The Hindu : Business : MRF turnover crosses Rs. 5,000-cr. mark

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Saturday, Oct 06, 2007
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MRF turnover crosses Rs. 5,000-cr. mark

Special Correspondent

Robust demand contributes to healthy top line; company plans two greenfield plants

To make radial tyres at Tiruchi
Plans to produce aircraft tyres

ON EXPANSION MODE: K. M. Mammen (left), Chairman, and Arun Mammen, Managing Director, MRF, addressing a press conference in Chennai on Friday.

CHENNAI: Tyre major MRF has crossed the Rs. 5,000 crore-turnover mark during the year ended September 2007. The company reported a turnover of Rs. 4,260 crore for the previous year ended September 30, 2006.

Announcing this at a press conference here on Friday, K. M. Mammen, Chairman, said MRF was the first Indian tyre company to breach the Rs.5,000-crore sales mark. It now had about 26 per cent share in the Rs. 19,000-crore Indian tyre industry, he said. The Chairman said MRF would announce the results for 2006-07 in the next few weeks.

Greenfield plant

A robust demand had contributed to a healthy top line. “Bottom line, however, is a bit of a concern,” he said. The margins were very low at 1.8 per cent for 2005-06. The April-June quarter of 2007 was, however, better with margins improving to three per cent, he added.

The demand slowdown in the automobile industry, in the wake of a high interest regime, was a cause for concern, he said. The Chairman said MRF “is taking calculated risks” and looking at greenfield options, both within and outside the country. The company is putting up a greenfield project at Tiruchi in Tamil Nadu to make radial tyres at an investment of around Rs. 600-700 crore.

“We are in the process of acquiring land and the facility is expected to be ready in the next two years,” the Chairman said.

The Tiruchi facility would have a test track as well and would involve an investment of around Rs. 20-30 crore, Koshy Verghese, Executive Vice-President (Marketing), said.

Mr. Mammen said MRF was also planning a second greenfield plant. The company was yet to zero in on a location, he added.

To a question, he said, “we have to consider going to China.” MRF “is re-looking at it (China venture),” he added.

The company, he said, was also looking at making aircraft tyres for the Defence. “The intent has come from the Army,” Mr. Verghese said. The proposal was still at an embryonic stage. The project would cost around Rs. 150 crore and the Defence department had shown interest in funding it, he said.

MRF is already a supplier of tyres to the Defence, which accounts for 1-2 per cent of company’s turnover. Exports comprised 10 per cent of the total sales.

The intention was to have a world base with 50 per cent of production and sales happening outside the country, Arun Mammen, Managing Director, said.

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