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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (10194)	12/21/1999 8:01:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

MRF to raise output by 20% to meet overseas demand mrftyres.com Raj Narayan Chennai, Dec 21: Automotive tyre major MRF Ltd plans to increase production by about 20 per cent in 1999-2000 to feed the growing demand from overseas markets, a senior company official has said. "We propose to raise production by about 20 per cent in the current financial year (October-September) as part of our efforts to corner a larger chunk of the export market," MRF's executive director (marketing) Philip Eapen said here. The Rs 2,300 crore tyre giant, which exports to over 65 countries, garnered Rs 152 crore from overseas sales in the last financial year. MRF is now looking towards markets in west Asia to boost exports. After their foray into Brazil last year, the company proposed to expand its operations in other Latin American countries, which almost had similar road conditions, he said. "We are hoping to achieve exports of about 25 per cent of our total tyre production this year, compared to about 20 per cent achieved in 1998-99," Eapen said adding that the company expected export revenues to go up 15 per cent this fiscal. The company, which has been made approved supplier by auto giant General Motors for the "Corsa" model in India, is also not averse to tapping the original equipment manufacturer (OEM) bazaars globally. "For MRF, the export thrust is a long-term haul and we are looking to establish ourselves in west Asia, Latin America and the African continent," Eapen said adding that several of these countries favour cross-ply varieties like India. Referring to the domestic markets, the official said MRF is not too bullish on a demand pick-up in the near future as the turnaround in the automobile industry, especially heavy vehicles, needs to sustain longer for positive results. While truck tyres posted a 7 per cent growth in the previous financial year, there was a robust 20 per cent growth in two-wheeler tyres, he said adding that the growth slump in the scooter segment was offset by increasing motorcycle sales. "We have not seen the kind of growth in automobiles which could trigger a turnaround in the tyre industry. After all, the demand growth is yet to catch up with the levels prevailing in 1994-95 in the auto industry," he said. When queried about a possible price rise to improve the falling margins, eapen said MRF was currently studying various alternatives as the company felt that any increase in prices at this juncture could stymie growth in automobile sector. "We are studying various options and the full impact of the declining margins would be known only by this month-end. Maybe, we will decide on the price rise issue by next month," Eapen said. Detailing the reasons for slumping margins, Eapen said cost of inputs like nylon tyre cord and carbon black had gone up substantially. While Government imposed anti-dumping duty on these goods in a bid to protect the domestic industry, it did not do so in the case of tyres, especially from the south-east Asian nations which hampered growth, he said. The idea of imposing anti-dumping duty was the easiest route that Government could take and was not the right attitude. "If the inputs became costlier, we have to pass on a part of it to the consumers," Eapen said. He ruled out any possibility of MRF entering into contract farming for rubber saying that the company would find it difficult to maintain quality standards that was expected of it.(Fe)