Tyre manufacturer MRF is exploring opportunities for acquiring companies outside the country, said its Chairman Mr K. M. Mammen.
“For over 15 years, the industry has been suffering an inverted duty structure, despite appeals. It costs more in India to import rubber (20 per cent duty) than import a brand new tyre. We are reviewing possibilities of acquiring companies outside,” said Mr K. M. Mammen, Chairman. There are opportunities particularly in Europe, China and South-East Asia. Sourcing and leasing land overseas are also options but it is important to ensure quality, he said.
Shortage of rubber in the country has also challenged the company to consider options outside, added Mr Arun Mammen, Managing Director.
MRF has crossed a turnover of Rs 10,000 crore during the financial year ended September 30, 2011 – a growth of 30 per cent over last year. While topline has not posed a problem for the company – which has grown from a turnover of Rs 5,000 in 2007 – the bottomline has taken a dip due to high raw material costs.
The industry has been operating at margins of 1-1.5 per cent or even at a loss, but fortunately “we have not gone in the red,” said Mr Koshy Varghese, Executive Vice-President – Marketing.
Rubber prices in the last one year have gone up from Rs 140 a kg to Rs 235. “Prices have plateaued now, but they are still high. We don’t expect results to be good this quarter too, unless prices dip below Rs 200.”
Topline growth has been achieved by setting up more manufacturing plants to react to market demands, said Mr Varghese.
The company has been investing Rs 900-1,000 crore annually for the last few years. It hopes investments in new plants will give full volumes next year – the factory at Ankanpally (A.P.), which was commissioned last year, and a new plant in Trichy which will start operations in the first quarter of the 2012 calendar year.
MRF hopes to make more investments on expanding its aircraft tyre range.