Ceat Ltd: Profit drops 99%
Despite revenues remaining relatively stable, Ceat Limited endured a massive drop in net profit in the first quarter of its 2017-18 financial year. Consolidated net revenues declined 0.7 per cent year-on-year to Rs 14.6 billion (£175.2 million), while the Indian tyre maker reported a 70.4 per cent per cent decline in EBITA to Rs 580 million (£7.0 million) and shrinkage of the margin from 13.3 per cent to 4.0 per cent. Profit after tax plummeted 99.0 per cent from Rs 1.03 billion (£1.2 million) to Rs 10 million (£120,000).
Anant Goenka, managing director of Ceat Limited, described the three months to 30 June as a “challenging quarter” in light of destocking its channel partners undertook ahead of the introduction of VAT in India on 1 July as well as high raw material prices.
“As raw material prices witnessed significant volatility, we exercised tight controls over raw material covers, leading to (a) significant drop in inventory by end of June,” added chief financial officer, Kumar Subbiah. “We restrained all our discretionary costs to invest more on the brands during the quarter. We prepared well to transition into GST (VAT) regime smoothly.”