourages and promotes Small and Medium Enterprises. The Apollo Tyres South Africa – Small and Medium Enterprises and Black Enterprises Development sourcing team is to be established to specifically enable emerging businesses into enterprises that are viable, and are able to provide goods, equipment, site works and services as may be required by the operations of Apollo Tyres South Africa. Percentage of total procurement budget spent on local suppliers was 43.40%

Social Compliance
During the reporting period, no incident of noncompliance was reported and no fines were imposed.

Marketing Communication
The marketing communication process ensures clear and correct messaging to our customers. The effort is to disclose reliable and timely information to the users. We adhere to the following standards and codes of communication.
Note: Refer to the Marketing Communication Table below

Product Responsibility Compliance
Apollo Tyres SA (Pty). Ltd. ensures prior approval from the relevant government authorities before the start of on any project. The applicable environmental requirements are monitored at all stages during project execution at the manufacturing facilities to ensure compliance with relevant legislation pertaining to customer health and safety, product and service labelling, marketing communications and the use of our products. During the reporting period, no incident of noncompliance was reported and no fines were imposed.

Anti-Corruption
At Zone A, both our business units are analysed for business risks in general including corruption. Awareness on anti-corruption issues is generated through the general contract between Apollo Tyres and the employee. Awareness is done through workshops. Sales department employees undergo competition act training (anti-competitive). Senior management and sales personnel undergo National Consumer Act Training as well. Number of people trained in Anti-Corruption:
n

Community Development
Ladysmith Creche
The Company is supporting the crèche currently financially to the value of R2500 / month, and partnering with the Spar Supermarket group. In addition we have approved capex of R60 000 for

Customer Privacy
There has been no instance of breaches with customer privacy and loss of customer data during the reporting period.

40 Management Personnel 699 Operators and Workers Personnel

n

Code or Standard for Marketing Communication
Advertising Standards Association Consumer Protection Act Electronic Communications and Transactions Act

Frequency of Monitoring
Continuous Continuous Continuous There have been 21 instances of corruption within our facilities during the reporting period. In 14 instances disciplinary action were taken against the employees who participated in corruption activities, while there were 12 instances of employees being dismissed due to their
Sustainability Report 2011-12 77

76 Social Performance 2011-12

upliftment projects such as Vegetable Gardens first subsistence and later supply to the factory canteen for income. We are also investing in a project to collect water via a rain capturing project, via the use of large plastic water tanks called a “JoJo”. Apollo has donated used OTR Bladders which we will use to set up to grow potato gardens and composting chambers. Collection boxes for second hand goods at Apollo's Factory has also been set-up, whereby employees can donate their old clothes and toys for the benefit of the children.

Inkanyezi Special School

Ladysmith High
The Company is supporting the establishment of a modern Multi-Media Research and Resource Centre, which will be called the Apollo Tyres MultiMedia Centre. The project involves the installation of 36 computer terminals with full internet access.

Carbon Offsetting
The Ladysmith Factory has also embarked on a twoyear tree planting project, to green the area, and to in part offset emissions from our coal burning boilers. Over a two year period, we completed planting more than 1000 indigenous trees. In the previous year, we already planted 500 trees, and the trees were sourced via the Wildlands Conservation Trust, whom ATSA supports financially. This year we planted another 500 trees, but also included some large fruit trees and the fruit will be for local consumption by employees.

