Revenue from India stood at Rs 2,155.2 crore as against Rs 2,266.4 crore in the year-ago quarter, while that from Europe was at Rs 856 crore as compared to Rs 884 crore in the year-ago period.

Quarterly Performance

With decline in the rubber prices, the company has witnessed substantial decline in the raw material cost during fourth quarter ended March 2016. But big increase in other expense (as a % of sales, net of stock adjustment) put pressure on margins. The raw material cost as % of sales net of stock adjustments has declined 480 bps to 43.12%. The employee cost fell 20 bps to 13.42% in Q4 FY 15-16. Other expenses rose 320 bps to 19.5%. Resultantly, operating margins slipped 40 bps 16%. Operating profit fell 8% to Rs477.29 crore on a y-o-y basis.

Domestic prices of natural rubber, which makes up more than 50% of the cost of a tyre, fell to Rs 93 per kg during the Jan-March 2016 quarter, 27% lower than year ago. Rubber prices had been trading lower on persistent worries about slower economic growth in the main consumer, China, and oversupply.

With other income of Rs 19.7 crore, PBIDT fell 3% to Rs497 crore. Interest cost fell by 31% to Rs23.86 crore. Depreciation cost increased by 40% at Rs122.77crore. Thus, PBT before EO decreased by 10% to Rs350.36 crore. After nil EO items vis a vis an EO expense of Rs3.5 crore in previous year, PBT after EO registered 9% drop to Rs350.36 crore. After considering 970 bps increase in the effective tax rate at around 30% and 34% rise in tax provision, Net Profit fell 20% at Rs245.12 crore.

During the quarter, the company earned 65% and 26% of its revenues from India and Europe respectively. Revenues from Indiafell 5%. Europe registered 3% drop in revenues.

At the segment front, Indian business witnessed 7% rise in PBIT at Rs 325.13 crore and constituted 88% of the total segment profit. Segment profit of European operations fell 57% to Rs41.31 crore.

AnnualPerformance:

For the year ended March 2016, sales registered 8% decline at Rs11,793 crore. Operating margins improved 160 bps at 16.7%. Operating profit rose 2% to Rs1968.4 crore on a y-o-y basis. The raw material cost as % of sales net of stock adjustments has declined 490 bps to 45.4%. The employee cost rose 80 bps to 13.4% in FY 15-16. Other expenses washigher by 200 bps at 19.27%.

With 30% rise in other income to Rs70.03 crore, PBIDT increased by 3% to Rs2038.5 crore. Interest cost fell by 50% to Rs91.55 crore. Depreciation cost rose 9% at Rs 424 crore. Thus, PBT before EO increased by 8% to Rs1523 crore. After an EO income of Rs 47.77 crore accruing from sale of business in South Africavis a vis an EO expense of Rs 82.49 crore in previous year, PBT after EO registered 18% rise to Rs1570 crore. After considering 390 bps increase in the effective tax rate at around 30.4% and 35% rise in tax provision, Net Profit rose 12% at Rs1093 crore.

During FY 15-16, the company earned 66% and 24% of its revenues from India and Europe respectively. Revenues from India fell 3%. Europe registered 11% drop in revenues.

At the segment front, Indian business witnessed 22% rise in PBIT at Rs1345.78 crore and constituted 83.6% of the total segment profit. Segment profit of European operations fell 44% to Rs269 crore.

The stocks is trading around Rs 160at BSE currently.