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MRF Ltd.

BSE: 500290 Sector: Auto
NSE: MRF ISIN Code: INE883A01011
BSE 00:00 | 25 May 73857.65 5.85






NSE 00:00 | 25 May 73866.40 265.70






OPEN 73917.65
52-Week high 81423.00
52-Week low 61110.00
P/E 28.67
Mkt Cap.(Rs cr) 31,316
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 73917.65
CLOSE 73851.80
52-Week high 81423.00
52-Week low 61110.00
P/E 28.67
Mkt Cap.(Rs cr) 31,316
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

MRF Ltd. (MRF) - Director Report

Company director report

Your Directors have pleasure in presenting to you the Fifty Sixth Annual Report and theAudited Financial Statements for the financial year ended 31st March 2017.

Financial Results Rs in Crores
1st April 2016 to 31st March 2017 1st October 2014 to 31st March 2016
[12 months period] [18 months period]
Total Income 15078 22483
Profit before tax 2066 3606
Provision for taxation 615 1132
Profit for the year 1451 2474

In accordance with the notification issued by the Ministry of Corporate

Affairs the Company has adopted Indian Accounting Standards (referred to as "INDAS") notified under the Companies (Indian Accounting Standards) Rules 2015 witheffect from 1st April 2016. The financial statements have been prepared in accordancewith IND AS as prescribed under Section 133 of the Companies Act 2013 and rulesthereunder.

The current financial statements are for a period of 12 months i.e. 1st April 2016 to31st March 2017. The figures for the previous financial year is for a period of 18 monthsi.e. 1st October 2014 to 31st March 2016 and hence the figures for the period underreview are not comparable with the previous period.

Performance Overview

During the financial year ended 31st March 2017 your Company’s total income wasRs 15078 crore as against Rs 22483 crore in the previous 18 months period ended 31stMarch 2016. The net profit for the financial year was Rs 1451 crore as against Rs 2474crore in the previous period. Across the board there was an overall increase in allsegments adding up to a 10% increase in total tyre production.

The Company’s exports stood at Rs 1316 crore for the financial year ended 31stMarch 2017 as against Rs 1856 crore for the 18 months period ended 31st March 2016. Asrequired under regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the management discussion and analysis report is attached and formspart of this Annual Report.


Two interim dividends of Rs 3 each per share (30% each) for the financial year ended31st March 2017 were declared by the Board of Directors on 27th October 2016 and on 03rdFebruary 2017. The Board of Directors is now pleased to recommend a final dividend of Rs54/- per share (540%) on the paid up equity share capital of the Company forconsideration and approval of the shareholders at the Annual General Meeting of theCompany. With this the total dividend for the financial year ended 31st March2017 works out to Rs 60/- per share (600%). The total amount of dividends aggregates to Rs25.45 crore.

The Directors recommend that after making provision for taxation debenture redemptionreserve and dividend an amount of Rs 1769.41 crore be transferred to general reserve.With this the Company’s Reserves and Surplus stands at Rs 8540.18 crore.

Industrial Relations

Overall the industrial relations in all our manufacturing units had been harmonious aswell as cordial except in Thiruvottiyur unit wherein long-term wage settlement ispending. Efforts are being made to resolve the issue. Both production and productivitywere maintained at the desired levels throughout the year under review.

Prospects for the Current Year

The outlook for the domestic tyre industry looks stable in the short to medium term onthe back of favourable demand in both the domestic and export markets. The issue of rawmaterial cost escalation especially of natural rubber is here to stay for some time whichwill affect operational margins for a while in the foreseeable future. Good monsoons andinvestments in the core and infrastructure segments sectoral growth in the economycoupled with a 7.2% annual growth in GDP are likely to have very many positive benefitsfor the tyre industry in the short to medium term. The positive sentiment shown by theinfrastructure and rural sectors in recent months will definitely have an impact on thedemand in the tyre industry both for the original equipment and the replacement markets.However the days of higher industry profit margins are most likely behind us and theexpected hardening of raw material prices coupled with excess capacity in the industrywill see competition intensifying in the market place.

Performance of Subsidiaries

The consolidated financial statements of the Company and its subsidiaries prepared inaccordance with the Companies Act 2013 and applicable accounting standards form part ofthe Annual Report. The consolidated financial statements include the financial results ofits subsidiary Companies.

