Apollo Tyres Maintains Prices

Despite the challenges presented by raw material price inflation, Apollo Tyres has no intention to increase its own prices during the current quarter, India’s Hindu Business Line has reported. “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,” Neeraj Kanwar, chief operating officer (COO), told the publication.

In the nine month period ended 31 December the company’s net profit margin declined to 2.49 per cent from a level of 3.05 per cent the previous year. “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,” Kanwar said. He expressed confidence that the net sales of the company would surpass 2.5 billion rupees (£30.4 million) in the current financial year.

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.

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.