Apollo Tyres (APOLLOTYRE) Q4 96/97 earnings summary

Executive summary

• FY97 sales and other income rose 14.1% to Rs. 1,426.91 crore; net profit increased to Rs. 36.32 crore despite sluggish markets, higher input costs and power cuts.

• Cost controls, material efficiency and operating improvements supported margins and reinforced leadership in truck and bus tyres.

Financial highlights

• Operating profit before depreciation and finance charges reached Rs. 134.88 crore, up 18.5% YoY; PBT was Rs. 41.93 crore versus Rs. 39.06 crore.

• Net profit after tax was Rs. 36.32 crore versus Rs. 35.31 crore; FY97 tax provision of Rs. 5.61 crore under MAT was available for set-off against normal tax over five years.

• Recommended equity dividend of 40%, absorbing Rs. 11.85 crore; dividend tax of Rs. 1.19 crore to be borne by the issuer.

• Equity EPS was Rs. 12.16; free reserves were Rs. 205.49 crore at March 31, 1997, against paid-up capital of Rs. 29.88 crore.

Outlook and guidance

• Free tyre imports under the 1997–2002 EXIM policy were expected to pressure margins; priorities included cost reduction, quality improvement and radialisation to compete with multinationals.

• Kochi expansion was underway; the Rs. 11 crore first-phase modernisation at Kalamassery was expected to finish by March 31, 1998, raising capacity.

• Passenger-car radial JV plans with Continental AG were being reworked after the economic slowdown and changed demand; continued access to Continental technology remained a goal.