Apollo suffers because of South African subsidiary
Apollo Tyres Ltd. posted net income of more than 1.8 billion rupees on net sales of 31 billion rupees for its third quarter ended Dec. 31, 2014. That compares to income of nearly 3.4 billion rupees on sales of 35.6 billion rupees for the same period in 2013.
Based on the exchange rate on Dec. 31, 2014, Apollo recorded net income of $29 million on net sales of $488 million for 3Q 2015. The company's income-to-sales ratio was 5.9%, down from 9.5% for 3Q 2014.
Operating income was down 14.1%, from 4.6 billion rupees to nearly 4 billion rupees.
For the first nine months of its 2014-2015 fiscal year, Apollo posted net income of 6.7 billion rupees on net sales of 96.6 billion rupees. Both results were down compared to the first nine months of the previous fiscal year. In contrast, operating income was up slightly.
"We have maintained our profit margins, despite accounting for all charges related to the rescue plan of our South African subsidiary," says Chairman Onkar S Kanwar. "I am pleased to inform that we have been able to secure the best value for all the stakeholders. This, as mentioned earlier, was prompted by the uncompetitive cost structure in the South African market, along with the continuous labor unrest and related issues."
"Business rescue proceedings" were initiated in the second quarter by the company's South African subsidiary, and the rescue plan was approved in November 2014, with the closure of the Durban truck, bus and OTR tire plant.
In addition to approving the company's unaudited financial results for the third quarter, Apollo's board of directors approved the appointment of Raj Banerji as the chief financial officer of the company. He takes over for Sunam Sarkar, who was promoted to president and chief business officer in November 2014.