Balkrishna Industries' sales volume, revenue and profitability to be impacted in June quarter

Off-highway tyre manufacturer Balkrishna Industries Ltd (BKT) on Thursday said its sales volume, revenue and profitability are likely to be impacted in the June quarter of the current financial year due to the closure of operations in April due to the nationwide lockdown. The company in a regulatory filing also said it has successfully been ramping up substantial capacity across various plants on a daily basis since the re-opening of its plants in late April.

The company had temporarily closed the manufacturing operations on March 25 across India on account of the lockdown imposed by the government due to the COVID-19 pandemic. It has manufacturing facilities at Bhiwadi and Chopanki (Rajasthan), Waluj, Aurangabad (Maharashtra) and Bhuj (Gujarat). "We believe there will be an impact in sales volumes, revenue and profitability for the first quarter of 2020-21 as our operations were partially shut in April and were gradually ramped up during May. However, at this juncture, it is difficult to predict the impact of COVID-19 on the full year of operations of the company as the nature of the problem is dynamic," BKT said in the filing.

It also said BKT's international operations were also affected due to COVID-19 but currently substantial normalcy has been achieved in it, adding that the company's corporate office in Mumbai, however, remains closed as per the lockdown directives of the Maharashtra government. The company said it has undertaken safety measures across its plants to ensure that its people are safe and secure.

Stating that more than 80 per cent of the BKT sales comes from exports while the rest 20 per cent from the domestic market, the company said that due to the lockdown situation in the country, it was prohibited from dispatches of finished goods to end-customers in both the Indian and international markets from the end of March that continued till April. "On resumption of operations in April-end, we resumed our dispatches which has gradually increased in May," it added.

However, the company has sufficient raw materials and, therefore, has witnessed no disruption in manufacturing, on account of lack of availability of raw materials, BKT said in the filing. BKT has a comfortable liquidity position being a net cash company with zero long-term debt. However, there may be some impact on the receivable cycle but the company foresees no major risk while the capital expenditure (capex) programmes are broadly on track, it said.

However, the completion of capex will depend on the COVID-19 situation which is changing rapidly, it said adding that the company is well-positioned to fulfil its obligations and existing contracts/arrangements..