Representative image. (Image source: apollotyres.com)

Apollo Tyres domestic market prices have increased by 3-5% in the third quarter of the current fiscal to offset the impact of higher raw material prices. Similar measures may have to be taken in the fourth quarter if the hikes continue at high levels. Company officials reveal how they are growing. Kanwar, vice chairman and chairman of Apollo Tires, told analysts that the company’s tire prices have risen by an average of about 9% through the month of September.

“This quarter, we will again increase the entire segment (October and November He added that the monthly prices have gone up by 3-5%.

Asked about the extent of “recovery” of cost inflation in India, Gaurav Kumar, CFO, Apollo Tyres, said raw material costs remain a moving target.

“We expect a slight increase in Q2 and Q3 due to higher raw material prices,” he added, adding, “Overall, prices have gone up about twice as fast as expected.”

Responding to another question on how much growth is needed, Kumar said, “The outlook for raw materials by the fourth quarter remains to be seen. Overall, we need to increase by 3-5%, but assuming raw materials are at current levels.”

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Apollo Tyres’ standalone net profit fell 59% to Rs 8,965 crore in the second quarter ended September 30th. Rs 2,162.4 crore in the same period last fiscal due to higher raw material prices.

The company’s standalone operating profit stood at Rs 364.971 crore, up from Rs 291.157 crore in the same period last year.

The cost of raw material consumption jumped to Rs 24,716.3 crore in the second quarter, compared to Rs 15,270.6 crore in the same period last year.

Kumar said that India is “gradually returning to normalcy in the face of an unprecedented pandemic and the momentum in business demand is steadily improving”.

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Demand for truck tire OEMs was low but is showing signs of improvement,” he added. However, demand for passenger car OEMs is suffering due to semiconductor shortage.”

The company said there was “strong demand momentum” in alternative industries, but continued raw material price increases and disruptions in OEM production impacted the company’s business results in the second quarter.

He added: “We have implemented cross-category price increases in the alternatives space, but going forward we will need to raise prices further to fully transfer the impact of rising raw material costs.”

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Eating at a high-end restaurant won’t make you feel more miserable. Kumar also said that demand momentum will continue to build in the second half of the current fiscal. The announcement was made in November to “address the rising cost of raw materials”.