The Hindu Business Line : MRF Q3 net rises five fold

Chennai, July 26 MRF Ltd has reported a 420 per cent rise in its net profit at Rs 42.50 crore for the third quarter ended June 2007, compared with Rs 8.17 crore posted during the corresponding quarter of the previous year.

The lower net profit during last year was due to unusual rubber prices that were ruling at over Rs 100 a kg compared with Rs 70-80 a kg during the quarter under review. MRF also raised prices of its products in April.

Senior officials of the company told Business Line that they are concerned over several factors that may negatively impact the company during the current quarter.

First, rubber prices are once again rising. Second, high global crude oil prices are bound to impact all oil-derivative raw materials such as carbon black and synthetic rubber.

Third, there is a possibility of a fuel price hike in India, which might slowdown the vehicle sales impacting tyre sales.

MRF’s turnover, net of excise duty, for the quarter was Rs 1,133 crore (Rs 994 crore). MRF officials pointed out that the net profit is still only 3.75 per cent of the turnover.

Total costs as a percentage of sales came down to 89 per cent against 93 per cent, reflecting the impact of easier rubber prices.

Answering a question, MRF’s spokesman said that the company has not been hedging raw material prices on the commodity exchanges. He said that it was difficult to take a view on the movement of prices. Asked whether if the company could have locked-in major input costs, he said, “if we lock-in raw material prices and the prices fall and if the customers demand price reductions on the basis of the current prices, we would be hit.”

He said that the company was yet to take a decision on the location of its greenfield plant and he added that Tiruchi was one of the locations considered.