Kolkata, On the heels of a 14-15 per cent increase in prices in both OE (original equipment) and replacement segments in early August, Falcon Tyres is planning to enhance prices by another 10-25 per cent latest by next month to keep pace with the cost push.
�We have to increase prices in next couple of weeks to maintain profitability,� Mr P.K. Ruia, told newspersons here today.
�Phenomenal increase in cost of production - especially that of natural rubber and rubber chemicals - had eroded our margins to the extent that we were selling a number of products below the cost prices. While we have increased the prices once this month, another price increase up to 20-25 per cent is imminent to maintain positive margin on the entire product range,� he added.
Falcon reported 58 per cent drop in its net profit to Rs. 54 lakh during the first quarter of this fiscal compared to the corresponding period of 2007-08. In a clear indication of the pressure on margins, net profit has dropped irrespective of a 69 per cent growth in net sales to Rs. 142 crore.
Mr. Ruia, however, maintained that the profit outlook of the net quarter was not worse than the first quarter results. �Two and three wheelers sales picked up beginning end may generate robust demand for Falcon products. However, the sharp rise in raw material cost continued to be a cause of concern�, he said.
Addressing Falcon�s concerns major OE buyers have agreed to enhance prices.
�We have already effected a 15 per cent prise for supplies to Bajaj in July another hike of eight per cent is scheduled to take place in September.
�We are hopeful of tiding over the crisis riding on stringent cost cutting measures as well as a significant positive impact on the bottomline by the recently commissioned captive co-generation plant at Falcon�s Mysore facility,� Mr. Ruia said.
Apart from meeting the captive requirement of 4-4.5 mw, Falcon is planning to feed of the excess power produced by the dual fuel (coal and rice husk) plant to the state grid at a lucrative price of Rs 6 per unit.
|
