Apollo Tyres Set To Increase Product Prices By 3-5 Per Cent, Cites Rising Raw Materials Cost
Published On 16-Nov-2021
If prices continue to remain high, the company may take a similar step in the next quarter.
The Indian tyre giant Apollo has announced to hike the prices of its products in the domestic market by 3-5 per cent in the third quarter. The reason cited behind the hike is the increasing commodity prices. And if the same continues to happen, the tyre maker may be forced to hike the prices in the fourth quarter as well. As per Apollo Tyres Vice Chairman and MD Neeraj Kanwar, till September, there is an average 9 per cent increase in tyre prices.
The Vice-Chairman also said that price will be increased in various segments in October-November, as the cost of raw material will play a significant role in deciding the future course of action. On asking how much further hike will be required to bridge the gap, he said it would depend on the prospects of the raw material in the fourth quarter.
Talking about the second quarter, the brand posted a 59 per cent decline in the standalone net profit at INR 89.65 crore, as against INR 216.24 crore in the same fiscal last year, due to high raw material cost. On the other hand, the standalone revenue of the company derived from operations was high at INR 3,649.71 crore, as compared to INR 2,911.57 crore in the last year same fiscal. Similarly, the consumed raw material cost in the second quarter rose to INR 2,471.63 crore, as against INR 1,527.06 crore last year in the same period.
Neeraj Kumar also stated that business is steadily returning to a normal state of affairs after the Covid-19 pandemic, and it’s a promising sign. The company is witnessing constructive demand from the truck tyres OEM, while the same in the passenger segment continues to be afflicted due to deficiency of semiconductors in the market. He further added that demand in the replacement market is strong, however, due to inflation in the raw material, together with OEM production disturbance, there is a strain on the operating performance in the second quarter.
At the global level, Apollo Tyres has been riding high as the firm posted a consolidated net profit of INR 174 crore in the second quarter, ending September. It is against the INR 246 crore net loss in the same period last year. From April to September, the tyre maker posted a net profit of INR 302 crore, as compared to INR 381 crore loss in the corresponding period last fiscal. The company has been witnessing positive growth in the European markets, especially in the ultra-high-performance passenger vehicles category.
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