Lockdown impact: MRF foresees challenges on the production front

Our Bureau Chennai | Updated on June 12, 2020

Leading tyre maker MRF has said its performance in the current quarter would see a big hit due to lockdown while outlining Covid-19 impact on its operations and the market scenario.

While the company's production levels were lower than capacity during April and May, in view of the lower demand for products, the manufacturing locations were able to service the requirements of the market.

By May-end, there have been improvements in the opening up of tyre sales outlets across the country, but many of them are still not operating fully and also operating for a few hours only. Sales offices have opened in most of the places except a few, the company said in a communiqué to stock exchanges.

With relaxations announced by the government effective June 1, all the plants are expected to step up operations. Production levels will, however, be moderated based on the market off-take. Demand is expected to be less than normal.

On the production side, Covid management issues (including the availability of contract labour) may pose some challenges. There could also be challenges faced with regard to the availability of raw materials because of issues faced by vendors.

The financial results for Q1 of FY 2020-21 will be adversely impacted due to shutdown during the quarter, the company said.

“The company has a strong net worth, low levels of debt and favourable liquidity position. We have also serviced all our debt obligations in a timely manner. We do not foresee any incremental risk with regards to our ability to service financial arrangements and recoverability of our assets including inventory and receivables at this point in time,” it added.

Published on June 12, 2020

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