Apollo Tyres , a leading tire manufacturer, has secured a significant legal victory in a long-standing excise duty dispute worth ₹3,016 crore. The Central Excise and Service Tax Appellate Tribunal (CESTAT) has ruled in favor of the company, marking a crucial win for Apollo Tyres in a case that had substantial financial implications.

Key Highlights of the Ruling

• Dispute Amount: The litigation involved a sum of ₹3,016.00 crore.
• Tribunal Decision: CESTAT allowed the appeal in favor of Apollo Tyres.
• Excise Duty Calculation: The tribunal confirmed that excise duty should be calculated on the transaction value.
• Rejected Claim: The department's claim for payment of excise duty based on Maximum Retail Price (MRP) was denied.

Implications of the Verdict

This ruling carries significant weight for Apollo Tyres and potentially for the wider tire industry. The decision upholds the company's stance on the appropriate method for calculating excise duty, which is based on the transaction value rather than the MRP.

Company's Official Statement

Apollo Tyres disclosed this development in a regulatory filing to the stock exchanges. Seema Thapar, Company Secretary & Compliance Officer of Apollo Tyres, stated in the filing, "Central, Excise and Service Tax Appellate Tribunal has allowed the appeal in favour of the Company."

Background of the Case

The case, which had been pending before CESTAT, centered around the interpretation of excise duty calculation methods. The tax department had sought payment based on the Maximum Retail Price, a position that Apollo Tyres contested.

Conclusion

This favorable ruling not only vindicates Apollo Tyres' position but also provides clarity on the excise duty calculation method for the tire industry. The decision is likely to have positive financial implications for the company, potentially setting a precedent for similar cases in the sector.

Investors and industry observers will be keenly watching how this ruling might impact Apollo Tyres' financial position and whether it could influence similar pending cases in the tire and rubber industry.

Apollo Tyres , one of India's leading tyre manufacturers, has reported a significant decline in its consolidated net profit for the first quarter, despite a modest increase in revenue.

Financial Highlights

• Consolidated net profit fell to ₹129.00 million, down from ₹3,020.00 million in the same quarter last year.
• Revenue increased to ₹65,610.00 million from ₹63,300.00 million year-over-year.
• Exceptional items for the quarter totaled ₹3,700.00 million, compared to ₹404.00 million in the previous year.

Revenue Growth and Profit Decline

Apollo Tyres managed to achieve a 3.6% year-on-year increase in revenue, reaching ₹65,610.00 million. However, this growth was overshadowed by a sharp 95.7% decline in net profit, which fell to ₹129.00 million from ₹3,020.00 million in the corresponding quarter of the previous year.

Exceptional Items Impact

The company reported exceptional items amounting to ₹3,700.00 million for the quarter, significantly higher than the ₹404.00 million reported in the same period last year. These exceptional items have substantially impacted the company's bottom line.

Segment Performance

The company's financial results reveal segment-wise performance:

The Asia Pacific, Middle East, and Africa (APMEA) segment continues to be the largest contributor to both revenue and results.

Operational Challenges

The significant increase in exceptional items suggests that Apollo Tyres faced substantial operational challenges or underwent strategic restructuring during the quarter. The nature of these exceptional items includes:

1. Employee re-organisation costs of ₹17.28 million.
2. A major restructuring provision of ₹3,684.74 million related to the intended discontinuation of tyre production at the Enschede plant in the Netherlands by summer 2026.

Management Commentary

Onkar Kanwar, Chairman of Apollo Tyres, stated in the board meeting outcome, "The Board of Directors has reviewed and approved the unaudited financial results for the quarter ended June 30. Despite the challenges reflected in our bottom line, we've seen growth in our top line, indicating resilience in our market presence."

Future Outlook

While the company faces near-term pressures on profitability, it has taken steps towards future growth and efficiency. During the quarter, shareholders approved an Employee Stock Option Scheme, granting 2,669,181 options at an exercise price of ₹450.00 per option, aimed at aligning employee interests with long-term company performance.

Apollo Tyres' management will need to navigate the challenges posed by restructuring costs and market pressures while leveraging its revenue growth to restore profitability in the coming quarters.