MRF all set to reach a billion-dollar mark

By SiliconIndia   |   Thursday, 21 December 2006, 06:00 Hrs
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Chennai: MRF chairman has announced that the company had intentions to spend Rs 500-600 crore over the next two years and was looking to expand production capacities at three of its factories. K.M. Mammen, Chairman and MD, MRF, informed that the expansion program would be at Puducherry, Arakonam and Medak. The expansion would be funded mainly from internal accruals. The company needs to expand in a big way explained Mammen as the automotive market was burgeoning. In addition to this, MRF has three more units at Tiruvottiyur in Chennai, Kottayam and Goa. The expansion at Puducherry, would add about 100,000 to the existing capacity of about 300,000 a year. The company makes radial tyres there. At Arakonam, where manufacturing of two-wheeler tyres take place, production would go up by about one lakh from the current capacity of about five lakh; and at Medak, MRF will add about 15,000-20,000 light commercial vehicle tyres to the current capacity of about 80,000. The tyre industry, driven by the automobile industry, is booming with the passenger car market growing by about 20-25 per cent. In commercial vehicles there is a product mix change, with the growth in multi-axle vehicles keeping the number of trucks down, he added. MRF has the widest product range among the domestic tyre companies as it makes tyres for all class of vehicles from trucks to two-wheelers and go-karts. As per Philip Eapen, Executive Director (Marketing), over 45-50 per cent of its production is accounted for by truck tyres. In spite of concerns caused due to the rubber and oil prices, MRF is set to give premium products commanding premium prices. It has efficiently covered itself as compared to other lower-cost tyre manufacturers. The company is reaching the billion-dollar mark, absorbing about 75-80 per cent of its raw material cost in product prices. Mammen informed that the buoyancy in the trucks and cars segment has contributed to topline growth and the company would soon exceed the $1-billion mark. MRF has reported net profit of Rs 79.91 crore on income of Rs 4,248.31 crore for the year ended September 30. During the previous year the company reported net profit of Rs 40.31 crore on income of Rs 3,453.48 crore. The company announced a final dividend of Rs 14 (140 per cent), taking the total dividend for 2005-06 to Rs 20 (200 per cent). On the NSE, the MRF script opened at Rs 4,399 and closed at Rs 4,309.45. The chairman commented that the Greenfield projects were an expensive bet. He also added that the company was exploring overseas opportunities for production facility, with no immediate projects in the pipeline.

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