A sharp fall in cost of raw materials consumed during the quarter, largely to due to tumbling rubber prices, has helped Apollo Tyres post a 27% rise in its net profit for the quarter ended June 2015 at Rs. 291 crore.
Input costs fell by almost 28% year on year to Rs 1,273.33 crore. As a result, the company’s total expenditure during the quarter also fell 16.5% to Rs. 2,431.41 crore.
The pressure of cheap tyre imports from China and slowing domestic demand hit the company’s net sales as they fell 12.4% in the quarter to Rs 2,832.24 crore, which resulted in a lower total income for the tyremaker at Rs. 2,845.35 crore.
“While the European operations reported flat revenue growth in the quarter under consideration, the increasing imports of commercial vehicle tyres, into the country, adversely impacted the Indian operations’ revenue. More than 30% of the demand for truck-bus radials from the replacement market in India is being met by these imported tyres, which are mostly from China,” said a company release.
Commenting on the April-June results, Onkar S Kanwar, chairman, Apollo Tyres said, “In a slow-growth market across geographies, further marred by unregulated imports of tyres in India, we have planned and invested to capitalise on the future opportunities. This strategic planning will reduce our dependence on a particular market for growth and help us expand our global footprint.”
Also read: Apollo Tyres forecasts FY2016 to be challenging, plans to expand global footprint