INDIA’S largest tyre maker Apollo Tyres’s revenue in the first quarter grew by 55%. But the company says the continuing all-time high NR prices, along with sluggish growth in some major markets, had a dampening impact on its profitability. Meanwhile, Apollo will plant more rubber in Laos to meet the demand for NR.
While both India and Europe continue their growth path, of particular concern has been the South African economy, with its high cost of manufacturing and recurring wage negotiations. “With demand failing to pick up adequately combined with a growing influx of Chinese tyres, have together posed an enormous challenge to the domestic industry,” said Chairman Onkar S Kanwar.
He also said that in the largest market in India, the inability to raise prices in time is having an adverse impact on all Indian tyre manufacturers. Kanwar added, “Some of the players have already posted negative results and this will influence overall investments in the sector.” Europe continues to do well, despite high raw material prices.
In other news, Apollo has acquired 10,000 ha of land in Laos for rubber plantation. Kanwar said that the objective to acquire land abroad on lease is to meet 25% of the company’s requirement as security in the next five years.
The company has also proposed to invest Rs500 crore in the current financial year to augment its production capacity in India and abroad. Of this investment, EUR6 million will be invested in Europe, US$30 million in South Africa and the remaining in India.
The company will also invest Rs40 crore in its Perambra unit in Chalakkudy and facility in Kochi, he added. The rest will be utilised for capacity augmentation at the Chennai plant, which manufactures tyres for trucks and cars. He said the plant capacity would be enhanced to produce 6,000 tyres/day for trucks, compared to the current 3,000, and 16,000 cars tyres/day, compared to the 8,000 now. (PRA)
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