Thaindian News

Chennai, Oct 10 (IANS) Tyre major MRF Ltd, with a revenue of Rs.10,000 crore, is looking to acquire tyre plants and rubber plantations overseas for its growth and to improve its margins, said a top company official.

“We are looking at acquisitions in Europe, China and South East Asia for existing tyre plants and rubber plantations, chairman K.M. Mammen told reporters here Monday. “Acquisition is a quicker way to expand overseas. We are studying the prospects.”

He said MRF became the first Indian tyre company to touch Rs.10,000 crore turnover for the 2010-11.

“The financial results are yet to be approved by the board,” he added when queried about profitability figures. “However, the increasing raw material prices have exerted pressure on the bottomline growth. We are operating at 1-1.5 percent margin and sometime even its negative.”

The company closed 2009-10 with sales of Rs.7,463 crore and an after-tax profit of Rs.353.98 crore.

He said the inverted import duty structure — lower duty on tyres and higher duty on rubber, the raw material — was hurting the domestic industry and the acquisition of rubber plantation overseas may be a remedy.

According to Arun Mammen, managing director, the company is looking at acquiring or leasing plantation to the order of one lakh hectares in South East Asia.

MRF earns 10 percent of its revenue from exporting tyres to around 65 countries.

Queried about the capex planned for the current year, Koshy Varghese, executive president and vice president-marketing, said the plans were fluid and depended on the plans of vehicle makers.

The company derives 70 percent of its revenue from the replacement market, 20 percent from sales to vehicle manufacturers and 10 percent from exports.

Varghese said the sales mix was beneficial to the company and did not forsee any change in that.

Officials said the company’s new plant at Tiruchirapalli, around 320 km from here, would commence operations in the first quarter of 2012.