During a con-call with its investors, Gurugram-based Apollo Tyres stated its decision to cut down capital expenditure by Rs 400 crore and its fixed costs by about 20 per cent in the current fiscal year amidst the challenging business environment due to the ongoing COVID-19 pandemic.
The management of the company had earlier said that capital expenditure for FY21 would be in the range of Rs 1,400 to 1,500 crore. However, to reduce stress from a cash flow perspective, it has cut its capital expenditure to the tune of Rs 400 crore in FY21. It has now been reduced to Rs 1,000 to 1,100 crore. A similar cut has also been announced for its European operations.
The company has taken several steps to control cost as much as possible in light of the uncertainty looming due to the rising COVID-19 cases. The cost-cutting measures include salary cuts for top management, nil increments for the year and reducing sales promotion, advertising and other promotional expenses.
In direct connection with original equipment manufacturers, the tyres industry has seen demand slumping during the lockdown owing to the pandemic. Gaurav Kumar, CFO at Apollo Tyres stated that FY21 sales would be lower than that of FY20 due to weak original equipment business and lack of promising outlook.
The company's stock was trading at Rs 117.20 at 10 am on Tuesday, down by 0.51 per cent or Rs 0.60 per share. The 52-week high is recorded at Rs 196.70 and the 52-week low is Rs 73.55 on BSE.