Apollo Making Billions in Zimbabwe – But Enjoying No Profits

You don’t have to look very far these days to encounter news about Zimbabwe. A steady stream of grim reportage and chilling images are fed through television, internet and print media, all conveying the same basic message that things aren’t what they should be in this troubled African nation. And in addition to the much talked about violence and political issues, conditions for business are, to put it mildly, dire.

Such has been the experience of Apollo Tyres, who acquired a manufacturing facility in Zimbabwe upon its purchase of South Africa based Dunlop Tyres International in April 2006. While its Zimbabwe facility continues to operate profitably, thanks to the country’s hyperinflation – estimated at the start of July to be nine million per cent – Apollo cannot repatriate any profits from Dunlop Tyres International in Zimbabwe or consolidate the operation’s accounts.

“Repatriation is not allowed and, with the value of Zimbabwe dollar at what it is, it is not even worthwhile for it to give dividend to the parent company,” commented Apollo Tyres chief of strategy Sunam Sarkar. “For us, it is like the plant is there and yet not there.” Sarkar adds, with dark humour, that Zimbabwe is probably the only place where all the company’s employees are trillionaires.”

In spite of this massive hindrance, production will continue as usual, its 30 tonne per day output close to maximum capacity. “Being the only tyre plant in the country, the government realises its importance and has provided it with the foreign exchange needed to import raw material,” Sakar says. “But we are not expanding there till the situation improves.”