JK Tyre's Net Profit Sees A Massive Drop Of 80 Per cent
Published On 23-May-2022
The huge 157 crore net profit fall is attributed to higher expenses due to an increase in input costs.
The aftermath of Covid-19 and the ongoing Ukraine-Russia war continues to haunt the automotive world as the homegrown tyre maker JK Tyre has posted a decline in the net profit in the fourth quarter of FY 2021-22. The tyre brand witnessed a consolidated net profit plunge of 80 per cent at INR 38.22 crore. Last fiscal, in the same period, the company posted a net profit of INR 194.96 crore in its regulatory filing.
High input cost playing spoilsport
This severe drop is attributed to higher expenditures due to a rise in input costs. The company's revenue from the operations in the last quarter stood at INR 3,311.83 crore, as compared to INR 2,927.28 crore in the corresponding period last year.
Further, the total expenses remain higher at INR 3,280.78 crore, as against INR 2,673.58 crore in the same period FY2020-21, with the total consumed material cost increased to INR 2,219.63 crore, from INR 1,839.4 crore in the same quarter previous year.
For the fiscal year 2021-22, the consolidated net profit dropped by 39.2 per cent to INR 201.24 crore, down from INR 330.93 crore in the previous FY2020-21. Similarly, the revenue from operations stood at INR 11,982.96 crore, as against INR 9,102.2 crore the last fiscal. The board has suggested a dividend of INR 1.50 per share with a face value of INR 2 each for FY 21-22.
Commenting on the development, Raghupati Singhania, Chairman and MD, JK Tyre & Industries, said that the unexpected increase in input cost in the previous fiscal has affected the margins. This impact was despite reducing the cost and improving the efficiency, along with price increment decisions taken from time to time across the categories. However, he stated that there has been a good demand boost after unlocking COVID-19 restrictions, subsequently creating higher volumes in the commercial and passenger car tyre categories.
Export Increased Against All Odds
He also said that exports played a crucial role in contributing to the top level and were 60 per cent higher than the previous fiscal. He said hopefully, the pressure from inflation will diminish, post the current geopolitical events and disruption in the supply chain.
He further emphasized the position of the tyre industry that with revamped infrastructural activities, the company is optimistic about the high demand for cars and commercial vehicles and improvement in the external environment.
The brand is currently expanding the production capacity of the passenger car tyre segment at an expense of INR 530 crore. The additional tyre volumes are expected to be available by the end of 2023, which will further improve sales and profitability.
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