The company witnessed big drop in margins. Rising interest and depreciation charges truncated the bottomline further.

The company said the first quarter revenue in India was subdued because of the pre-GST destocking by the company's business partners, and confusion over switchover from BS III to BS IV emission norms in commercial vehicles.

Commenting on the results, Apollo Tyres Chairman Onkar S Kanwar said "The results reflect the impact of the rising raw material prices on our operations. Raw material prices as a basket have jumped more than 30% in the first quarter, as compared to the same period last year, and has negatively impacted our margins."

Quarterly Performance

The company witnessed increase in the raw material cost(inclusive of purchase of stock in trade) during first quarter ended June 2017. The raw material cost as % of sales net of stock adjustments rose1100 bps to 61.2%. The employee cost fell 60bps to 12.5% in Q1 FY 17-18. Other expenses fell 230 bps to 18.3%. Resultantly, operating margins slipped 800 bps 8.3%. Operating profit fell 49% to Rs 273.25crore on a y-o-y basis.

Despite average natural rubber (NR) prices which is the key input cost being flat on yoy basis, (up marginally 0.4% to Rs 132/kg) during the Apr-June 2017 quarter, the company's margins contracted by substantial amount.

With 69% drop in other income to Rs 8.75 crore, PBIDT fell 50% to Rs 282crore. Interest cost rose 26%to Rs 34.05 crore. Depreciation cost increased 19% at Rs 125.85crore. Thus, PBT before EO registered 72% dropto Rs 122.1 crore. After considering 46 bps increase in the effective tax rate at around 27.69% and 71% drop in tax provision, PAT fell 72% at Rs 88.29 crore.

During the quarter, the company earned 60% and 24% of its revenues from APMEA (Asia Pacific, Mid East and Africa) and EA (Europe Americas)respectively. Revenues from APMEA fell 68%. EA registered 74% drop in revenues. The other segment comprising of other business entities which constitutes 16% of overall revenues, registered 131% rise in income.

At the segment front, APEMA business witnessed 68% drop in PBIT at Rs 114.63crore and constituted 71% of the total segment profit. Segment profit of EA operations fell 74% to Rs 24.26 crore and constituted 15% of segment profit. Profit from other segment stood at Rs22.17 crore, rise of 363%.

On the outlook, the company is positive going forward. The re-stocking of the tyre inventory by dealer (post GST) will further boost replacement demand while it expects the OEM segment to gradually recover, going forward.

The company said its board has approved raising Rs 500 crore through issue of non-convertible debentures on private placement basis.

The stocks is trading around Rs 275 at BSE currently.