Apollo says 2009 to be 'most challenging year'

ERJ staff report (DS)

Kochi, India -- reporting first quarter results at Apollo Tyre's AGM, Onkar S Kanwar, Chairman & Managing Director, said: “These are probably one of the most challenging times we have faced as a company. The unnatural rise in crude and natural rubber prices, have had a cascading impact across all raw materials. Combined with prices, which are two or three times higher than they were last year, we are facing the added problem of certain essential crude-based raw materials being unavailable even at higher prices. Merely by increasing product prices we will not be able to bridge this yawning gap. The only solution is to look internally, undertaking rigorous efficiency and economy drives across the organisation. That's the silver lining. I believe this frugality will only strengthen the company in the long run.”

Kanwar noted that oil prices rose by 118 percent, natural rubber by 62 percent, and rubber chemicals by 30 percent. He said the Indian tyre industry's input costs rose by 30 percent in the last year.

Kanwar said Apollo's plan to build a green field tyre factory in Hungary is progressing through regulatory approval, while the new factory in India's Tamil Nadu is in the construction phase.

The company reported its results for the three months ended June 2008. Consolidated revenue was Rs 13.2 billion (Euro 194 million) up 15% from Rs 11.5 billion a year ago. Consolidated net profit after tax was Rs 586.6 million up 7.3% from Rs 546.4 million. Standalone India Operations revenue stood at Rs 10.7 billion up 23% from Rs 8.7 billion. Standalone India Operations net profit after tax at Rs 486.3 million up 4% from Rs 467.6 mn. Sharp rise in prices of raw materials precipitated price corrections across products

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