Apollo at the “Cusp of a New Dawn”, states Onkar Kanwar

The 2009-10 financial year was, for Apollo Tyres, a year in which the company “walked new geographies, met different people, mingled with various cultures, learnt new lessons, and have been amply rewarded for our keenness to explore newer pastures and challenges.” These words from company chairman Onkar S Kanwar describe a period of massive change for the tyre maker, a time of transition that has seen Apollo emerge as an entity operating on a global level.

“Your company closed the year with consolidated revenues of Rs 81 billion (£1.11 billion), a phenomenal growth of 63 per cent, and a net profit which is four-and-a-half times over the previous year’s performance,” Kanwar told shareholders at the company’s 37th Annual General Meeting, which was held on July 29. “Given this accomplishment, your Board of Directors have proudly approved a dividend payout of 75 per cent – the highest your Company has ever announced since it was registered right here in Kerala.”

During the first quarter of the current financial year Apollo’s net sales amounted to Rs 18.2 billion (£249.7 million), a year-on-year growth of 11 per cent. The company’s European operations contributed Rs 4.4 billion (£60.4 million) towards this total, while India and South African sales were Rs 11.2 billion (£153.7 million) and Rs 2.66 billion (£35.7 million) respectively. Operating profit, at Rs 2.02 billion (£27.7 million), was slightly down compared with the first quarter of the previous financial year, net profit rose 0.5 per cent to Rs 742 million (£10.2 million).

“Five years ago, 100 per cent of our revenues came out of India,” Kanwar commented. “Today India accounts for 62 per cent, while Europe brings in 24 per cent and Africa the rest. Five years ago, 70 per cent of your company’s revenue was derived out of the truck-bus category. Today it contributes 47 per cent, while in keeping with global trends the passenger vehicle segment accounts for 33 per cent.”

Speaking on Apollo’s current activities, Kanwar referred to the capacity increase being implemented at the Apollo Vredestein plant in Enschede, the Netherlands at a cost of 6.6 million euros; this work will raise capacity from the 5.1 million to 6 million tyres a year. He added that the company will be “absorbing investments of US$30 million” for expansion and equipment upgrading in the Apollo Tyres South Africa Durban and Ladysmith plants. Furthermore, said Kanwar, the Chennai Greenfield project in India that began production in the previous quarter is expected to be completed by the end of the year. Apollo’s Board has already sanctioned a further Rs 3 billion (£41.2 million) investment in the site, bringing the total to Rs 23 billion (£315.6 million).

“We are at the cusp of a new dawn,” Kanwar told Apollo’s shareholders. “A transition in the creation of an institution called Apollo Tyres. The journey began in the year 2005, when we set ourselves a strategic direction to achieve a turnover of US$2 billion by March 2011. This year itself, we are at $1.7 billion. I am happy to say that there is no doubt in my mind that when we meet next year it will be as proud members of a $2 billion company.

“Together we must maximise on the opportunities evolving out of the global and domestic economy,” Onkar Kanwar concluded. “As your company journeys across the world, I am reminded of the saying ‘The world is a book’. At Apollo we endeavour to bring to you the many chapters, flavours and learnings from this book, as we negotiate our way through it.”