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Lower raw material prices help tyre makers

Apollo posted a 96% rise in net profit, Ceat posted 70% rise in profits

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Prices of natural rubber, the key raw material required for making tyres, have softened from their highs, thereby boosting the bottom lines of tyre manufacturers.

While Delhi-based Apollo, India's second largest tyre maker posted a 96% rise in net profit Mumbai-based Ceat, the country's fourth largest tyre maker (by tonnage) posted a 70% increase in net profit.

Manish Dugar, chief financial officer, Ceat, said, "There has been some softening in the prices of raw material especially natural rubber. We are expecting natural rubber prices to remain stable for now but might see some hardening in the fourth quarter".   

The rise in net profit came on the back of slowing sales in the domestic market. Vehicle production of trucks, cars and two-wheelers has been subdued since the past quarter on account of inventory correction measures.

Thus fresh orders for tyres from vehicle manufacturers had come down substantially though it was off-set up to a certain extent by the replacement demand.

Onkar S Kanwar, Chairman, Apollo Tyres, said “Despite the challenging circumstances, we have succeeded in maintaining a healthy topline and bottomline. Our revenues received a booster dose, riding on the replacement demand, more so in India and South Africa.".

The RPG-group led Ceat has appointed a consultancy firm to advise it framing better manufacturing processes, improve production capacity and reduce wastage. The firm started work at the beginning of the year and has 6-7 months to go.

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