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Investigation reveals coordinated theft by contractors and employees through bulk pilferage and excess loading schemes

Goodyear India Limited disclosed that a comprehensive investigation by Ernst & Young uncovered a sophisticated theft operation at its Ballabgarh manufacturing plant, resulting in the loss of 4,571 tyres valued at approximately INR 39.11 million.

The tyre manufacturer’s board reviewed the investigative findings during a meeting that concluded last week, revealing what the company described as “potential theft of tyres in bulk by contractual workers involved in security, warehousing and loading operations, acting in collusion.”

Dual Theft Operations Exposed

The Ernst & Young investigation, spanning October 2023 to November 2024, identified two primary theft methods that enabled the systematic pilferage of farm tyres from the Faridabad-based facility.

Bulk Theft Scheme: The more significant operation involved truckloads of tyres being removed from the plant through coordination between third-party loading supervisors, warehouse workers, security guards, and external accomplices. Electronic communications reviewed by investigators revealed references to 4,057 tyres across 20 dates between July and December 2024, with detailed SKU counts discussed among the conspirators.

Security records were deliberately manipulated to conceal the theft, with one security contractor admitting to accepting kickbacks from a loading supervisor to avoid recording truck details carrying stolen merchandise.

Excess Loading Operation: A secondary scheme involved loading additional tyres beyond invoiced quantities onto legitimate shipments, with the excess stolen during transit. The investigation revealed a significant increase in overweight dispatches during the July-November 2024 period, with 50 per cent of overweight trucks dispatched during this timeframe, compared to historical patterns.

Quality assurance protocols were compromised, with one employee admitting to receiving instructions from a third-party warehouse vendor to disregard overweight trucks and dispatch them without conducting mandatory quality studies. The employee estimated that 5-6 excess tyres were loaded per truck in select shipments to Goodyear warehouses.

Quality Control Manipulation

The investigation also uncovered systematic inflation of tyre rejection quantities during pre-dispatch inspections. A quality assurance employee acknowledged receiving kickbacks to artificially inflate rejected tyre counts in daily reports, despite no physical rejections having occurred, allegedly to help manage inventory shortfalls maintained by the third-party warehouse vendor.

Data analysis revealed an increase in rejection rates in 2024 compared to 2023, with the manipulation involving collusion between employees and third-party quality inspectors.

Operational Control Gaps

Beyond the theft schemes, Ernst & Young identified significant weaknesses in Goodyear’s inventory management and production processes. The manual production handover system lacked proper verification, with multiple employees admitting that the defined processes weren’t followed.

Production records maintained manually revealed discrepancies, with multiple spreadsheets containing different production numbers for the same periods. The investigation found that production during shutdown periods wasn’t recorded in the Production Management Information System, creating variances that couldn’t be validated due to unreliable manual records.

Financial Impact and Response

The financial impact of the inventory shortage identified in November 2024 was already recognised in Goodyear India’s financial statements for the quarter ended 31 December 2024. “The management has taken cognisance of the findings and initiated appropriate legal and disciplinary actions against those involved,” the company stated in its regulatory filing. “Proactive measures, including a site security assessment and tightened controls, have been implemented.”

Investigation Methodology

Ernst & Young’s fact-finding review employed comprehensive investigative techniques, including data analytics, transaction testing, background checks on suspected third parties, forensic imaging of electronic devices, and interviews with employees and contractual workers.

The investigation covered electronically stored information from the laptops and server backups of suspected individuals, utilising keyword-based searches to identify suspicious communications that proved crucial in establishing the theft patterns.

Regulatory Compliance

The disclosure fulfils Goodyear India’s obligations under Regulation 30 of the Securities and Exchange Board of India’s Listing Obligations and Disclosure Requirements Regulations, 2015. The company initially informed stock exchanges of the inventory variance on 12 February 2025.

“The Company remains committed to upholding the highest standards of corporate governance and safeguarding stakeholder interests,” Goodyear India stated in its filing.

Tyre maker faces headwinds from low-cost imports but exceeds transformation goals

Goodyear Tire & Rubber reported an adjusted net loss for the second quarter, citing challenges from global trade shifts and a surge of low-cost imports across key markets. However, asset sales helped boost overall revenue.

The Akron, Ohio-based tyre maker posted an adjusted net loss of USD 48 million, or 17 cents per share, compared with adjusted net income of USD 48 million, or 17 cents per share, in the same period last year.

Net sales for the quarter totalled USD 4.5 billion with tyre unit volumes of 37.9 million. The company reported net income of USD 254 million, or 87 cents per share, compared with USD 79 million, or 28 cents per share, a year earlier, boosted by significant one-off gains.

“The second quarter proved challenging in both our consumer and commercial businesses, driven by industry disruption stemming from shifts in global trade - including a surge of low-cost imports across our key markets,” said Chief Executive Mark Stewart.

The results included a pre-tax gain of USD 385 million from the sale of the Dunlop brand to Sumitomo Rubber Industries in May, alongside rationalisation charges of USD 59 million and USD 5 million in transformation costs.

