May also expand capacity of Holland unit
With its newly commissioned Chennai facility on course to operate at the terminal capacity, Apollo Tyres Ltd is expecting to double the export of Apollo branded tyres to 100,000 pieces a month, to Europe, in a little over six months.
Plans are also afoot to stretch the production of the Netherlands based Apollo Vredestein to 6.5 million tyres a year – over and above the expanded rated capacity of 6 million pieces.
“With higher capacity in place, our exports to Europe are increasing steadily and have touched 50,000 tyres a month this quarter. We are hopeful to push the exports to 1,00,000 tyres a month, tentatively in the first quarter of 2012,” the Apollo Tyres Vice-Chairman and Managing Director, Mr Neeraj Kanwar, told Business Line.
With an EBIT (earnings before interest and tax) of 10 per cent, the European business was a major contributor to Apollo's consolidated profit of Rs 78 crore (Rs 53 crore) during the July-September 2011 quarter. According to the company, the early rush for winter tyres was a major reason behind the improved performance in Europe in the last quarter.
‘Q3 will be better'
Responding to queries on the European sales and margins in the second half of this fiscal, Mr Kanwar said that the demand for winter tyres was also going strong in the current quarter. “We will to do better both in terms of overseas sales and margin in the third quarter and fourth quarters of this fiscal.” Interestingly, while the declining rupee has improved the margin on exports, an adverse forex rate has nearly wiped out the benefits of decline in prices of imported rubber and rubber chemicals.
The company, however, is hopeful to do better on the domestic front, primarily riding on truck-bus tyre sales, in the current quarter.
“Overall, Apollo will post reasonably higher growth than the industry as a whole in the third and fourth quarters,” he said, adding that the industry is expected to record single-digit growth in the current quarter.