“We will invest Rs. 2,000 crores in the next three years, including Euro 200 million, for our upcoming plant in Hungary,” Apollo Tyres Chief of India Operations Satish Sharma told newsmen recently.
He said the company would invest around Rs. 1,350 crores for the facility in Hungary for which it bought about 45 hectares of land earlier this year. The Hungary plant would be the company’s service hub for its passenger car radial tyre buyers in Europe, North America as well as other countries.
The company is also augmenting the passenger car tyre production capacity at the Vadodara unit from the existing 10,000 tyres to 15,000 tyres a day by mid-2009. The truck-bus radial tyre manufacturing capacity there would be raised four-fold from the present 300 tyres to about 1,100 tyres a day.
Mr. Sharma said the Vadodara plant would also manufacture off-the-road tyres for which the company has entered into a tripartite pact with construction equipment maker BEML and Coal India. Part of the investment would also go for setting up a production unit in Chennai with a capacity of 20,000 tyres a day. This too would be achieved by mid-2009.
Meanwhile, Apollo is also planning to provide after-sales support for its truck and bus tyres. With the increasing radialisation in commercial vehicle tyres, it is setting up a chain of wheel balancing and aligning centres called ‘Trust’. It is opening its first such centre in Salem in Tamil Nadu, and would later extend the chain to other cities.
Net sales of Apollo Tyres Ltd. for 2007-08 (April-March) grew by nine per cent to Rs. 46.9 billion from Rs. 43 billion in the previous year. Operating profit moved up by 50 per cent to Rs. 6.1 billion from Rs. 4.1 billion, and net profit jumped to Rs. 2.7 billion from the previous year’s Rs. 1.2 billion, registering an impressive growth of 125 per cent.
Commenting on the results, Mr. Onkar S. Kanwar, Chairman & Managing Director, Apollo Tyres Ltd., said: “It’s been a year of consolidation and of planning which will result in numerous expansion projects being launched this year. This year will be Apollo’s year of unprecedented investments across our operations in India, South Africa and Europe. Given this, the improvement in our profitability ratios is heartening, but tough times stare us in the face with all-time highs in prices of almost all our raw materials, inflation and the spectre of a global slowdown.”
The company teams in both India and South Africa have done an excellent job in selling higher value products, while at the same time improving processes and efficiencies across the value chain. “Apollo Tyres is today well poised to further capitalise on the opportunities around us”, he added.
Annual corporate highlights include establishment of branded retail outlets for passenger car vehicles, ‘Apollo Radial World’ in India and ‘Dunlop Zone’ in South Africa, announcement of a greenfield passenger car tyre manufacturing facility in Hungary, commencement of work on a brownfield off-the-road tyre facility at Limda in Gujarat, and a 139 per cent growth in volumes of Apollo’s retreading material, DuraTread.
Given the company’s performance under Mr. Neeraj R.S. Kanwar, Joint Managing Director and COO, the Board of Apollo Tyres took an unanimous decision to elevate him to be the Vice-Chairman for the next five years.
The last quarter of the financial year saw a worsening raw material situation, with crude and raw material prices rising sharply. At the beginning of the quarter, crude was around $90 a barrel, while by the quarter end it had crossed $113 a barrel. At the same time, rubber price moved up from Rs. 92 kg to Rs. 116 a kg.
Going forward, there might be no alternative to product price increases as it would be impossible to absorb a cost push of this magnitude. Raw materials account for about 70 per cent of the selling price of a tyre.
