The rising crude oil prices from $110 a barrel in January to $142 a

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barrel will drill a hole in the profits of tyre manufacturers. Net profit for the last quarter (April-June) is expected shrink by five per cent as compared to the corresponding period previous year.

"Even after increasing the prices of tyres, the tyre companies will have to bear the pinch of rising crude oil prices for another two quarter," an analyst, who did not wished to be named said.

Ceat Tyres’ managing director Paras Chowdhary said, "High crude prices will certainly have a negative impact on the bottom line. But actual loss cannot be determined." The prices of raw materials like carbon black, nylon, natural rubber have gone up by over 30 per cent.

"Over 30 per cent increase in crude oil prices since January 2008 and natural rubber by 20 per cent, manufacturing cost of tyres have gone up by 40 per cent in the last six months, thus forcing us to hike prices of tyres by 18-20 per cent since January 2008 till date," AS Mehta, director — marketing at JK Tyres, says.

He further said the rise in raw material prices would certainly impact the bottomline in the first quarter ended June 30, 2008. However, it will not be right to speculate the impact, he added.

According to an analyst, various factors such as interest cost, PAT margins and whether the rise in input cost is passed on to the consumer are being considered to see the effect on the sales and profits of a company. He also said that MRF Tyres, which has very low interest component, is expected to have least impact of high input cost than Ceat Tyres, JK Tyres, Apollo Tyres, who will have see a decline in profits by around 5-10 per cent as compared to corresponding quarter previous year.

"We are already under tremendous pressure, especially given that there does not seem to be any signs of relief in sight. As far as impact goes, in all senses it is immediate. However, it takes about one entire quarter for the full impact to be felt on the bottomline," Sunam Sarkar, chief –corporate strategy and marketing, Apollo Tyres Ltd, said

JK Tyre has decided to hike tyre prices by 6 per cent from July 6, while Ceat will raise price by 8 per cent. Other companies have also decided to increase tyre prices in the range of 6 -12 per cent from this month.