The move is in line with other tyre makers' plans to pare their outlays.
Apollo
Tyres has decided to cut back its capex by about Rs 300 crore to
Rs 2,400 crore in 2019-20 and by a similar amount in FY21, following
the slowdown in auto sector. The proposed capex mainly will be at
company's upcoming unit in Andhra Pradesh and at its Hungary
facility.
During
the recent analyst call, company's management said, “The company
had started the year with an estimate of Rs 2,700 crore capex, which
has now been scaled back to Rs 2,400 crore. Over the last nine
months, the company incurred a capex of about Rs 2,000 crore”.
For
the next year, the number should be in the range of Rs 1,400-1,500
crore from Rs 1,700-1,800 crore earlier. The decision is in line with
other tyre makers' plans to cut down capex due to the slowdown in the
auto sector.
"All
the competitors, including us, were surprised at the drop in OEMs and
particularly the extent of drop in OE business. Because of that, from
the announced plans, the capexes have been slowed down by everybody
like we have," Gaurav Kumar, chief financial officer of Apollo
Tyres told analysts.
"Based
on the market information that we get, all the players have slowed
down their capital expenditure. So is there specifically some
capacity coming up, which will alter the demand‐supply economics in
near term? (The answer is) No," he added.
Speaking
about the Andhra Pradesh facility, he said, that the plant ramp up
may depend on how the demand situation pans out. The ramping up is
scheduled to happen over two years, and the full capacity will be
available in Fiscal 2023. When it reaches 100 per cent utilisation,
it can genrate over Rs 4,000 crore in revenue.
The
plant will start making tyres by the end of this year and then its
capacity will be expanded to 15,000 car tyres and 3,000 truck radials
over a two-year time frame, that is by FY22-end.
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