In the third quarter of the current financial year, Chennai-based MRF reported a 25 per cent drop in net profit to Rs 31.86 crore against Rs 42.50 crore in the third quarter of 2007-08. The fall in net profit was despite a 12 per cent increase in the net sales during the quarter.
Net sales in the third quarter was Rs 1274.37 crore, which was 12 per cent higher than Rs 1133.43 crore reported in the third quarter of the previous year.
During the period under consideration MRF witnessed a 26 per cent jump in raw material consumption while staff cost went up by 29 per cent, according to the unaudited results declared by the company today.
Key raw materials that go into the manufacture of tyres include rubber and carbon black. While rubber prices, that are primarily sourced by Kerala, have been steadily rising for the last two years, the price of carbon black in influenced by global crude oil prices, which has also been on the rise.
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Along with these two direct costs, depreciation and interest costs too rose by 14 per cent and 32 per cent respectively during the third quarter. The combined impact of these rising costs saw the company report a lower profit before tax of 30 per cent to Rs 48.56 crore. Despite a lower provision for tax (drop by 30 per cent) net profit dipped by 25 per cent in the third quarter of 2008-09.