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MRF to expand capacity at three locations

Special Correspondent

Turnover exceeds Rs. 4,000 cr.


  • Tyre capacity will go up by 3 lakh numbers
  • `Duty structure lopsided'

    CHENNAI: Tyre major MRF has drawn up an expansion plan, spreading across three factories located in Medhak (Andhra Pradesh) and Puducheri and Arakkonam (Tamil Nadu).

    The expansion will involve an investment of Rs. 500-600 crore. It will be implemented over a two-year period, according to K. M. Mammen, Chairman and Managing Director (CMD).

    Addressing a press conference here on Wednesday to announce the company's audited financial results for the year ended September 2006, Mr. Mammen said the expansion of its existing facilities would require only incremental investments as the overhead costs were being shared.

    The funds for expansion would come from internal accruals as it had always been the case, the CMD said.

    Philip Eapen, Director (Marketing), said MRF was looking to expanding its radial tyre capacity by one lakh numbers at its Puducheri facility, which had a capacity to turn out three lakh tyres. At Medhak, the company was planning to raise the capacity of light commercial vehicle tyres to close to one lakh numbers from the existing around 70,000-80,000 numbers. At Arakkonam, MRF was planning to increase the two-wheeler tyre capacity by one lakh numbers from the current five lakh, Mr. Eapen said.

    The company reported a 22 per cent jump in total income to Rs. 4,260.73 crore during 2005-06, from Rs. 3,482.09 crore in the previous year. Exports for the year under review stood at Rs. 502.55 crore (Rs. 426.57 crore).

    The profit before taxation and exceptional item stood at Rs. 63.40 crore (Rs. 59.52 crore). After taking into account exceptional income of Rs. 36.41 crore net of taxes and after making provision for tax of Rs. 19.90 crore, the net profit stood at Rs. 79.91 crore (Rs. 40.31 crore). The board of directors has recommended a final dividend of 140 per cent.

    With two interim dividends of 30 per cent each paid earlier, the total divided for the year was 200 per cent.

    Mr. Eapen said rising input costs, especially of rubber, had impacted the margins. In this context, he said the rubber prices in India were ruling at Rs. 15-17 higher per kg now when compared to the international prices.

    In this context, Mr. Mammen referred to the `inverted duty structure' where the import duty on rubber was much higher than on the finished product.

    Replying to questions, Mr. Eapen said MRF would not want to be drawn to a field where margins were not there.

    He said bias tyres had almost gone out of the passenger car segment. In the truck segment, radialisation was at a low level for a variety of reasons.

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