Rolling Into Controversy—Goodyear India Faces Heat Over Missing Tyres

Image Source: Daily Excelsior

Goodyear India Ltd. has issued a material operational and financial update, stating that it has discovered the financial impact of a shortage of inventory in Q4 FY2024, which is possibly due to likely theft of tyres by employees, according to an exchange filing. The company's board is studying a full forensic report submitted by Ernst & Young LLP, which was hired on the issue.

The announcement comes in the backdrop of a broader strategic review of Goodyear India operations, particularly its farm tyre business, which has been under stress due to volume and profitability deterioration.

Key Developments

Inventory Shortfall Identified: An inventory shortfall on material magnitude has been established by Goodyear India in the Q4 FY2024 financials, impacting its bottom line.
Suspected Theft: Preliminary evidence points to the shortfall potentially being caused by unauthorized theft of tyres by certain employees.
EY Forensic Audit: Ernst & Young LLP was engaged to conduct an independent investigation. The report has been submitted and is under review by the board.
Board Oversight: The company's board of directors and audit committee are reviewing the findings and debating remedial actions.
Internal Controls Under Review: The incident prompted a review of Goodyear's inventory controls and security within its Ballabgarh factory.

Strategic Context

This follows as Goodyear's American parent is conducting a strategic review of its farm tyre operation in India which could result in a sale or restructuring. The Indian operation has been a pioneer in the agricultural tyres business but was weighed down by weakening tractor sales and rising input costs.

The company has reaffirmed its commitment to transparency and governance and stated that it will take "appropriate disciplinary and corrective actions" depending on the final evaluation of the board.

Sources: Goodyear India Annual Report FY2024-25, Business Standard, Devdiscourse, Financial Express, MarketScreener