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Leading tyre maker MRF has reported a significant fall in its net profit at ₹183 crore for the quarter ended September 30, 2021, when compared with that of ₹403 crore in the year-ago period, due to cost pressures despite double-digit rise in income.
Revenue from operations grew 15 per cent to ₹4,832 crore during September 2021 quarter as against ₹4,186 crore in the year-ago period.
While cost of raw materials consumed was higher at ₹3,805 crore (₹2,249 crore), total expenses stood at ₹4,672 crore as against ₹3,669 crore.
MRF posts ₹161-crore profit in Q1
MRF’s profit before exceptional items and tax was lower at ₹249 crore as against ₹562 crore.
The Board of the company declared an interim dividend of ₹3 per equity share (30 per cent) for fiscal 2021-22.
Inflationary pressures
Though strong demand recovery continued across auto segments during the September 2021 quarter, tyre companies’ operating performance was affected by steep increase in raw material costs and constrained OEM demand (particularly in the passenger vehicle segment) due to chip shortage.
Demand outlook for Indian tyre industry remains favourable: ICRA
Tyre companies did manage to pass on the input material price hike by undertaking price increases up to high single digit, says an industry analyst.
Industry representatives and analysts point out that the demand environment is likely to remain healthy, in particular from the CV industry. But higher inflationary pressures could continue to weigh on margins over the near term.
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