MRF rides on unique franchisee concept to enhance tyre life
India’s leading tyre maker MRF with the ‘franchisee concept’ to retread tyres has gained a unique place in the market. MRF PRETREADS is the most advanced precured retreading system in India. The company has perfected the art of precured retreading with its extensive knowledge of tyres and rubber.
MRF, which manufactures and supplies tyres to trucks, buses, passenger cars and two-wheelers, has the expertise required for retreading radial tyres of truck, bus, LCV and passenger vehicles.
The retread pattern is available with the MRF franchisees. When the life of a truck tyre expires, the same pattern can be replicated in the franchisee workshop and it enhances the life of the tyre. MRF has an After Tyre Product (ATP) group through which the company addresses all the problems related to tyres in the franchisee setups. The company claims that it uses superior quality rubber and well-researched tread patterns for various retread applications. The retread tyres also give higher mileage.
About the ‘franchise concept’, the company official said that, “Competitions are huge in the current market. There are many foreign players entering understanding the potential in India. Our concept of franchisee takes birth here to endorse the quality. We do not sell tread rubber in the open market. But there are other brands selling tread rubber with discounts to maintain targets. We train the franchisees how to use MRF PRETREADS with all the processes to ensure non-violation.”
Retreading of radials
MRF warrants mileage of 120-130 lakh km for its truck radial tyres. The company recommends single retreading for radial tyres though the market currently goes for double retreading. After the first retreading, mileage will be 75% of the original tyre. However, it depends on the route of operations and the maintenance under normal load conditions.
“After retreading we always advise customers to use the retread tyres in the drive axle. Usually rear axle tyres give more mileage than the front axle tyres. The front axle tyres, after having completed 60-70% of their life, are recommended for rear axles. If we remove and refit the front axle tyre in the rear axle, there will be 30% increase in mileage. The logic behind this is that the load of steering, which strains the front axle right tyre more, wears the front axle tyre very fast,” the official said. As fuel efficiency is a major attribute in performance, wheel balancing after the retread tyre fitment also is recommended.
Safety norms
MRF is preparing itself for all environmental and safety norms with regard to tyre. The proposed new regulatory standards will outline standards predominantly for safety, fuel efficiency and noise. The company expects this norm will
be enforced shortly across vehicles. “By default we are very close to the requirement norms. Only a finetuning is required for us. Our R&D plays a major role in this. As we cater to the aviation industry also, our R&D is balanced both spatially and technically. As we have good technical knowledge in commercial vehicle space, we were able to foray into aircraft tyres,” the official said.
India is the export hub for many OEMs. MRF manufactures super single tyres for export, mainly to the Middle East. According to the company, there are certain tyre sizes like 11R 22.5, which has market potential in Europe. This tyre gets fitted in vehicles like Man, Scania with capacities above 400 HP. A few customers in India use this tyre on vehicles for exports.
Sustained growth
Rating company ICRA recently said that MRF showed a sustained improvement in its financial performance over the years, driven by robust growth in earnings and cash flows. Amidst heightened competition and large supply additions by key industry players, MRF has been able to sustain the market leadership position in the Indian tyre industry buttressed by a well-balanced product mix and diversified segmental mix. Favourable skew towards replacements (72% of revenues), presence across all product segments, wide distribution network and pricing power on the back of strong brand equity ensures stability to MRF’s business profile going forward.
Incorporated in 1960, MRF Limited was initially started as a small manufacturing unit producing balloons, latex cast squeaking toys and industrial gloves. The company has four subsidiaries – MRF Corp Limited, MRF International Limited, MRF Lanka (Private) Limited and MRF SG Pte Ltd. With an annual production capacity of 53.4 million tyres and 40.2 million tubes, MRF has its manufacturing plants spread across 9 locations in Tamil Nadu, Kerala, Andhra Pradesh and Goa. MRF has a strong R&D support and marketing team with a wide distribution network.
Given its market leadership position, diversified presence across product categories and large capacities getting added in the recent years, MRF is well positioned to meet the expected rise in tyre demand and sustain its market share. While MRF remains exposed to the challenges of cyclicality in auto and tyre demand and also pricing pressures in the industry due to large supply additions and heightened competition, the company’s strong financial profile insulates the impact to a large extent.
However profit margins remain susceptible to the vagaries of commodity price cycles. MRF reported a net profit of Rs 2,366.0 crore on an operating income of Rs 20,583 crore for the 18 month period ending March 31, 2016. For the period, October 2013 to September 2014, MRF’s net profit stood at Rs 908.3 crore on an operating income of Rs 13,347.8 crore. The company’s exports stood at Rs 1,856 crore for the 18 months period to March 31, 2016 as against Rs1,332 crore for the 12 months period that ended on September 30, 2014.