The Hindu Business Line : Apollo Tyres not to hike prices this quarter

THE challenging times on the raw material prices front notwithstanding, the Rs 2,300-crore Apollo Tyres has no intentions to go in for a price hike in its finished products during the current quarter.

"I am not looking at this quarter for price increase. There are too many things happening in the market (budget, VAT etc) that have to be factored in before taking any decision," Mr Neeraj Kanwar, Chief Operating Officer (COO), ATL, told Business Line.

Net profit as a percentage of net sales (net profit margin) for the nine-month period ended December 31, 2004 declined to 2.49 per cent from a level of 3.05 per cent for the nine-month period ended December 31,2003. "The net profit margins are under some pressure, but we will try to get to the net profit margin level (3.05 per cent) achieved last fiscal. It will be a big challenge," Mr Kanwar said. He expressed confidence that the net sales of the company would surpass the Rs 2,500-crore in the current fiscal.

Besides the Union Budget in February, Mr Kanwar pointed out that the proposed introduction of State-level value-added tax (VAT) regime from April 1,2005 would have significant ramifications for the tyre manufacturers as well as the tyres dealers.

Mr Neeraj Kanwar is pinning hope on the possibility of the Government doing away with the 8 per cent special excise duty (SED) levied on tyres sold to the replacement market in the forthcoming budget. "It is important for the excise duty to come to a level of 16 per cent from the current level of 24 per cent. We are hoping that the 8 per cent SED would go in this Budget. We have achieved a higher share in the replacement market for commercial vehicle tyres despite a decline in the size of the replacement market for such tyres in the current fiscal," he said.

On the issue of higher interest outgo for the nine-month period under consideration at Rs 32.61 crore (Rs 14.95 crore), Mr Kanwar said that this was "partly due to the heavy investments (Rs 270 crore) that has gone into creation of facility for manufacture of passenger car radials and commencement of production from the facilities created". He, however, sees the interest burden to generally come down in the next few months.

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