MRF Ltd
Overview
The MRF story is a truly remarkable one. MRF Ltd (NSE:MRF) started as a rubber balloon factory with a funding of Rs.14, 000 way back in Madras that housed its first makeshift toy balloon manufacturing unit set up by KM Mammen Mappillai in 1946. It was not until 1952 when it changed course and turned to tread rubber manufacturing. By the early 60’s, MRF was exporting its quality tyres to offices overseas in multiple countries and soon its presence was known globally in 65 different countries - with tyres rolling out of 8 facilities built across 450 acres, 4000 plus strong dealer networks and 180 different offices.1
The MRF is now a multibillion legacy that produces quality tyres used all around India & internationally along with a presence in paints & coats, toys, motorsports and cricket training.
MRF is recognized for its drive towards continuous quality improvement and customer satisfaction. It has won the JD Power award not once but 12 times till date. It has also won the TNS and CAPEXIL awards for being voted as the most trusted tyre company in India.
MRF’s passion for motorsports is seen through its involvement in racing, karting, rallying and various other motorsport events. Its rallying team has won the prestigious FIA Asia Pacific Rally Championship twice and even in international championships, MRF karting tyres homologated by FIA, is the preferred choice.
MRF's team of 300 engineers and scientists gives MRF its enormous strength in product design. Requirements received, a team now works on converting the customer input into a Design Concept. The prototypes for verification and validation testing are manufactured in one of MRF's 9 factories all of which are TS 16949/ISO 9001 certified.
Plant Locations
- Tiruvottiyur, Tamil Nadu.
- Kottayam, Kerala.
- Goa,Ponda, Goa.
- Arkonam,Tamil Nadu.
- Medak,Telangana.
- Puducherry, ettapakkam Commune, Puducherry.
- Ankenpally, Telangana.
- Perambalur, Tamil Nadu.
- Dahej, Gujarat
Products and Services
Products
Tyres
Manufacturer recommended tyres are the best for cars, as they guarantee optimum performance and fuel efficiency.
Sports Goods
MRF's association with sports in India, especially cricket, goes all the way back to the 1980s. The company took it to the next level in the 1990s when some of the world's best batsmen wielded bats sponsored by it, playing unforgettable knocks that swept you through a whole range of emotions. Now the company take a step closer to you. Presenting MRF Sports Goods, available at over 350 stores across the country.
Funskool
Funskool is India’s leading toy manufacturing company promoted by MRF group. Having commenced its commercial operations in the year 1988, the company has state-of- the-art manufacturing facilities at Goa located in a sprawling area of 80,000 sq.ft and a 50,000 sq. ft factory at Ranipet. Funskool has been pioneering the concept of quality and safety in toys in India and has been instrumental in raising the quality standards of toys in the Indian Market.
Paints & Coats
The MRF Polyurethane Coating Systems come in a variety of substrates that provide superior surface finish. It’s used by various industries such as Automotive, Decorative and Industrial through a wide range of pigmented and clear shades across metallic, glossy and matte surface finishes.
MRF Specialty Coatings retains its leadership in the Polyurethane finish segment and is the preferred choice amongst dealers & customers. The company strives to deliver to its customers cost-effective, durable, eco-friendly and quality products. It has 2 fully equipped state-of-the-art manufacturing facilities in Chennai.
Pretreads
MRF PRETREADS is the most advanced precured retreading system in India. MRF forayed into retreading as far back as 1970. Today, MRF has perfected the art of recured retreading with its extensive knowledge in tyres and rubber.
In the MRF PRETREADS system, the tread rubber is precured from MRF's factory in a carefully controlled environment, thereby ensuring world-class quality. Today, MRF PRETREADS has emerged as the Mileage leader in precured retreading and also has the specialized expertise required for retreading Radial Tyres of Truck, Bus, LCV and Passenger vehicle.
MRF Srilanka
MRF LANKA PVT LTD, a subsidiary of MRF LIMITED, India, was started in the year 2006 at No.1, Dankotuwa Industrial Estate, Dankotuwa, Sri Lanka.2
It manufactures Precured Tread Rubber for retreading tyres of commercial vehicles. MRF Lanka caters to the growing demand for Precured Tread Rubber from the markets of Africa, Middle East, Bangladesh , Far East & South East Asian countries.
Services
Mrf Tyres & Service
MRF T&S is a one stop shop for a unique tyre shopping experience. An experience that's fun and enjoyable for the whole family. T&S stocks the entire range of MRF tyres and is equipped to provide services such as computerised nitrogen inflation, tubeless repair, wheel alignment, wheel balancing and tyre changing. It is an answer to the increasing number of world-class cars which are cruising on Indian roads.
