The Hindu Business Line : Apollo Tyres aims to keep growth rolling in Q2

Kolkata, Aug. 14 Higher replacement sales and net realisation in the truck-bus segment, and rise in sale of passenger car tyres could help Apollo Tyres maintain its growth momentum in the July-September quarter.

The company, according to its Managing Director, Mr Neeraj R. S. Kanwar, has maintained 12-14 per cent growth in volume and 6-7 per cent in value in the heavy commercial vehicles tyre sales in the current quarter, despite nearly 20 per cent drop in original equipment sales in the segment vis-À-vis the corresponding period of last year. The truck-bus segment contributes to nearly 70 per cent of the company’s profits.

Apollo Tyres posted 80 per cent growth in profit before depreciation and tax against 10 per cent growth in turnover in the April-June quarter.

“Replacement sales are bullish primarily due to fall in Chinese imports from as high as 1.5 lakh to 5,000-10,000 tyres a month. The market realisation is also up, making us hopeful of maintaining the growth during the current quarter,” Mr Kanwar told Business Line.

He, however, pointed out that the recent rising trend in prices of natural rubber and crude oil (impacting the price of rubber chemicals) was causing concern. “We will consider price increase if the current trend in raw material cost continues for long,” he added.

Raw material price, as he informed, moved up 5-10 per cent during the quarter, compared to last year.

H2 may be difficult

Mr Kanwar said lower rainfall impacting agriculture might also affect the company’s growth in the second half of the year.

“The second half will be challenging. It is apprehended that the road movement of agricultural commodities will be on a low key, making it difficult for us to maintain the growth rate. However, we are confident of overcoming the challenge through better operational efficiency. We are also expecting growth in manufacturing and infrastructure sectors, compensating part of the loss that might be caused by lower road movement of farm products,” he added.

According to the Indian Foundation of Transport Research and Training, the cargo movement by road is down by 20-30 per cent due to lower movement of agri-commodities.

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