MRF

MRF- leading tyre maker in India has reported pale operating performance in the last quarter ended September 11, mainly on the back of continued spike in raw material costs. The company follows October - September financial year. However, change in the policy of accounting for depreciation has resulted in accumulation of Rs 404.23 crore of EO income resulting in whopping 413% jump in Net Profit at Rs 395.45 crore for the quarter ended September 11.

Quarterly Performance:

For the final quarter ended September 11, the company has reported 24% jump in the total income from operations at Rs 2619.79 crore, thanks to spike in the tyre realizations. The company has witnessed sharp surge in the raw material cost on the back of huge jump in the natural rubber cost in the quarter under review. The raw material cost as % of sales net of stock adjustments increased 440 bps to 74.6% in quarter under review. On the other hand, staff cost slipped 30 bps to 4.4% and that of other expenditure slipped 90 bps to 14.2% in the quarter under review. Thus Operating profit margins slipped 310 bps to 7.2% and led Operating profit down 13% to Rs 189.39 crore.

The Other income reported a loss of Rs 6.14 crore while the interest cost jumped up 58% to Rs 26.16 crore in the quarter under review. The company has changed method of depreciation on building, plant & Machinery, Molds and other parts from written down value method to straight line basis in the quarter under review. Resultantly, there was depreciation write back of 11.58 crore in the quarter under review. With the change in method of depreciation, Rs 404.23 crore of EO income was arrived at by the retrospective computation. Resultantly, PBT surged 358% to Rs 572.90 crore in quarter under review. Taxation spiked up 270% to Rs 177.45 crore and led Net Profit up 413% to Rs 395.45 crore.

Yearly Performance:

For the year ended September 11, the company has reported 31% jump in the total income from operations at Rs 9743.17 crore. Spike in the rubber cost has put OPM under pressure which slipped 300 bps to 8.3%. Resultantly, Operating profit was marginally down 4% to Rs 804.76 crore. The other income jumped 40% to Rs 25.31 crore and led PBIDTA down 3% to Rs 830.07 crore. Further, interest cost jumped up 47% to Rs 93.02 crore while that of depreciation slipped 5% to Rs 247.63 crore and led PBT down 8% to Rs 489.42 crore. The company has EO income of Rs 404.23 crore by retrospective computation of changing method of calculating depreciation in year under review. Thus PBT was up 67% to Rs 893.65 crore. After accounting 52% increase in taxation at Rs 274.23 crore, Net Profit was up 75% to Rs 619.42 crore.

On the consolidated front, the company has reported 73% jump in the net Profit at Rs 618.77 crore over 31% increase in the total income from operations at Rs 9751.81 crore.

• The Debt Equity ratio at end of September 11 stood at 0.64. The Debt service coverage ratio stood at 1.77 while that of Interest service coverage ratio was at 9.49 at end of September 11.

• The Board has recommended a Final Dividend of Rs.19/- per share which along with the 2 interim Dividends of Rs.3/- each already paid works out to Rs 25/- per equity share of Rs.10/- (i.e.250 % ) for the year ended 30th September, 2011.

• The promoter's shareholding has increased to 26.86% at end of September 11 against 26.70% a year ago. The promoters have pledged 1.49% of their total share holding (0.40% of the total share capital of company) at end of September 11 against 1.64% (0.44% of total share capital of company) a year ago.

MRF: Financial Results