Dear Shareholders,
The unwavering confidence you place in us is our greatest source of
motivation. As the global economic landscape continues to evolve with uncertainty, we
remain steadfast in our core purpose: serving our customers, collaborating with partners
to deliver best-in-class products and giving back to the communities we operate in.
Ultimately, our relentless pursuit of excellence is fuelled by your trust and we are
committed to continuously enhancing it through our actions.
Most importantly, what has sustained Apollo Tyres through uncertain
times is our unwavering focus on key principles to achieve our vision. Since our
inception, regardless of the economic climate, we have steadfastly adhered to these broad
themes...
Profitable Growth: We prioritise maintaining a healthy top and bottom
line over 'growth at any cost.' The focus has been to have the right product mix and
create a strong pull in the market for our brands, Apollo and Vredestein. This strategy
ensures a comfortable bottom line and sustainable growth.
Market Expansion: While India remains our largest market, followed by
Europe, we have been actively nurturing new markets in Asia, the Middle East and now a
special focus on the North American market. This has helped us see consistent growth.
Cost and Quality Focus: To achieve profitable growth, it is crucial to
manage costs effectively. We have consistently focused on reducing costs and enhancing
manufacturing efficiencies across the organisation. Eliminating unnecessary costs is
vital, as it distinguishes a profitable company from a losing one in this increasingly
competitive global landscape.
Along these broad themes, we continued to focus on our growth pillars
to accelerate our progress towards our vision FY26. And within these pages, you will find
detailed accounts of the significant progress we have made, as outlined in the letter from
our Vice Chairman and Managing Director.
The reported year saw a robust financial performance despite
challenging market conditions. Consolidated revenues from operations across all
geographies grew by 3%, reaching Rs 25,378 crores, up from Rs 24,568 crores in FY23. This
growth was driven by single-digit revenue increases in both our Indian and European
operations. Notably, our operating profit surged by 34%, amounting to Rs 4,447 crores
compared to Rs 3,314 crores in the previous fiscal year. Our strategic initiatives and
cost management efforts resulted in a remarkable 65% increase in net profit, closing at Rs
1,722 crores, up from Rs 1,046 crores. This improvement translated into a net profit
margin of 6.8%, a 253 basis point increase year-over-year. Additionally, our free cash
flow witnessed a significant rise from Rs 600 crore to Rs 2,000 crore, and we successfully
reduced net debt from Rs 4300 crore to Rs 2500 crore, strengthening our financial position
and enhancing shareholder value.
The performance for FY24 has surpassed several of our long-term targets
set for FY26 well ahead of schedule. We achieved an EBITDA margin of 17%, exceeding our
target of over 15%. Additionally, our Return on Capital Employed (ROCE) reached 16%,
significantly outperforming our target range of 12% to 15%. Our disciplined financial
management is further reflected in our Net Debt to EBITDA ratio, which stands at an
impressive 0.6x, well below our target of less than 2x. These achievements underscore our
commitment to sustainable and profitable growth.
In these exciting, yet demanding times, your Company does not forget
its commitment to live by one of its core values - 'Taking Responsibility. Sustainability
is no longer just a buzzword; as a responsible corporate citizen, we recognise our duty to
integrate sustainability into every aspect of our operations. Our efforts in this arena
have earned us numerous accolades, reflecting our dedication to these principles with the
same vigour as our commercial pursuits. Sustainability and CSR initiatives are not
afterthoughts but integral elements of Apollo Tyres' corporate strategy. We have launched
multiple initiatives in
India and Europe to positively impact the daily lives of our
stakeholders.
We actively participate in various ESG rating platforms such as CDP,
S&P Global, and Sustainalytics. The improvement in our ratings over
the years testifies to our relentless efforts to advance our sustainability agenda. For
instance, our first-time participation in the CDP Water Security assessment in FY23
resulted in a commendable score of B-, which is above the global average. In addition to
this, our S&P Global ESG score improved from 39/100 last year to 44/100 this year.
These achievements underscore our commitment to sustainability and
responsible corporate practices.
You will appreciate that any business, unfortunately, has uncertainties
built into it. Uncertainties are an inherent part of our daily lives, making it difficult
to predict the future with certainty. In such times, I am reminded of the words of
American President Abraham Lincoln, who said, "The best way to predict the future is
to create it."
With this in mind, your Company remains committed to relevant
investments, shaping its own destiny as it strives to achieve its Vision. I am confident
that Team Apollo, steadfast in its guiding principles, will continue to set new
benchmarks, introduce innovative products across markets and expand our distribution
network.
Lastly, I want to express my heartfelt gratitude to every employee,
network partner and business partner for their unwavering support and active contributions
to our success. I also extend my deepest thanks to you, our valued shareholders, for being
with us on this exciting journey. The continued support from our banks, financial
institutions, and the various State and National Governments where we operate has been
invaluable and we remain profoundly grateful.
Regards,
Onkar Kanwar
Chairman