The Hindu Business Line : Apollo Tyres hopes to post 18 pc growth in sales

IN line with its 18 per cent compounded annual growth rate (CAGR) in sales over the last five years, Apollo Tyres Ltd (ATL) hopes to close fiscal year 2003-04 with a net sales growth of about 18 per cent on a year-on-year basis.

For the year ended March 31, 2003, ATL had reported a net profit of Rs 120.02 crore on gross sales of Rs 2,025.62 crore.

"The net sales growth in fiscal year 2003-04 would approximately be about 18 per cent. While the sales are registering good growth, the profit margins have been under pressure. We expect the margins in the fourth quarter to be better than the previous quarters. It's too early to comment accurately on the bottomline," Mr Sunam Sarkar, Chief- Strategy and Business Operations and member of the Board of ATL, told Business Line here.

High natural rubber prices had impacted the bottomline of the company in the third quarter of fiscal 2003-04. In this quarter, ATL reported a 38.59 per cent decline in net profit at Rs 15.64 crore (Rs 25.47 crore).

For the nine-months period ended December 2003, the company reported a net profit of Rs 51.64 crore on sales and other income of Rs 1,692.44 crore. ATL had reported a net profit of Rs 74.44 crore on sales and other income of Rs 1,483.34 crore in the same period last year.

When asked if the company proposes to go in for one more round of price hike, Mr Sarkar said, "If costs of inputs (raw materials) were to move up significantly, then we have to do it."

He highlighted that there were four price increases of tyres in the last fiscal (2003-04). "We have been able to offset the complete cost push of last year through price increases. In the coming days also, we can undertake cost reductions and productivity improvements only up to a point. Beyond that if margins come under pressure due to raw material price increases, we have to increase prices," Mr Sarkar said.

Asked about the progress in the efforts being taken by ATL to acquire the tyre business of Modi Rubber, Mr Sarkar said that various aspects and issues including technical due diligence of the plant are being examined. "We have been in talks with the promoters of Modi Rubber. We have also approached the creditors of Modi Rubber for restructuring their debts as well as for settling of legal cases," he said.