Apollo Tyres found itself soaring after a decision to forfeit the equity shares held by Harshad Mehta in the company.

The news sent the scrip of the tyre major spiraling 12.68% to Rs 144 by 15:25 IST. A total of 214,000 Apollo Tyres shares changed hands on BSE by then. The scrip of Apollo Tyres has now risen 43% from Rs 100.90 on 2 May 2003.

The company said today that, following the public notice and hearings that have taken place before the Special Court on 30 April 2003 and 2 May 2003, the company has purchased the controlling block of equity shares at Rs 90 per share. A total of 30,69,000 shares have been bought back by the company for cancellation. The aforesaid equity shares belonged to the Harshad Mehta Group.

This cancellation of shares is expected to reduce the company's equity and improve the financials of the company as well as increase shareholder value. This reckoning set off big gains in the stock today.

For Q4 ended 31 March 2003, Apollo Tyres reported a massive 146% rise in net profit to Rs 45.58 crore on a 16% increase in total income to Rs 442.59 crore (Rs 4.42 billion). For the year ended 31 March 2003, the company's net profit soared 226% to Rs 120.02 crore (Rs 1.2 billion) on a 17% increase in total income of Rs 1,609.72 crore (Rs 16.09 billion).

The board of directors has recommended a dividend of 45% and has fixed 1 July 2003 to 28 July 2003 as book closure for the purpose of dividend.

A strong volume growth has been behind the solid performance by the company, especially in the commercial vehicles segment - trucks, LCVs, jeeps and passenger cars. Meanwhile, enhanced operations management, efficient collection of receivables and low interest payouts have boosted bottom line. The growth was fueled by the surge in truck and bus tyre volumes as India's truck sales rebounded sharply helped by rising replacement demand and a construction boom that increased the movement of cement, steel and other raw materials. Nearly 80% of the company's sale of truck tyres takes place in the replacement market.

The tyre industry is witnessing a virtual dream run in terms of demand, both in the domestic and export markets. However high input costs, especially those of petroleum-based products and natural rubber, are cause for concern. The industry is groaning from the sharp rise in rubber prices, over 35% higher than that in the corresponding previous year's period. Though the industry has seen improved realisations through reduction in discounts, the increase in costs has not been passed on to customers, thereby affecting margins.

The company currently has a network of over 7000 dealerships of which over 3500 are exclusive outlets under the brand name 'Apollo Tyre World'.

As on 31 March 2003, promoters held a 36.97% stake in Apollo Tyres, while the public and institutions held 36.05% and 22.22%, respectively.

BSE code: 500877