To further enhance the viability of the room, a data projector, speakers and wall screen to achieve full audio-visual functionality for enhanced teaching and learning will be installed. This media centre would allow all learners access to research and resource material but more especially to those who are not fortunate enough to have computer and internet access in their homes. Such a centre would, without a doubt, equip children to be more competitive, competent and knowledgeable in the broader context of skills development for life. The school has proved itself to be an exemplary academic institution having achieved a 100% Matric (Grade 12) pass rate for the last 19 years. The learner demographic is completely multicultural, reflecting all population groups of Ladysmith.
78 Social Performance 2011-12 Sustainability Report 2011-12 79

Performance Indicators

80 Performance Indicators 2011-12

Sustainability Report 2011-12 81

APOLLO G3 Critical Indicator Index 2011-2012
Performance Indicator Core/ Additional Description Economic
Aspect - Economic performance
EC1 EC2 EC3 EC4 Core Core Core Core
Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments. Financial implications and other risks and opportunities for the organisation's activities due to climate change. Coverage of the organisation's defined benefit plan obligations. Significant financial assistance received from government.

APOLLO G3 Critical Indicator Index 2011-2012
Performance Indicator Core/ Additional Description Environmental
Aspect - Compliance

Zone Zone Zone Corporate E I A

Zone Zone Zone Corporate E I A

Y Y Y Y Y Y Y

Y Y Y Y Y Y Y

Y Y Y Y Y N Y

Y Y Y Y Y N Y

EN28

Core

Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations.

Y

Y

Y

Y

Aspect - Transport
EN29 Add
Significant environmental impacts of transporting products and other goods and materials used for the organisation's operations, and transporting members of the workforce.

Y Y

N Y

N Y

N Y

Aspect - Overall
EN30 Add
Total environmental protection expenditures and investments by type.

Aspect - Market presence
EC5 EC6 EC7 Add Core Core
Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation. Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation. Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation.

Social: Labor Practices and Decent Work
Aspect - Employment
LA1 LA2 LA3 Core Core Add
Total workforce by employment type, employment contract, and region. Total number and rate of employee turnover by age group, gender, and region. Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations.

Y Y Y Y Y

Y Y Y Y Y

Y Y Y Y Y

Y Y Y Y Y

Aspect - Indirect economic impacts
EC8 EC9 Core Add
Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement. Understanding and describing significant indirect economic impacts, including the extent of impacts.

Y Y

Y Y

Y Y

Y Y

Aspect - Labor/management relations
LA4 LA5 Core Core
Percentage of employees covered by collective bargaining agreements. Minimum notice period(s) regarding significant operational changes, including whether it is specified in collective agreements.

Environmental
Aspect - Materials
EN1 EN2 Core Core
Materials used by weight or volume. Percentage of materials used that are recycled input materials.

Aspect - Occupational health and safety

Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y

Y Y Y Y Y Y Y Y Y Y Y Y N N N Y Y N Y Y Y Y Y Y Y

Y Y Y Y Y Y Y Y Y Y Y Y N N N Y N N Y Y Y Y N N Y

Y Y Y Y Y Y Y Y Y Y Y Y N N N Y N N Y Y Y Y N N Y

LA6 LA7 LA8 LA9

Add Core Core Add

Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs. Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region. Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases. Health and safety topics covered in formal agreements with trade unions.

Y Y Y Y Y Y Y

Y Y Y Y Y Y Y

Y Y Y Y Y N Y

Y Y Y Y Y N Y

Aspect - Energy
EN3 EN4 EN5 EN6 En7 Core Core Add Core Core
Direct energy consumption by primary energy source. Indirect energy consumption by primary source. Energy saved due to conservation and efficiency improvements. Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives. Initiatives to reduce indirect energy consumption and reductions achieved.

Aspect - Training and education
LA10 LA11 LA12 Core Add Add
Average hours of training per year per employee by employee category. Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings. Percentage of employees receiving regular performance and career development reviews.

Aspect - Water
EN8 EN9 EN10 Core Add Add
Total water withdrawal by source. Water sources significantly affected by withdrawal of water. Percentage and total volume of water recycled and reused.

Aspect - Diversity and equal opportunity
LA13 LA14 Core Core
Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity. Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings.

Aspect - Biodiversity
EN11 EN12 EN13 EN14 EN15 Core Core Add Add Core
Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas. Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas. Habitats protected or restored. Strategies, current actions, and future plans for managing impacts on biodiversity. Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk.

