Apollo profits fall on higher NR costs

ERJ staff report (DS)

Gurgaon, India - Apollo Tyres has reported sharply lower profits on higher sales for the three months ended 30 Sept, 2010. The company blamed record high prices of natural rubber, which have impacted profitability at its Indian operations.

For the three month period, net sales reached Rs 19.49 billion (euro 319.7 million) from Rs 20.46 billion in the same quarter a year ago. Operating profits fell to Rs 1860 million (euro 30.51 million) from Rs 2900 million.

Commenting on the results, Onkar S Kanwar, Chairman, Apollo Tyres Ltd, said, “It's been a very difficult 6 months managing the unprecedented rise in natural rubber prices. Unfortunately even when international natural rubber prices were significantly lower than Indian prices, we were unable to import in large quantities due to the duty policy of the government.”

He continued, “Natural rubber constitutes 60 percent of our raw material costs, and if I look at the November to November period, natural rubber was at Rs 76/kg in November 2008, Rs 113 in November 2009 (a 14 percent rise) and is at Rs 192 now -- an increase of nearly 70 percent in a single year and 150 percent in 2 years! This has affected all aspects of our operation.”

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