Customers shop for tyres and wheel related services in air conditioned comfort. Each T&S facility has an exclusive corner where customers can unwind over a cup of hot coffee as they wait. The technicians at MRF T&S are trained at the MRF Tyredrome. Currently, there are over 1000 T&S franchises across the country and many more springing up each day.
Tiretok
For the first time in India, world-class tyre and vehicle care services in Ahmadabad, Coimbatore and Faridabad. MRF TireTok is a unique retail concept from MRF Ltd, India’s largest tyre manufacturer. Offering the complete range of MRF tyres and tubes in a world class, customer friendly retail environment and an impressive range of services from robotic wheel alignment to A/C recovery and recharging, services that are tailored to make every drive a delight. MRF TireTok also caters to two-wheeler customers by providing wheel balancing and tyre changing.
Tyre Drome
Experience an international range of services at the MRF Tyredrome. From robotic wheel alignment to Nitrogen filling, its services have been designed to make driving safer and more pleasurable. Professional ambience and friendly service enhance the experience.
MRF Fasst
MRF FASST is a new concept in tyre care from MRF, India’s largest tyre manufacturer. An exclusive air-conditioned customer care center for MRF PASSENGER CAR AND TWO WHEELER TYRE CUSTOMERS. Discuss your tyre related queries with its company trained personnel and get an immediate resolution of the problem. It’s a customer service just like its tyres. Smooth. Easy. Sure. You can also visit its MRF T&S outlets, MRF Exclusive showrooms and MRF Authorised dealerships for warranty claims.
Muscle Zone
MRF MuscleZone is a unique, state of the art facility with high-end machines to serve commercial vehicles. It has exclusive offerings like Product-O-Drome and a product lounge where customers can learn about the tyres they buy and at the same time, access the entire range of commercial and passenger tyres.
MRF Institute Of Driver Development
MRF has instituted a non-profit organisation known as the MRF Institute of Driver Development (MIDD), which imparts training to unemployed young men in light and heavy commercial vehicle (LCV and HCV) driving. The objective of the institute is to produce proficient HCV drivers in the larger interest of the road transport industry. Over two decades, the institute has turned out over 2000 LCV and 700 HCV drivers since its humble beginnings in 1988.
Industry Overview
As 2019 ended, the world automotive industry was already showing signs of slowing down. The decline was due to certain markets reaching maximum automobile saturation. Some estimates show that the pandemic induced recession will result in world automobile production falling by over 10% in 2020.
The slowdown in the Indian economy was reflected in the automobile sector as well. While the domestic production grew at a 7% CAGR between financial year 2015 to financial year 2019, there was a negative growth of 15% in financial year 2020. The decline was seen across Vehicle segments. Exports also witnessed a decline with steep declines in Medium and Heavy Commercial Vehicles (M&HCV) but Passenger Vehicles and 2 & 3 wheelers managed to show positive growth.3
Medium and Heavy Commercial Vehicles (M&HCV) went through a turmoil in financial year 2020 with a 47% decline in production for the full year. Imminent transition to BS VI norms resulted in postponement of purchases. Liquidity issue with NBFCs also did not help matters.
Indian Passenger Car Industry has seen a drop in the last financial year due to a host of reasons ranging from GDP growth and change over to the new BS V1 norms. In the financial year 2019-20, there has been a 14% drop in new vehicle production. The Industry was affected by a overall slowdown in the Economy. Added to this was the requirement to phase out all BS IV models and stocks ahead of the 01st April 2020 deadline.
The Two Wheeler industry recorded declines in all 4 quarters of the year. Exports, however, recorded an increase. The decline was larger in Scooter space as compared to Motorcycle. Cost of ownership increased following higher insurance costs. Besides, weak consumer sentiment also impacted volumes. The segment saw launch of a number of new models. The company was the preferred choice of fitment in most of these new launches. The year also saw launches in the electric vehicle space. The 2 wheeler Industry has transitioned to BS V1 sufficiently early which also led to higher prices.
Tractor production declined by 15% in financial year 2020 which was a cyclical impact. Good monsoon last year has left reservoirs with high water levels. This year’s monsoon is also predicted to be normal. The agriculture sector is expected to show decent growth.
Tyre Industry enhanced capacity in financial year 2020 but capacity utilisation declined because of contraction in the Original Equipment (OE) segment. Tyre production recorded a negative 8% growth. Replacement Sales declined marginally. The sharpest drop was in the Commercial segment. However, Export of Tyres registered an increase of 8%.
Automobile Industry in the coming year would see new trends, with the Industry trying to recover from the covid 19 induced recession. There could be a preference for personal mobility with entry level vehicles standing to benefit. E-Commerce would see more traction which will drive sales of Light Commercial Vehicles. 2 Wheelers also could see traction since they are used for last mile delivery.
