S. Africa closure impacts Apollo annual results

Gurgaon, India - Apollo Tyres Ltd has posted a net sales of 127 billion rupees (€1.6 billion) in the full fiscal year between April 2014 and March 2015, down over 4 percent from 134 billion rupees the previous year.

In a statement on 12 May, the Indian company’s CEO Onkar Kanwar said that the closure of its plant in South Africa as well as currency factors had the highest impact on the company results.

“Despite a healthy volume growth in the passenger car tire segment in Europe, and nearly 30-percent volume growth in the truck-bus radial segment in India, our topline has not grown, primarily due to the South African operations, and also because of the depreciation of Euro,” said Kanwar.

Apollo closed its truck and OTR tire plant in Durban, South Africa, in November 2014, citing the factory’s uncompetitive cost structure and continuous labour unrest as primary reasons.

Kanwar added that Apollo’s efforts towards faster market expansion outside of India had resulted in a strong growth of more than 20 percent in exports out of India.

“The recent increase in import duty of natural rubber from 20 percent to 25 percent in India, will be a challenge going forward,” said Kanwar, who predicted that the duty would lead to a rise in import of cheap tires into the country.

This, he said, will hinder the growth of capacity investments by the domestic tire industry, in addition to making Apollo uncompetitive.

Apollo’s break-up of revenues across geographies showed India contributed for 65 percent of sales while Europe 28 percent and other geographies had a 7-percent share.

The company also introduced its passenger car and commercial vehicle tires in two Middle Eastern countries of Oman and Lebanon in the previous year.