Tyre manufacturer Ceat reported on Monday that increasing costs caused its consolidated net profit to fall by 86% to Rs 6 crore for the second quarter ended in September.
For the months of July through September of the previous fiscal year, the company reported a net profit of Rs 42 crore.
However, operating revenue increased to Rs 2,894 crore from Rs 2,452 crore in the same quarter a year ago.
From Rs 2,402 crore in the same quarter last year, the company’s overall expenses increased to Rs 2,864 crore in the second quarter.
“The domestic market continues to witness an uptick in demand, which has led to strong growth in the OEM segment. During the quarter, we made price adjustments in the two-wheeler segment, which has positively impacted our margins. Internationally, we are beginning to see some headwinds in developed markets,” Ceat Ltd Managing Director Anant Goenka said in a statement.
Because of strengthening domestic demand and stabilising commodity prices, the company anticipates stronger revenue and profits for the second half of this year, he noted.
The recent corrections in commodity prices, according to Ceat CFO Kumar Subbiah, indicate that the business will benefit in the upcoming quarters if the trend continues.
In order to increase the production of agricultural radial tyres at the Ambarnath factory in Maharashtra by 55 tonnes per day over the course of the following two years, the business said its board has approved an extra investment of almost Rs 396 crore.
It also stated that a combination of loans and internal accruals will be used to finance the investment.
On the BSE, the company’s shares on Monday finished 1.61 percent higher at Rs 1,608.05 per share.
