The Hindu Business Line : Apollo Tyres hikes non-truck tyre prices

THE Rs 2,300-crore Apollo Tyres Ltd (ATL) has increased the prices on its entire range of non-truck tyres by an average 2.5 per cent, a senior company official said. Plans are afoot to increase the prices of truck and bus tyres by about 2-3 per cent from June 26.

The latest price hike is the first for the company this fiscal. Last fiscal, the company had increased the prices four times to offset the impact of the rise in raw material prices.

Rising natural rubber prices and general increase in prices of petroleum-based inputs have been impacting the operating margins of tyre companies.

Spot market rates of RSS 4 ruled at Rs 66.50 per kg on Tuesday.

ATL had, on December 22, 2003, effected a 3-4 per cent increase in the prices of its non-truck tyres — passenger car tyres, light commercial vehicle tyres and farm tyres. The company had last increased the prices of its commercial truck and bus tyres in January 2004, when the prices were increased by up to 3 per cent.

Although the prices of RSS4 have been ruling between Rs 65 and Rs 70 per kg in the recent days, ATL sees some comfort in the softening trend in international prices of rubber.

"At the current domestic price levels (Rs 67-Rs 70), it would be cheaper for us to go in for imports. With the recent softening of international prices, the landed cost of imported rubber is lower than the prevailing domestic price," Mr Sunam Sarkar, Chief (Strategy and Business Operations) and a member of the ATL board, told Business Line here.

Mr Sarkar held that the latest price increase would cover natural rubber price increase up to Rs 65 per kg.

ATL had reported a 41.33 per cent decline in net profit for the year ended March 31, 2004, at Rs 70.42 crore as against a net profit of Rs 120.02 crore (including an exceptional income of Rs 16.62 crore) in the same period the previous year. Gross sales for the year ended March 31, 2004, increased by 14.25 per cent to Rs 2,314.31 crore (Rs 2,025.62 crore).

The increase in raw material prices had impacted the bottomline of the company last year; raw materials consumed, as a percentage of gross sales, had increased from about 45.32 per cent in 2002-03 to 51.55 per cent in 2003-04.

The total value of raw materials consumed in 2003-04 stood at Rs 1,193.16 crore (Rs 917.99 crore).