Y Y

Y Y

Y N

Y N

Social: Human Rights
Aspect - Diversity and equal opportunity
HR1 HR2 Core Core
Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening. Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken. Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained.

Aspect - Emissions, effluents and waste
EN16 EN17 EN18 EN19 EN20 EN21 EN22 EN23 EN24 EN25 Core Core Add Core Core Core Core Core Add Add
Total direct and indirect greenhouse gas emissions by weight. Other relevant indirect greenhouse gas emissions by weight. Initiatives to reduce greenhouse gas emissions and reductions achieved. Emissions of ozone-depleting substances by weight. Nox, SOx, and other significant air emissions by type and weight. Total water discharge by quality and destination. Total weight of waste by type and disposal method. Total number and volume of significant spills. Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally. Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally.

Y Y Y

N Y N

N N Y

N N N

HR3

Add

Aspect - Non-discrimination
HR4 Core
Total number of incidents of discrimination and actions taken.

Y

Y

Y

Y

Aspect - Freedom of association and collective bargaining
HR5 Core
Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights.

Y

Y

Y

Y

Aspect - Child labor
HR6 Core
Operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor.

Y

Y

Y

Y

Aspect - Products and services
EN26 EN27 Core Core
Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation. Percentage of products sold and their packaging materials that are reclaimed by category.

Aspect - Forced and compulsory labor

Y Y

Y Y

Y N

Y N
HR7 Core

Operations identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of forced or compulsory labor.

Y

Y

Y

Y

82 Performance Indicators 2011-12

Sustainability Report 2011-12 83

APOLLO G3 Critical Indicator Index 2011-2012
Performance Indicator Core/ Additional Description Social: Human Rights
Aspect - Security practices
HR8 Add
Percentage of security personnel trained in the organisation's policies or procedures concerning aspects of human rights that are relevant to operations.

Zone Zone Zone Corporate E I A

Y Y

Y Y

Y Y

Y Y

Aspect - Indigenous rights
HR9 Add
Total number of incidents of violations involving rights of indigenous people and actions taken.

Social: Society
Aspect - Security practices
SO1 Core
Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting.

Y

Y

Y

Y

Aspect - Corruption
SO2 SO3 SO4 Core Core Core
Percentage and total number of business units analyzed for risks related to corruption. Percentage of employees trained in organisation's anti-corruption policies and procedures. Actions taken in response to incidents of corruption.

Y Y Y Y Y

Y Y Y Y Y

N Y Y Y Y

N Y Y Y Y

Aspect - Public policy
SO5 SO6 Core Add
Public policy positions and participation in public policy development and lobbying. Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country.

Aspect - Anti-competitive behavior
SO7 Add
Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes.

Y

Y

Y

Y

Aspect - Compliance
SO8 Core
Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations.

Y

Y

Y

Y

Social: Product Responsibility
Aspect - Customer health and safety
PR1 Core
Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures. Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes.

Y Y

Y Y

Y N

Y N

PR2

Add

Aspect - Product and service labelling
PR3 PR4 PR5 Core Add Add
Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements. Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes. Practices related to customer satisfaction, including results of surveys measuring customer satisfaction.

Y Y Y

Y Y Y

Y N Y

Y N Y

Aspect - Marketing communications
PR6 PR7 Core Add
Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship. Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes.

Y Y

Y Y

N N

N N

Aspect - Customer privacy
PR8 Add
Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data.

Y

Y

Y

Y

Aspect - Compliance
PR9 Core
Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services.

Y
# Core

Y
# Add 30 24 20 19

Y
# Total 79 72 60 59

Y
GRI Level A B B B

Report Level

Zone E Zone SA Zone I Corporate

Level A (Core 27 ) Level B (Core Indicators 27) Level B (Core Indicators 28) Level B ( Core Indicators 26)

49 48 40 40

84 Performance Indicators 2011-12

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