The Chairman of Apollo Tyres said at the beginning of the fiscal year that maximizing asset utilization needs to be a priority instead of setting up greenfield manufacturing facilities in India. Also, they needed to save costs. The company has indeed banked on that thought by saving almost ₹400 crore, or approximately ₹1.1 crore every day.
The deployment of AI and ML in type manufacturing has come in handy as Apollo has been able to remove the bottlenecks of manufacturing with lower spending. It has further boosted efficiencies. For instance, the number of types of production has gone up to 73,000 per day from 68,000. This is the case for passenger vehicles, wherein the company has extensively utilized IoT.
It was initially announced that capex would be ₹1100 crore. Turns out, only ₹700 crore was deployed. The company is less likely to make any changes. Apollo has seven facilities, five of which are in its native country, India. The remaining facilities are in Hungary and the Netherlands. Apollo only utilizes 75% of its total capacity and may not spend on capex unless there is a drive in capital utilization.
Neeraj Kanwar, the company’s Vice Chairman and Managing Director, has said on several calls with investors that Apollo had a heavy capital-intensive decade. Another official source stated that it is being moderated as the company focuses more on capacity utilization, along with having a strong balance sheet and better bottom line.
Apollo is currently cautious about the demand for its products. Apollo expects to have a different number once the Lok Saha elections conclude and the voting has been done. Both processes are over, and it now remains to be seen how Apollo moves in the market.
Kanwar is expecting a rise in demand within the European markets.
The update comes almost one month after Apollo posted its net profit for FY24. It came to around ₹1,722 crore, with an increase of 65% from the previous report. Consolidated revenue surged to ₹25,738 crore at 3%. Revenues for Indian and European markets surged reasonably.
Interestingly, the implementation of AI and ML in the company has gained a larger amount of attention. Both technologies are gaining recognition across the world, irrespective of the industry. Finance was one of the first to make a move, and now it is the tyre industry that has made it evident that the use of AI and ML can expand one’s operations at nearly the same cost.
Their implementation in the financial sector largely entails trading, where traders and investors get their orders executed seamlessly based on pre-set criteria. It now remains to be seen if Apollo can sustain the margin.
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