The prolonged recession in the commercial vehicle and passenger car segments in India is a matter of serious concern for the country’s supplier community, more so because these segments typically register a double-digit growth under normal market conditions. The market collapse comes at a time when vehicle manufacturers are expanding capacities at their plants. This has added a lot of pressure on the aftermarket segment. With excess capacity and reduced demand, profit margins across the industry have taken a hit. One company in the Indian tyre industry which, unlike many others, has continued to produce impressive results despite testing market conditions is MRF.
The commercial vehicle segment accounts for over 50 per cent of MRF’s overall turnover, a segment in which it holds an impressive 28 per cent market share in the aftermarket. MRF has consciously refrained from being a big player in the OEM market which currently contributes only 20 per cent to its total turnover. “Since there are many players in the aftermarket, it’s a question of how we play out our strengths, which include the value for money we offer and our pan-India network. We don’t see competitors as a threat because we keep the customer as the focus and not our competitors”, said Mr. Koshy K. Varghese, Vice President – Marketing, MRF, at a recent press conference in Chennai.
Despite the overall Indian commercial vehicle industry experiencing extremely sluggish growth for well over a year, MRF plans to go ahead with its capex plans with an investment of Rs. 800-1,000 crores for the current year to further expand its presence across different segments.
Sharing details on the capacity utilization at its plants, Mr. Varghese said: “Our company has been running at full capacity in all our plants, producing around 40,000 tons of tyres each month, which contributed to a total turnover of Rs. 13,500 crores in the financial year ended September 2013.”
In addition to serving the domestic market, MRF also ships out truck tyres and antique tyres for cars in the US market.
With radial tyres slowly but surely replacing the conventional bias type tyres in the Indian market, particularly for trucks, MRF expects radialization to catch up faster in the coming years. At present, the radialization level in the aftermarket is around 25 per cent while it has crossed 70 per cent on the OEM side.
Meanwhile, having established strong presence in the domestic automobile market, the company has recently rolled out its new ‘Aeromuscle’ tyre for IAF’s Sukhoi-30 aircraft, a breakthrough in the company’s history, making it the first Indian tyre maker to meet the extremely stringent standards of IAF. The Aeromuscle tyres will roll out of the MRF facility at Medak in Hyderabad.