After battling pandemic-induced difficulties, tyre major MRF faced the challenge of soaring input costs in FY22. The increase in the costs of raw materials was unprecedented as it happened continuously for months together, forcing the company to go for multiple price hikes, it said in its annual report.
“The Ukraine war has not helped either as some of the raw materials became unavailable and costlier,” KM Mammen, chairman & MD, MRF, told shareholders.
He further said the surge in fuel costs affected consumer demand, particularly in two-wheeler tyres and to some extent in passenger ones. Besides, the automobile industry faced its own challenges, the foremost being the shortage of semiconductors for vehicles. “This brought down the production of vehicles in many cases, thus bringing down the volume of our institutional sales. However, the commercial vehicle movement has been brisk for most part of the year and this has lessened our discomfort on the selling front,” Mammen said.
MRF’s 10th factory in Gujarat has ramped up production and is contributing significantly to the company’s total output. It is in the process of developing new products for new markets in India and abroad.
On the industry outlook, the company said that challenges faced with regard to availability of raw materials will remain. Moreover, restrictions in China consequent to the Omicron wave will continue to have its impact on the supply chain situation.
An early end to the war in Ukraine would ease the supply chain bottlenecks for the auto industry and also push costs downward. Investments in the production-linked incentive (PLI) scheme in the auto and auto components industries will be a big boost for automobile production in India, the company added.
On the exports, MRF’s traditional and strong markets of Bangladesh, Philippines, Indonesia, the African continent and the West Asia region showed substantial growth across categories. Its exports grew by a substantial 33% over the previous year, while exports turnover stood at Rs 1,779 crore in FY22 against Rs 1,333 crore in the previous year.
During FY22, MRF achieved a total income of Rs 19,304 crore and there was an overall increase of 18% in tyre production with all product groups showing growth. In the heavy CV product group, there was an increase of 15% over the previous year, while LCV tyres increased by around 13%. The small CV tyres increased by 44% in the three-wheel product group, while it increased by 13% for four-wheel products. Passenger & SUV showed a growth of 21%. The motorcycle and scooter product groups increased by 11% and 33%, respectively, the company said.
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