The General Tyre and Rubber Profit after Tax (PAT) grew exponentially by 733 percent during the first quarter ended September 30, 2020, on the backdrop of a significant decline in finance cost.
As per the company’s financial statements, the PAT of the company profit after tax for the quarter was Rs.126.0 million as compared to PAT of Rs.15.9 million reported in the same period last year.
This comes as the finance cost for the period was Rs. 123 million as compared to Rs. 231 million the same period last year. The decrease in financial cost is mainly due to a drop in average interest rates as compared to last year and the effective utilization of working capital.
On the other hand, the net sales in value terms for the first quarter under review was Rs. 3.19 billion as compared to Rs. 2.25 billion in the same period last year, showing significant growth of 42pc.
Moreover, OEM sales, in particular farm tyre sales, also improved from the same period last year. The export sales of the Company for the period was Rs. 29.3 million, grew by 32pc from last year.
The gross profit for the quarter was Rs. 474 million as compared to Rs. 386 million the same periods last year. The gross profit margin was 14.9pc as compared to 17.2pc in the same period last year.
The drop in gross margin was mainly due to higher utility prices, devaluation of Rupee from last year, COVID-related additional cost, and production loss due to rain. Partly offset by higher sales in the replacement market, better product mix and price increase to offset the impact of inflation and an increase in utility prices, and other manufacturing costs.
As a result of the factors mentioned above, profit after tax for the quarter was Rs.126.0 million as compared to a profit after tax of Rs.15.9 million reported in the same period last year.
The company said that the government’s strict monitoring of borders due to COVID and actions taken to curb smuggling are helpful in containing smuggling of tires, which is beneficial for the local industry and resulted in better sales numbers for the quarter.
Further State Bank’s decision to decrease in interest rate also resulted in an increase in auto financing which is supporting better passenger car OEMs offtake.