Pursuant to the provisions of section 136 of the Companies Act 2013 the financialstatements consolidated financial statements along with the relevant documents andaudited accounts of subsidiaries are available on the website of the Company.

A statement in Form AOC-1 containing the salient features of the financial statementsof the Company’s subsidiaries is attached with the financial statements. Thestatement also provides details of performance and financial position of the subsidiaries

The Contribution of the subsidiaries to the overall performance of the company is givenin note 27(f) of the consolidated financial statement.

Directors’ Responsibility Statement

As required under section 134(3)(c) of the Companies Act 2013 your Directors statethat:

a) In the preparation of the annual accounts the applicable Accounting Standards havebeen followed and that there are no material departures;

b) They have in selection of the accounting policies consulted the Statutory Auditorsand applied them consistently making judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company at theend of the financial year and of the profit and loss of the Company for that period;

c) Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d) Annual accounts have been prepared on a going concern basis;

e) Internal financial controls had been laid down and followed by the Company and suchinternal financial controls are adequate and were operating effectively; and

f) Proper systems to ensure compliance with the provisions of all applicable laws havebeen devised and such systems were adequate and operating effectively.

Risk Management

The Company has developed and implemented a risk management policy for the Companyincluding identification therein of elements of risk if any which in the opinion of theBoard may threaten the existence of the Company. The Board and the Audit Committeeperiodically undertake a review of the major risks affecting the Company’s businessand also the policies/measures evolved to mitigate these risks.

Adequacy of Internal Financial Control

The Company has adequate internal financial control procedures commensurate with itssize and nature of business. These controls include well documented procedures coveringfinancial and operational functions. The internal financial controls of the Company areadequate to ensure the accuracy and completeness of accounting records timely preparationof reliable financial information prevention and detection of frauds and errors andsafeguard against any losses or unauthorized use or disposal of assets. These controls areassessed on a regular basis by Internal Audit.

Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo

Information as required to be given under section 134(3)(m) read with rule 8(3) of theCompanies (Accounts) Rules 2014 is provided in Annexure I forming part of this Report.

Corporate Social Responsibility

As required under section 135 of the Companies Act 2013 the CSR Policy was formulatedby the CSR Committee and thereafter approved by the Board. CSR Policy is available on theCompany’s website http://www. filenamecsr-Policy.pdf.

The details of the CSR initiatives undertaken during the financial year ended 31stMarch 2017 and other details required to be given under section 135 of the Companies Act2013 read with rule 8(1) of the Companies (Corporate Social Responsibility Policy) Rules2014 are given in Annexure II forming part of this Report.


Mr Arun Mammen who was Managing Director has been appointed as Vice Chairman by theBoard and consequently re-designated as Vice Chairman and Managing Director of the Companywith effect from 04.05.2017.

Mr Rahul Mammen Mappillai who has been the Whole time Director of the Company since2010 has been appointed by the Board as Managing Director of the Company for a period of 5years commencing from 04.05.2017.

As required by section 152 of the Companies Act 2013 Dr K C Mammen Director of theCompany retires by rotation at the ensuing Annual General Meeting and is eligible forre-appointment.

The Company has received notices in writing from members along with deposit ofrequisite amount under section 160 of the Companies Act 2013 proposing the candidatureof Mr Samir Thariyan Mappillai and Mr varun Mammen for the office of Director of theCompany. Both the proposals mentioned above are subject to approval of the shareholdersunder section 149(1) of the Companies Act 2013 for increasing the number of Directors ofthe Company. On the recommendations of the Nomination and Remuneration Committee theBoard of Directors has decided to recommend to the shareholders their appointment asDirectors of the Company liable to retirement by rotation. The Board has also approvedthe appointment of Mr Samir Thariyan Mappillai and Mr Varun Mammen as Whole-time Directorsfor a period of 5 years commencing from 04.08.2017 subject to approval of theshareholders. A brief profile of Mr Samir Thariyan Mappillai and Mr Varun Mammen is givenin the notice to the Annual General Meeting.

The notice convening the Annual General Meeting includes the proposal for the aboveappointments/re-appointment.

The Company has received declaration of independence from all the Independent Directorsconfirming that they meet the criteria of independence as prescribed under Section 149(6)of the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.

