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Investor Presentaiton

MRP in Bangladesh since August 2022 led to a serious drop in the Letter of credit availability thus impacting exports and total revenue. Although the forex crisis has receded a bit we are yet to see the robust levels of early 2022. Business from Indonesia was impacted due to the sudden suspension of quotas being released by the Ministry of Trade & Industry since September 2022. The Philippines in the far east & the middle eastern region showed substantial growth and continue to maintain the momentum for brand MRF. Categories of Truck Radial, Light truck & passenger car tyres showed good growth in these markets and consumer preferences continue to be high. Going forward we see immense opportunities in our existing strong markets of Middle East, Africa, Far East, Bangladesh and emerging markets of Europe, South America & USA. Discussion on Financial Performance with respect to Operational Performance and Key financial Ratios Revenue from operations Other Income Total Income Profit before tax Provision for tax Profit after tax (Crores) 2022- 2023 22578 248 2021-2022 22826 18989 315 19304 1119 879 303 232 816 647 The revenue from operations of the Company for the 2022-2023 stood at *22578 Crores against 18989 Crores for the previous year ended 31st March, 2022. During the year ended 31st March, 2023, the earnings before interest and depreciation (EBIDTA) stood at *2666 Crores as against *2328 Crores in the previous year ended 31st March, 2022. After providing for depreciation and interest, the profit before tax for the year ended 31st March, 2023 is 1119 Crores as compared to *879 Crores in the previous year ended 31st March 2022. After making provision for income tax, the net profit for the year ended 31st March, 2023 is 816 Crores as against *647 Crores in the previous year ended 31st March, 2022. There is no significant change (i.e. 25% or more) in key financial ratios viz. debtors turnover, inventory turnover, current ratio, debt equity ratio and Interest coverage ratio, net profit margin (%), operating profit margin and return on net worth. The return on net worth increased from 4.80% in 2021-2022 to 5.77% in 2022-2023. This is due to the increase in current year's profit. Opportunities and Threats Macro indicators point to continued growth of the Indian economy. Infrastructure spending and continued emphasis to manufacture in India will provide impetus for growth. Private sector Capex is also picking up steam. Inflation continues to be near the upper end of the RBIs tolerance band and is forecast for a gradual reduction. High Bank interest rates are likely to sustain. Monsoon forecast is a little to the lower side of normal and El Nino has been predicted. Any shortfall in the monsoon can impact rural demand. Extreme weather events can impact agriculture and other activities. Outlook Pent up demand in passenger vehicles will cool in financial year 2024 but secular economic growth should provide steady growth to the auto industry. Higher capital expenditure by the auto industry points to high levels of capacity utilization and is a pointer to higher levels of production in the future. With new BS VI phase-2 transition effective 1st April, 2023, vehicle costs will go up. However, the reduction in input costs will be a positive for the auto industry. Impact on the tyre industry would also be similar as outlined above. Internal Control Systems and their Adequacy Your Company has established internal control systems commensurate with the size and nature of business. It has put in place systems and controls across the Company covering various financial and operational functions. Company through its own Internal Audit Department carries out periodical audits at various locations and functions based on the audit plan as approved by the Audit Committee. Some of the salient features of the Internal control systems are:- An integrated ERP system connecting all plants, sales offices, head office, etc. (i) (ii) Systems and procedures are periodically reviewed to keep pace with the growing size and complexity of company's operations. (iii) Assets are recorded and system put in place to safeguard against any losses or unauthorized disposal. (iv) Periodic physical verification of fixed assets and Inventories. (v) Key observations arising out of the Internal Audit are reviewed at the Audit Committee meeting and follow up action taken. 35
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