 "MRF plans to set up factories outside South India; eyes Gujarat and other ASEAN nations")
Tyre major MRF said that it is exploring possibilities of setting up a new plant outside South India and Gujarat could be one possible location.
Koshy K Varghese, executive vice-president — marketing, MRF said, "We look at options outside the South wherever opportunities throw up. Gujarat could be one of them.”
However, the company has not zeroed in any location at this point or even decided to set up a new facility. It is looking at opportunities both within India and outside, mostly ASEAN countries. "We need to look at long term. We should not say, the market is down, so let's not invest. We have kept investing. We will look at options. Gujarat is one of the options," Varghese added.
While the company’s plants are running full, MRF — with a pan-India presence — will benefit from a unit anywhere, Varghese said. It currently has nine plants in the country and most of them are located in South India.
Speaking on the status of the Rs 4,500-crore investment plan, he informed that most of the expansion was taking place in the company's Tiruchi plant at Tamil Nadu. On an average, the company spent Rs 800-1,000 crore every year.
Varghese said though the market is fairly lukewarm in the entire automobile industry, MRF is looking at a little long term and will continue to invest. He added that demand had been fairly slow and Centre’s measures had not come through.
"GST has not been passed, and it may not even happen in the coming Budget, and whether it will take place by the end of the year is a big question mark. There are question marks on some of the legislation to be parked to kick start. We have doubts on how it will happen," said Varghese.
He added that the company dropped prices by 9-10% in the last one year and it would affect the top line. "Revenue will get hit from that point of view, but volume will grow, and it depends up on various categories. Overall, there will be 10 % drop in revenue".
Price reductions were also as prices of natural rubber and crude prices saw a dip. The company felt that it is its responsibility to pass on the benefits to the consumers. He said, the price adjustment is function of the raw material prices. If it goes up, the company will revisit it. But, at this point of time, the movement is downwards.
While speaking to reporters after signing a global partnership with the International Cricket Council (ICC) for sponsorship, Varghese, in a response to a query on owning a team in the Indian Premier League (IPL) said nothing was restricting the company from doing so.
"However, we need to see whether in long term it makes business sense to do that and the associated issues that follow. There are more issues in IPL. Every year, there are controversies and we have kept out of that. We don't want any negative fallout of our brand, which has always remained clean and pure," he added.
