Apollo Tyres held a conference call on 10 February 2016 to discuss the third quarter of FY 2015-16 earnings. The call was addressed by Gaurav Kumar, CFO and other members of Finance and IR team.
Key Points from the discussion:
The domestic tyre industry continuesto face growth challenges and continues to be adversely impacted bycheaper imported Chinese tyres. However, import in Q3FY16 hasstabilised compared to Q2FY16 though the quantum of the same is still higher.
The company's current TBR capacity is 6000 tyres/day and is operating atutilisation level of more than 90%.
For Q3FY16, domestic business remained muted. It registered 7% volume growth but was largely offset by 6% lower pricing.
The company had reduced its prices by 2-3% across its segments in Q3 FY 16 while in January 2016 it further reduced 4-5%, which is almostin line with other domestic peers.
Revenue from European operations in Q3FY16 declined 6% yoy mainly due to mild winters, loss in volumes for its spacemaster's segments to one of its major OEMs and unfavourablecurrency movement impacting its performance.
The company feels that the overall European industry is growing with thepassenger car segment registering good growth.
The management feels that apart from domestic & European operations, its other businesses(mainly from Middle East, Africa, Asian countries) would maintain
their margins at the current level. The company does not see any majorimprovement from the same.
The company is preparing to launch its 2-W tyres in the domesticmarkets in a couple of monthsie in April 2016. The target segment wouldbe mass market and would initially be through the offtake route.
The management would broadly lay down its strategy for the 2W tyre segment after analysing consumer's response over two or three quarters post the launch.
Radialisationis increasing by 5% every year. In line with this, the company is expanding its TBR capacity to 12,000 tyres/day. The phase 1 of this is expected to come in Q4CY16 and full capacity is likely to commence by mid-2018.
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