Ceat Ltd – one of the country’s largest tyre manufacturers – on Wednesday reported a net loss of ₹35.24 crore on account of Covid-19-related disruptions, which led to subdued demand for its products in India and export markets. The company reported a net profit of ₹82.66 crore in the corresponding period last fiscal.
Due to tepid demand for vehicles across geographies, the revenue from operations declined significantly by 36.6% year on year to ₹1,120 crore. The operating profit or earnings before interest, tax depreciation and amortization (EBITDA), also dropped 38.95% to ₹105 crore, due to higher fixed expenses and sharp drop in sales. The operating margins also contracted by 40 basis points to 9.4%.
Vehicle manufacturers and their component suppliers had to close their factories from March 22, following the lock down announced by the union and state governments to contain the spread of the Covid-19 pandemic.
The Harsh Goenka-led company witnessed 76.4% decrease in other income and 12.5% increase in employee cost during the period, which contributed to the loss. Sharp drop in taxes paid during the period helped offset some of the losses incurred during the quarter.
According to Anant Goenka, managing director, CEAT Limited, the company’s performance in the quarter has been resilient and reflective of the agile operations, efficient planning, and purpose-driven execution. Primary area of focus over the last quarter was the health and safety of our people, our customers, partners and the community.
“We closely monitored our cash flows and costs and were able to see positive results. Looking ahead, we see a path for recovery backed by easing of restrictions and an uptick in the market. We have resumed operations at all our factories and are making concerted efforts towards ensuring we are ready as the demand picks up, while successfully transitioning into a new work environment," added Goenka.