There is a marked shift in the performance of the Tyre industry in 2011-12, as its overall net profit has become negative. As against a total net profit of Rs 584.63 crore of the leading eight companies put together in 2010-11, the corresponding figure in the FY12 is Rs 39 crore, according to the Automotive Tyre Manufacturers Association (ATMA). The net profit dropped by 107 per cent in the last financial year, compared to that of FY11.
According to the consolidated figures of the ATMA, the books of MRF, the country's leading tyre company, recorded a steep rise in its profit at Rs 690.41 crore, but this includes an extraordinary item (amounting to Rs 404 crore) towards method of calculation of depreciation. If the extraordinary item is excluded, then the net profit of MRF works out to only Rs 286 crore.
The overall industry profit, thus, is in the red. Even by taking the figure of MRF as Rs 690.41 crore, the total net profit dropped to Rs 364.83 crore in 2011-12. Interestingly, the net sales of the companies has increased 24 per cent from Rs 29,703.61 crore in 2010-11 to Rs 37,049.63 crore in 2011-12. The net profit as a percentage of net sales declined from 2 per cent to (-)0.1 per cent in the last financial year.
For all tyre companies, except Birla, net sales have shown an increase varying from 4 to 50 per cent, while there has been a significant decline in the net profit across companies.
In the case of Birla and Falcon, the drop in the net profit has been high -- for Birla it is (-)215.6 per cent and Falcon (-)119.1 per cent. Only TVS has shown an increase in the net profit, though very marginal 1.5 per cent.
The increase in net sales (turnover) can be attributed to higher production (in volume terms) as well as high input costs. The decline in the net profit, ATMA said, was solely attributed to significant increase in raw material costs.