The Hindu Business Line : Higher product prices drive up Apollo Tyres net

New Delhi, May 9 Apollo Tyres has posted a net profit of Rs 59.2 crore (Rs 42.7 crore) for the fourth quarter ended March 31, 2008, an increase of 38 per cent. Net sales at Rs 1,001.3 crore (Rs 910.2 crore) were up 10 per cent.

For the full year, net profit rose 93.38 per cent to Rs 219.3 crore against Rs 113.4 crore. Net sales increased 12.19 per cent to Rs 3,693.9 crore (Rs 3,292.3 crore).

The company cited the increased tyre prices announced last year as the key reason in reflecting higher profitability during the FY 2007-08. The board has recommended a dividend payout of 50 per cent.

Tough times ahead

“This year will be Apollo’s year of unprecedented investments across our operations in India. Given this, the improvement in our profitability ratios is heartening, but tough times stare us in the face with all-time highs in almost all our raw materials, inflation and the spectre of a global slowdown.” Mr Onkar S Kanwar, Chairman & Managing Director, Apollo Tyres Ltd, said in a statement.

The company’s Chief of Marketing and Corporate Strategy, Mr Sunam Sarkar, explained: “About 18 months back when the raw material prices shot up, we increased the tyre prices by about 10-12 per cent. So the impact of the increase has reflected in our profitability during the year.”

Commenting on the specific segment which accrued increased sales volumes and higher profitability, he said, “We have grown across the board with our sales volumes rising the car tyres and commercial vehicle.”

Replacement market

Apollo commands close to 20 per cent of the domestic replacement market in cars and around 35 per cent in case of trucks. With strong sales in the replacement market, the company garners 75 per cent of its revenues through this segment and the remaining is supplied to the vehicle manufacturers and sold in the domestic market.

This fiscal, Apollo plans to set up 50 retail outlets over the year to strengthen its after-market sales in the country.

The company has announced a capex of Rs 1,000 crore for the fiscal which would be mainly for its facilities in Gujarat where it would be making off-the- road tyres, and for a greenfield unit each in Tamil Nadu and in Hungary.