Segment operating income fell to USD 159 million from USD 334 million a year ago. After adjusting for the February sale of its off-the-road tyre business, segment operating income declined by USD 152 million, primarily due to higher raw material costs.

The company’s Americas division, its largest segment, saw net sales drop 1.3 percent to USD 2.7 billion with tyre unit volumes down 2.6 percent. Segment operating income fell to USD 141 million from USD 241 million the previous year, hurt by higher raw material costs and inflation.

In Europe, Middle East and Africa, the company posted a segment operating loss of USD 25 million compared with income of USD 30 million last year, despite net sales rising 5.1 percent to USD 1.3 billion.

Asia Pacific recorded the steepest decline, with net sales falling 22.7 percent to USD 459 million and tyre unit volumes dropping 15.6 percent, affected by the OTR business divestiture and actions to reduce lower-margin business outside China.

Stewart expressed confidence about prospects, stating: “We expect conditions to stabilise in the coming quarters, and we see a clear opportunity ahead as we capitalise on our strong U.S. manufacturing footprint.”

The company continues to execute its “Goodyear Forward” transformation plan, reporting USD 195 million in benefits during the quarter. The programme has generated USD 905 million from the February sale of its OTR business to Yokohama Rubber and USD 735 million from the Dunlop brand sale.

Goodyear has also agreed to sell the majority of its chemical business to an affiliate of Gemspring Capital Management for an undisclosed sum, with the transaction expected to close in late 2025.

“We continue to expect to exceed the original goals for Goodyear Forward both in terms of cost savings and proceeds from asset sales,” Stewart added.

Goodyear celebrated the 100th anniversary of Goodyear Blimp with an unforgettable milestone – hosting the world’s first high-altitude Pokémon battle aboard the iconic Wingfoot Three blimp, soaring 1,000 feet above Los Angeles.

Partnering with GameStop, the event featured popular YouTuber Casey Neistat battling on ModRetro’s Chromatic handheld, a retro-inspired console developed by Oculus VR founder Palmer Luckey. Joining as special guest trainers were Luckey himself, ModRetro CEO Torin Herndon and GameStop’s Head of Social Media, Joe Fonicello.

The historic clash blended gaming, aviation and pop culture, with highlights shared across social media afterward. As part of Goodyear Blimp’s yearlong centennial festivities – officially recognised on 3 June 2025 – the event showcased the brand’s legacy of innovation. Fans can expect more thrilling collaborations and aerial spectacles as the anniversary celebrations continue, reinforcing Goodyear’s enduring influence in both technology and entertainment.

Indian tyre maker sees steady growth despite European challenges

Apollo Tyres reported a four percent increase in first-quarter revenue to INR 65.61 billion, driven by steady growth in its Indian operations whilst European divisions faced challenging market conditions.

The Gurugram-based tyre manufacturer said consolidated revenue for the three months ended 30 June rose from INR 63.35 billion in the same period last year. However, operating profit declined to INR 8.68 billion from INR 9.09 billion.

Net profit jumped to INR 3.81 billion from INR 3.02 billion the previous year, excluding an exceptional restructuring cost of INR 3.69 billion that the company disclosed separately.

The results come as India’s tyre industry navigates mixed demand patterns, with the aftermarket segment showing particular strength whilst original equipment manufacturers face varied demand from automobile producers.

“This quarter’s results reflect solid execution and a focus on profitable growth,” said Onkar Kanwar, chairman of Apollo Tyres. “It’s encouraging to see Indian Operations performing in line with expectations -- driven particularly by strong momentum in the aftermarket segment.”

Kanwar said the quarterly performance demonstrated “the resilience of our business model and our ability to create long-term value for shareholders.”

The European operations faced what the company described as traditionally one of their seasonally weaker quarters, though management said performance was solid given challenging market conditions across the region.

Germany's rubber industry faces growing challenges due to high energy costs, threatening its long-term competitiveness. The German Rubber Industry Association (wdk), alongside other mid-sized industrial sectors within the ‘Alliance for a Fair Energy Transition’, is pushing for immediate government action to introduce a competitive production electricity price. This measure aims to stabilise energy expenses and protect domestic manufacturers from losing ground in global markets.

Current relief policies disproportionately favour large-scale consumers, leaving small and medium-sized enterprises at a disadvantage with higher electricity rates. The wdk emphasises that an effective industrial electricity price must include cost caps, broader eligibility criteria and simplified access – addressing existing shortcomings where support has been insufficient, overly complex and burdened by bureaucracy.

Separately, the association highlights the need for a distinct decarbonisation electricity price to support industrial transformation toward climate-neutral production. This initiative should extend to more businesses, ensuring long-term investment security in electrification projects spanning at least a decade.

However, European Commission regulations, particularly the CISAF framework, currently limit national flexibility in implementing such relief measures. The wdk urges the German government to advocate for reduced bureaucratic hurdles, faster approvals and expanded EU aid frameworks to enable timely support for energy-intensive industries. Without swift intervention, the sector warns of irreversible damage to regional economic stability.