Raw Material Cost

Explanation: Raw material cost refers to the expenses incurred by a company for the procurement of materials used in the production of goods or services. These materials are typically in their natural state or have undergone minimal processing before being incorporated into the company’s manufacturing processes. Raw material cost is a significant component of a company’s cost of goods sold (COGS) and directly impacts its profitability and cost management strategies.

Example: In FY23, Maruti Suzuki incurred a Raw Material Cost of 86,654.70 crore rupees. This expense represents the amount spent by the company on acquiring raw materials such as metals, plastics, and other components used in the manufacturing of automobiles. Monitoring changes in Raw Material Cost helps stakeholders understand Maruti Suzuki’s cost structure, supply chain dynamics, and ability to manage input costs effectively. Fluctuations in raw material prices or changes in sourcing strategies can impact the company’s profitability and competitive position in the market.

You can view the quarterly and annual values for Raw Material Cost on Radar under Total Expense in the Quarterly Results or Yearly P/L sections.