Steep increases in raw material prices dropped Apollo Tyres Ltd.'s first-quarter net profit by 72%.

Apollo posted net income of 880 million rupees on net sales of nearly 32.6 billion rupees for the first quarter ended June 30, 2017. That compares to income of 3.1 billion rupees on sales of 32.9 billion rupees for the same period last year.

Based on the exchange rate on June 30, 2017, Apollo recorded net income of $13.6 million on net sales of $504.2 million for the first quarter of its 2017-18 fiscal year. The company's income-to-sales ratio was 2.7%.

Operating profit dropped close to 2%, from close to 2.88 billion rupees to 2.8 billion rupees ($44 million).

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

“While, rubber prices have softened to some extent, other raw materials are still on a higher side, which is likely to put our margins under pressure going forward as well. Considering this, we may need to take price corrections.

“The silver lining for us, is the robust demand from the OEMs and the growing vehicle sales in India, both passenger and commercial, post GST implementation,” he says. “The recommendation by the Directorate General of Anti Dumping (DGAD) in India to impose anti dumping duty on truck-bus radials from China, has vindicated our stand on the same, and which, once implemented, would be a boost for us in India. In Europe, the increased sales reported by most of the vehicle manufacturers in the first half of the calendar year, would also prove to be a positive for us going forward.”