Performance evaluation of the Board its Committees and Directors

The Board of Directors has made a formal annual evaluation of its own performance andthat of its committees pursuant to the provisions of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulation 2015. The evaluation wasdone based on the evaluation criteria formulated by Nomination and Remuneration Committeewhich includes criteria such as fulfilment of specific functions prescribed by theregulatory framework adequacy of board meetings attendance and effectiveness of thedeliberations etc.

The Board and the Nomination and Remuneration Committee also carried out an evaluationof the performance of the individual Directors (excluding the director who was evaluated)based on their attendance participation in deliberations understanding theCompany’s business and that of the industry and in guiding the Company in decisionsaffecting the business and additionally in case of Independent Directors based on theroles and responsibilities as specified in Schedule Iv of the Companies Act 2013.

Corporate Governance

In accordance with Regulation 34 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a Report on Corporate Governance along with theAuditors’ Certificate is attached and forms part of this Annual Report.

The information pertaining to the number of Board meetings held the constitution ofthe Audit Committee Remuneration Policy of the Company criteria under section 178(3) ofthe Companies Act 2013 Related Party Transactions and the Vigil Mechanism as requiredunder the various provisions of the Companies Act 2013 have been disclosed in theCorporate Governance Report which forms part of this report.

Business Responsibility Report

Business Responsibility Report as per Regulation 34 of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 detailing the various initiatives taken bythe Company on the environment social and governance aspects of business forms part ofthis report.

Particulars of Employees

The disclosures pertaining to remuneration and other details of directors and employeesas required under section 197(12) of the Companies Act 2013 read with rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 have beenprovided in the appendix forming part of this report. Having regard to the provisions ofSection 136(1) read with relevant provisions of the Companies Act 2013 the Annual Reportexcluding the aforesaid information is being sent to the members of the Company. The saidinformation is available for inspection at the Registered Office of the Company duringworking hours and any member interested in obtaining such information may write to theCompany Secretary and the same will be furnished to the members. The Company has put inplace a formal policy in line with The Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013. During the financial year under reviewthe Company has not received any complaint under the Act.


Your Company has not accepted any deposits during the financial year ended 31st March2017. Three deposits aggregating Rs 0.09 crore remain unclaimed as at the close of thefinancial year ended 31st March 2017.

There were no defaults in respect of repayment of any deposits or payment of interestthereon during the financial year under review.

Awards received during the year

Your Company has been awarded the "Top Export Award" by the Chemical AndAllied Products Export Promotion Council India (CAPEXIL) and "Highest ExportAward" by the All India Rubber Industries Association (AIRIA).


As per the Companies Act 2013 auditors are permitted to hold office for a maximumperiod of 10 years continuously. In order to meet the statutory mandate during thecurrent year Messrs. Sastri & Shah Chartered Accountants Statutory Auditors of theCompany will not seek re-appointment and will retire. The Board of Directors on therecommendations of the Audit Committee at the meeting held on 4th May 2017 have decidedto recommend to the shareholders the appointment of Messrs. Mahesh Virender &Sriram Chartered Accountants (Firm Regn. No. 001939S) as the Joint Statutory Auditor ofthe Company for a period of 5 years from the conclusion of the Fifty sixth Annual General

Meeting until the conclusion of the Sixty first Annual General Meeting of the Companysubject to ratification annually by shareholders if required by law. Messrs. MaheshVirender & Sriram Chartered Accountants have given their consent to act as JointStatutory Auditors and have also confirmed that their appointment if made will be inaccordance with the provisions of the Companies Act 2013.

The Board recommends to the Shareholders the ratification of the appointment of Messrs.SCA AND ASSOCIATES (Firm Regn. No. 101174W) the Joint Statutory Auditors of the Companypursuant to the approval of the members at the 55th Annual General Meeting to hold officefrom the conclusion of the forthcoming Annual General Meeting of the Company until theconclusion of the next Annual General Meeting of the Company on a remuneration to befixed by the Board.

Cost Audit

The Board of Directors on the recommendations of the Audit Committee has approved there-appointment of Mr C. Govindan Kutty Cost Accountant (Mem. No. 2881) as Cost Auditorof the Company for the financial year ending 31st March 2018 under section 148 of theCompanies Act 2013 and recommends ratification of his remuneration by the shareholdersat the ensuing Annual General Meeting of the Company.