The way forward for the Automobile industry and the Tyre industry is not clear given the uncertainties brought about by the pandemic. The road to recovery will not be smooth given the impact on disposable incomes, consumer behaviour and credit availability. The bright spot would be the rural and semi urban areas. Tractors and 2 Wheelers are likely to do better than other segments.
Business Overview
During fiscal 2019-20, the company achieved a total income of Rs 16322 crores. Across the board, there was an overall decrease in all segments adding up to a 3.5% decrease in total tyre production. In the Heavy Commercial Vehicle segment, the decrease was 3% over the previous year while Light Commercial Vehicle tyres decreased by around 3%. The Small Commercial Vehicle tyres declined by 5% in the 4-wheeled segment, while it rose by 3% in the 3-wheeled segment, over the previous year. Passenger & Sports Utility Vehicle (SUV) showed a decline of 10%. The Farm segment declined by 6%. The Motorcycle and Scooter segments declined by 1% and 5% respectively. The Off- The Road Tyre (OTR) segment declined by 9%.
Exports
Exports of tyres has seen good traction in the past few years, thanks to increased demand and preference for Indian brands. Despite stiff competition from Chinese brands and those from other Far eastern countries, export of Indian tyres registered good growth.
The overall tyre exports is estimated to have grown in volume terms by 8 % during the current fiscal. This momentum was also reflected in the growth of exports of the company. The overall exports of the company stood at Rs 1651 crores against the previous year of Rs 1566 crores.
Superior product offerings across categories coupled with aggressive focus on channel development has helped the company increase share and build strong brand preference across all key markets.
Africa, Middle East, SAARC & some ASEAN countries will continue to drive growth for it in the coming years. However, import restrictions and increased regulations in countries like Indonesia & Thailand will act as a dampener to growth.
The revenue from operations of the Company for the 2019-2020 stood at Rs 15991 crores against Rs 15837 crores for the previous year ended 31st March 2019. During the year ending 31st March 2020, the Earnings Before Interest and Depreciation (EBIDTA) stood at Rs 2654 crores as against Rs 2663 crores in the previous year ended 31st March, 2019. After providing for Depreciation and Interest, the Profit Before Tax for the year ended 31st March 2020 is Rs 1399 crores as compared to Rs 1609 crores in the previous year ended 31st March 2019. The net provision for tax (current tax and deferred tax) for the year is Rs 4 crores (previous year Rs 512 crores) because the Company elected to exercise the option permitted under section 115BAA of the Income Tax Act, 1961 as introduced by the Taxation Laws (Amendment) Ordinance, 2019. Accordingly, the Company has recognized provision for Income Tax for the year ended 31st March 2020 and re-measured the Deferred Tax Liabilities / Assets on the rates prescribed in the said section. After making provision for Income Tax, the net profit for the year ended 31st March 2020 is Rs 1395 crores as against Rs 1097 crores in the previous year ended 31st March 2019.
Outlook
The way forward for the Automobile industry and the Tyre industry is not clear given the uncertainties brought about by the pandemic. The road to recovery will not be smooth given the impact on disposable incomes, consumer behaviour and credit availability. Some experts estimate that auto industry volumes will be down by 25% in financial year 2021. The bright spot would be the rural and semi urban areas. Tractors and two Wheelers are likely to do better than other segments.
Recent developments
MRF reports two-fold increase in net profit to Rs 521 crore in Q3 4
February 11, 2021; Tyre major MRF on Thursday reported over two-fold rise in its consolidated net profit to Rs 520.54 crore for the third quarter ended December 2020. The company had reported a net profit of Rs 241.32 crore for the October-December period in 2019.
Revenue from operations increased to Rs 4,641.6 crore in the third quarter, from Rs 4,075.75 crore in the year-ago period, MRF Ltd said in a regulatory filing.
The company's board, which met on Thursday, also approved raising of up to Rs 1,000 crore by way of issuance of non-convertible debentures on private placement basis in one or more tranches.
The tyre maker has authorised its finance committee to determine the detailed terms and conditions of the issue.
The board of directors also declared a second interim dividend of Rs 3 per share (30 per cent) for the financial year ending March 31, 2021.
Reported Consolidated quarterly numbers for MRF are:
Net Sales at Rs 4,641.60 crore in December 2020 up 13.88% from Rs. 4,075.75 crore in December 2019.
Quarterly Net Profit at Rs. 520.54 crore in December 2020 up 115.71% from Rs. 241.32 crore in December 2019.
EBITDA stands at Rs. 1,040.59 crore in December 2020 up 49.46% from Rs. 696.22 crore in December 2019.
MRF EPS has increased to Rs. 1,227.36 in December 2020 from Rs. 569.00 in December 2019.
