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.
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