Apollo Tyres plans to invest around Rs 2,500 crore-3,000 crore next year, primarily in its greenfield project in Andhra Pradesh.
Gaurav Kumar, chief financial officer (CFO) of Apollo Tyres, said the company has begun work on the Andhra plant. “While this year has seen significantly muted investments, next year will be better.”
The first phase of the plant will see an investment of Rs 3,800 crore. It is expected to start production in the last quarter of fiscal 2020, Kumar told analysts during a post-earnings conference call.
The facility would cater to both TBR (Truck, Bus Radial) and PCR (Passenger Car Radial) segments with a capacity to manufacture 3,000 units per day and 15,000 units per day, respectively. Production of both kinds would start simultaneously followed by a ramp-up phase, he added.
Kumar said the company would aim at a double‐digit growth of sales in fiscal 2020, unless significant headwinds hit the economy.
Speaking on third quarter numbers, he said that consolidated net sales stood at Rs 46.6 billion, a growth of nearly 16 per cent, compared to the same period last year and an 11 per cent growth on a sequential basis. Operations in India recorded a growth of 16 per cent, whereas European operations, in rupee terms, grew higher than 20 per cent.
The company’s domestic sales continue to grow at a very healthy rate, growing in excess of 20 per cent. EBITDA, excluding other income, for the third quarter stood at Rs 3.4 billion. This implies a margin of 11 per cent, compared to 13.7 per cent for the same period last year.
IL&FS overhang persists
Commenting on it exposure to debt-laden IL&FS, Kumar said Apollo continues to take additional provisions on account of the deposits placed in the non-banking financial company.
“We took an additional provision of Rs 60 crore taking the total provision on this account to Rs 100 crore out of the Rs 200 crore deposit,” the CFO told anlaysts.
He added, some tribunal proceedings have not given a conclusive roadmap to the fate of IL&FS loans, although some of its subsidiary companies or their parts have been put up for sale.
“We have already taken a 50 per cent write‐off. The board will consider next quarter if we should write‐off the full amount at once or spread it over couple of quarters. But, it is won’t extend beyond a couple of quarters. We may have to take a complete write‐off next quarter itself,” said Kumar.
Source: Business Standard