Hurt by rising input costs, JK Tyre & Industries on Tuesday reported a 74.93 per cent decline in net profit for the quarter ended December 31, 2010, to Rs 9.14 crore.
The company had posted a net profit of Rs 36.46 crore for the same quarter last financial year, JK Tyre & Industries said in a statement.
Net sales during the third quarter this financial year stood at Rs 1,174.4 crore, against Rs 798.7 crore in the year-ago period, translating into a 47 per cent increase, it added.
"It was a very challenging quarter, as prices of natural rubber have increased 100 per cent, attaining unprecedented levels. Other raw materials have also registered a sharp increase of nearly 40 per cent," JK Tyre & Industries Vice-Chairman & Managing Director Raghupati Singhania said.
He said although the company posted good growth in sales and revised tyre prices upward to some extent, margins were adversely impacted by the significant gap between input costs and selling prices.
"This has impacted the profitability for the quarter," Singhania said.
Commenting on the outlook, he said demand for tyres is growing well in India, on account of the rapid growth of the auto industry. JK Tyre has undertaken aggressive expansion to meet increasing demand for its products.
The firm is expanding its truck and bus radial tyre manufacturing capacity from eight lakh to 14 lakh tyres per annum, both at Mysore, as well as at a new plant in Chennai.
In addition, a unit with the capacity to manufacture 25 lakh passenger car tyres per annum is being set up at Chennai.
"Our projects are well on course and Vikrant Tyre expansion at Mysore is expected to be commissioned by middle of the current year itself," he added.
JK Tyre shares were trading at Rs 119.60 apiece in early trade on BSE, down 0.17 per cent from the previous close.