Apollo Reports Strong Q1 Financials

On July 25 the board of directors at Apollo Tyres reported the company’s unaudited results for the first quarter of the 2007-08 financial year, and also named August 27 as the date in which Rs 10 equity shares will be split into ten equity shares valued at Rs 1 each.

First quarter (April to June) net sales closed at Rs 11.5 billion (£138.6 million), an increase of 22 per cent on the previous year’s Rs 9.4 billion (£113.3 million). Net profit was recorded as Rs 546.4 million (£6.6 million), an impressive 369 per cent jump on the Rs 116.5 million (£1.4 million) obtained during the first quarter of 2006-07. Apollo attributes this significant profit growth to stabilising prices in major raw materials such as natural rubber, crude and steel, plus an improvement in key operating efficiencies, including wage cost, interest and depreciation.

The tyremaker further reported that all major product categories experienced substantial growth both in India and South Africa. The highest growth areas were 35 per cent for truck and bus radials in South Africa and 23 per cent for car radials in India.

Commenting on the results, Mr Onkar S Kanwar, chairman & managing director, Apollo Tyres Ltd, said: “Consistent sales growth, along with stability in global raw material prices, has helped us improve our profitability. The integration of our South African operations is complete, and the synergy benefits are accruing, as visible in the financials. However, the profitability of the tyre industry as a whole continues to remain well below that of other related industries like auto and auto ancillaries. This must change for the industry to be globally competitive, by investing in new technology and higher capacity.”

While addressing the Annual General Meeting of shareholders on a prior occasion, Mr Kanwar spoke of the challenges facing Apollo Tyres in its quest to become a global player. In particular he touched on the need to combat low-cost imports coming into India, making reference to recent events in other parts of the world. “India promises to take only our best to the global marketplace,” he said. “Given that, it is only fair that products imported into India also adhere to standards of safety. Regrettably, many imported tyres do not and the consequential safety issues are now coming to light globally. I do hope, in the long run, Indian customers will choose product and service quality over a lower price and not make the same mistakes that others are now struggling to correct.”