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Apollo Tyres Q1 margins under pressure due to increase in raw material prices

Apollo Tyres has reported a profit for the quarter ending June 30, 2017, on a consolidated level, of Rs 88 crores on the net sales of Rs 3258 crores. While Indian operations grew marginally to close at Rs 2284 crores, European operations clocked a revenue of Rs 1016 crores on the back of good volume growth in the passenger vehicle segment. Q1 revenue in India was subdued because of the pre-GST destocking by the company’s business partners, and due to the confusion over the switch over from BS III to BS IV emission norms in commercial vehicles.

Onkar S Kanwar, chairman, Apollo Tyres, said, “The results reflect the impact of the rising raw material prices on our operations. Raw material prices as a basket has jumped more than 30% in the first quarter, as compared to the same period last year, and has negatively impacted our margins.

“While, rubber prices have softened to some extent, other raw materials are still on a higher side, which is likely to put our margins under pressure going forward as well. Considering this, we may need to make price adjustments.

“The silver lining for us, is the robust demand from the OEMs and the growing vehicle sales in India, both passenger and commercial, post GST implementation. The recommendation by the Directorate General of Anti Dumping (DGAD) in India to impose anti dumping duty on truck-bus radials from China, has vindicated our stand on the same, and which, once implemented, would be a boost for us in India.

“In Europe, the increased sales reported by most of the vehicle manufacturers in the first half of the calendar year, would also prove to be a positive for us going forward.”

August 10, 2017

Written by Rachel Evans


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