Falcon Tyres Plans Another Price Increase

Despite having already implemented OE and aftermarket price increases in the vicinity of 15 per cent during early August, India’s Falcon Tyres is planning another price increase for September. This next round of price ‘enhancements’ will see prices go up by as much as a quarter.

“We have to increase prices in next couple of weeks to maintain profitability,” stated parent company Ruia Group chairman Pawan Kumar Ruia. “Phenomenal increase in cost of production – especially that of natural rubber and rubber chemicals – had eroded our margins to the extent that we were selling a number of products below the cost prices. While we have increased the prices once this month, another price increase up to 20-25 per cent is imminent to maintain positive margin on the entire product range.”

Falcon reported a 58 per cent drop in its net profit during the first quarter of this fiscal compared to the corresponding period of 2007-08. Ruia, however, maintained that the profit outlook of the net quarter was not worse than the first quarter results. “Two and three wheelers sales picked up beginning end may generate robust demand for Falcon products,” he said. “However, the sharp rise in raw material cost continued to be a cause of concern.”