The Hindu Business Line : MRF plans 2 greenfield facilities

Chennai April 18 MRF Ltd, which in December announced that it would invest between Rs 500 crore and Rs 600 crore over the next two years in expanding the capacities at the existing production facilities and is looking at two greenfield projects as well, the company's Chairman and Managing Director, Mr K.M. Mammen, said on Wednesday.

One of them will be in Tamil Nadu and the other possibly in the North, he told Business Line. He said he was unable to give the estimated investments in the greenfield facilities because that would depend upon the location, incentive package and the type of tyres that would be produced there.

However, he said that the proposed outlay on the expansion of the company's existing facilities could well exceed Rs 1,000 crore, against around Rs 600 crore announced in December.

Capacity

MRF had then said that it would triple its radial tyres capacity at Puducherry to 3 lakh a year, increase 2-wheeler tyres capacity at the Arakonam plant from 5 lakh to 6 lakh and add 20,000 units to the Medak plant, which can produce 80,000 commercial vehicle tyres a year now.

He said that there was a big demand in the country, although the tyre industry was forced to work under extremely thin margins — around 1 per cent — thanks to the high rubber prices. (Rubber prices rule today around Rs 87 a kg, thankfully less than the peak of Rs 120 a kg, but still substantially high from the Rs 26 a kg about four years ago.)

Eyeing Takeovers

Answering a question, Mr Mammen said that MRF was looking at takeover opportunities all over the world. In the recent past, the company had examined opportunities in Belarus, Germany, former Yugoslavia and China, but had not found any of them suitable.

He said that the demand for tyres was right here in India and MRF would first like to put its money in the country. But operating on a less-than-one-per cent margin was proving to be tough, he said.