New Delhi: Apollo Tyres expects a 11% growth in domestic sales in 2009-10, helped by reviving demand from increased economic activity, and sees margins maintained at current levels, its finance chief said.
The tyre maker would hike production to a daily 1,000 tonnes from the current 800 tonnes a day, as expanded capacities came on board, chief financial officer Sunam Sarkar said in an interview on Thursday.
Tyre makers have been cheered by signs of recovery in the economy, including rising auto sales and improved freight movement and by easing raw material prices, after a bad 2008-09.
Last week, JK Tyre & Industries Ltd reported a doubling of quarterly profit and said it was optimistic on future demand and profitability.
“Demand growth remains reasonably strong, so we’re quite upbeat on that front. Raw materials will put some pressure,” Sarkar said over the telephone, after the firm reported a 95% rise in June-quarter profit.
“We hope we’ll continue with the efficiencies we’ve been able to squeeze out and continue with similar margins for the rest of the year.”
Apollo currently has an operating margin of 16.5% and a net margin of 8%. In the fiscal year to March 2009, it had reported India sales of Rs40.7 billion.
Sarkar also said he saw consolidated sales, which include financial of the firm’s South African and Dutch operations, rising an annual 20% from Rs49.84 billion a year ago.
Apollo said its India operations’ profit rose to Rs946.7 million in the first fiscal quarter from Rs486.3 million a year ago, helped by reduced high-cost inventory.
Sales rose 9.7% percent to Rs11.80 billion.
The firm’s new plant in Chennai would begin commercial production by March, and expansion at its Baroda plant was on schedule, Sarkar added.
Shares in the firm, which the market values at around Rs19 billion, had risen 69% in April-June quarter, outpacing the broader market’s 50% rally.
By 2:13 pm, the shares were trading 2% lower at Rs37.25 in a Mumbai market that was up 1.48%.