Tyre major MRF has reported a 30.43% drop in its standalone net profit to Rs 112 crore for the first quarter of FY23 from Rs 161 crore in the corresponding quarter of last fiscal, due to the impact of the sharp increase in raw material costs.
The Chennai-based company’s revenue from operations jumped 36% to Rs 5,599 crore as compared to Rs 4,128 crore. Revenue from operations included subsidy of Rs 7.12 crore received from state governments. Other income contracted to Rs 34 crore from Rs 92 crore, the company said in a disclosure to stock exchanges.
Total expenses rose 37% to Rs 5,481 crore, of which raw materials’ increase accounted for 26% at Rs 4,043 crore. Other expenses rose to Rs 918 crore from Rs 723 crore.
MRF said the economic crisis in Sri Lanka led to currency devaluation, resulting in loss on consolidation of its wholly owned subsidiary MRF Lanka to Rs 2.60 crore.
The board of directors has approved raising of funds through issuance of non-convertible debentures on a private placement basis aggregating to Rs 100 crore, in one or more tranches.
KM Mammen, CMD, MRF, had said in the company’s annual report that they faced the challenge of rising costs of raw materials in FY22. This increase was unprecedented as it happened continuously for months, forcing the company to increase prices of products. The Ukraine war had not helped either, he had said.
On the other hand, the increase in fuel cost affected consumer demand, particularly in two-wheeler tyres and even to some extent in passenger vehicle tyres, Mammen had said.