With easing of raw material prices like natural rubber, improved pricing power, and revival of replacement market, Apollo Tyres is confident of carrying forward its strong performance in the April-June quarter and close the current fiscal with a ‘robust topline growth’. Neeraj Kanwar, vice chairman and managing director, Apollo Tyres, told FE that the company commands leadership position in passenger vehicle (PV) tyre and commercial vehicle (CV) tyre segments in the domestic market. He added that demand in overseas markets is healthy.
Analysts see the demand outlook for tyre companies to be robust and volumes to get a boost in the current fiscal due to recovery in the domestic original equipment manufacturers (OEMs) and the replacement segments. The easing of the semiconductor shortage would lead to an improvement in OEM sales and which in turn would revive replacement demand for tyre companies in the second half of the fiscal.
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Kanwar said that the company has a 20-21% market share in the PV segment, and more than 30% in the CV category. It supplies tyres to PV manufacturers like Maruti Suzuki India, Hyundai Motor India, Tata Motors, Mahindra & Mahindra, Kia India and Toyota Kirloskar Motor. Its CV clients include Tata Motors, Mahindra & Mahindra, Ashok Leyland and VECV.
“Despite being a late entrant in the two/three-wheeler category, we now command a good share of the market, especially in the high end of the two-wheeler segment,” Kanwar added. The company mainly caters to the replacement market in the two-wheeler space at present. The company has not committed to any significant expansion plan yet. “We are conscious of the volatile business environment and are first, looking at sweating our assets. The focus is on controlling costs, judicious use of capex and having healthy cash flows,” he said.
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On raw material prices, Kanwar said, “Considering the volatile scenario, we are having a tight control on costs, have enriched our product mix, and taking timely pricing actions across markets, which is helping us”.With the electric vehicle (EV) sales rising every month, Apollo Tyres sees a huge opportunity in this space and recently introduced tyres specifically for electric passenger vehicles and electric two-wheelers.
“There is enough happening in the EV segment towards creating products with lower rolling resistance, increased traction and one which helps extend the battery range of the vehicle. With so much data that is available when the tyres are in contact with the roads, the R&D team is working towards capturing that data by developing smart or intelligent tyres,” Kanwar said.
On a year-on-year (y-o-y) basis, Apollo Tyre’s revenue from operations jumped 29.61% to Rs 5,942 crore in the quarter ended June, while the consolidated net profit increased 49.21% to Rs 190.68 crore.
Among the rival companies, MRF’s revenue rose 36.14% y-o-y to Rs 5,695.93 crore, while profit fell 25.35% y-o-y to Rs 123.60 crore in the same period. JK Tyre & Industries recorded a 39.66% y-o-y jump in revenue to Rs 3,643.03 crore, but the net profit slipped 20.41% y-o-y to Rs 35.13 crore. Ceat’s revenue also jumped 47.84% y-o-y to `2,818.38 crore but net profit declined 62.34% y-o-y to Rs 8.68 crore.