JK Tyre reported a consolidated net profit of Rs196.02 crore for the March quarter, compared to a loss in the year ago period
JK Tyre Industries Ltd – one of the country’s largest tyre manufacturers – on Wednesday, reported a consolidated net profit of ₹196.02 crore for the quarter ending March 31, compared to a loss in the year ago period, as vehicle production returned to pre-Covid level in India and foreign markets. The bottom line though was impacted by a sharp jump in input costs due to surge in commodity prices.
Vehicle manufacturing in India improved sharply during the quarter as Original Equipment Manufacturers (OEMs) increased production to replenish stocks at dealerships as retail demand surpassed supply of vehicles.
The company reported a net loss of just ₹46.95 crore in the corresponding period.
The New Delhi based manufacturer, though returned to profitability, after beginning the fiscal year with a loss for the June quarter due to the stringent lockdown measures imposed to contain the spread of Covid-19 pandemic.
Due to recovery in business across geographies, the revenue from operations during the quarter improved by 63.30% year on year to ₹2921.28 crore. The operating profit or earnings before interest, tax, depreciation and amortization (EBITD), also jumped by 118.78% y-o-y to ₹472.03 crore due to the overall improvement in sales and costing cutting measures taken by the company.
The New Delhi based company though witnessed a sharp 55.93% increase in raw material cost during the quarter as result of the sustained increase in commodity costs; other expenses also jumped by 5.7%.
Despite swift recovery in sales, tyre manufacturers are expected to witness pressure on operating margins due to continuous increase in commodity prices. Explosive surge of covid-19 cases in India will also impact production plans for the first quarter of FY 22 as demand has plunged due to the lockdown in states.
According to Raghupati Singhania, chairman and managing director said, the year began with India in lockdown due to Covid-19 pandemic and the economy grinding to a halt with the first quarter almost a wash out. Despite the current headwinds, the company expects to continue capturing opportunities that are arising in this new environment in India and abroad.
“With high-capacity utilization, control on costs and reduced working capital, special focus on customer outreach and premium products offering, profitability improved significantly. Similarly, JK Tyre subsidiaries - Cavendish Industries and JK Tornel also added to substantial overall improvement in the profitability of the company," added Singhania.