Secretarial Audit

Pursuant to provisions of Section 204 of the Companies Act 2013 read with rule 9 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 yourCompany engaged the services of Mr K Elangovan Elangovan Associates Company SecretariesChennai to conduct the Secretarial Audit of the Company for the financial year ended 31stMarch 2017. The Secretarial Audit Report (in Form MR-3) is attached as Annexure-III tothis Report. The Secretarial Auditor’s Report to the shareholders does not containany qualification.

Extract of Annual Return

An extract of Annual Return in Form MGT-9 as on 31st March 2017 is attached asAnnexure-IV to this Report.

Other Matters

There are no material changes and commitments affecting the financial position of theCompany between the financial year ended 31st March 2017 and the date of this report.

During the period under review there were no material and significant orders passed bythe regulators or courts or tribunals impacting the going concern status and theCompany’s operations in future. Details of loans guarantees and investments asrequired under the Companies Act 2013 are given in the Notes to the financial statements(Note 3 and 28).


Your Directors place on record their appreciation of the invaluable contribution madeby the Company’s employees which made it possible for the Company to achieve theseresults. They would also like to take this opportunity to thank customers dealerssuppliers bankers financial institutions business associates and valued shareholdersfor their continued support and encouragement.

On behalf of the Board of Directors
Chennai K M MAMMEN
4th May 2017 Chairman & Managing Director



Conservation of energy is a key focus area in operations and we have an ongoing programto reduce specific consumption of fuel and power. Benchmarking of best performance ofprevious year and identification of losses is used in setting targets. Energy managementsystems are being introduced in plants. Focus on renewable energy and alternate sources ofenergy are being explored. Several power saving projects and fuel saving projects havebeen undertaken. Some of the key initiatives are given below:

(i) Steps taken or impact on energy conservation:

The following measures were implemented to reduce specific fuel consumption:

a) Identification of the areas of energy loss in steam consuming areas and immediatecorrective measures.

b) Parallel deployment of energy management system in various units to monitor &benchmark steam consumption at sub plant and equipment level.

c) Parallel deployment of all the successful energy saving projects across all units ofthe Company.

d) Ensuring the quality of steam generated by boiler.

e) Reduced steam consumption by modifying the process parameters.

f) Increased productivity ensured in curing by modifying the existing curing presses.

g) Usage of improved insulation to reduce the radiation losses.

The following measures were implemented to reduce specific power consumption:

a) Identification of areas of energy loss in power consuming areas and taking immediatecorrective measures.

b) LED/Induction lamp fittings are being used at plants.

c) Specific power consumption reduction in compressed air.

d) Introduction of compressor energy management system to trim down the energyconsumption further.

(ii) Steps taken by the company for utilizing alternate source of energy: In order toreduce its carbon footprint your Company is continuously exploring and using alternate orrenewable sources of power:

a) Power purchase from open access using power exchanges ensures significant portion ofpower drawn from renewable hydroelectric and wind based power.

b) Usage of skylight in structures ensures reduction of day time lighting consumption.

c) Rain water harvesting ponds planned in all units to conserve water.

d) Recycling of waste water for the process by introducing second pass reverse osmosisplant to reduce water consumption.

e) During the year a 500 KW Solar Power Plant has been installed. Feasibility studiesare being done to increase generation of Solar power.

(iii) Capital investment on energy conservation project: Investments have been carriedout for implementing energy conservation proposals which have long term saving impact andreduction of losses in the system.

Key projects initiated during the year are listed below:

a) Improved insulation for steam line networks.

b) Process changes resulting in reduction of consumption of steam and power

c) use of energy efficient lighting system.

d) Optimisation and rationalisation of pumps and motors.

e) Introduction of small solar plants for power generation. Key on-going proposals areas listed below:

i) Increasing the insulation coverage area.

ii) Study and critical analysis of power and fuel consumption data.

iii) Rationalisation of processes to optimise energy consumption.


1. Efforts made towards technology absorption adaptation and innovation

a) Evaluation of new generation materials New generation materials were evaluated andadapted in our formulations to achieve special properties to meet the specificrequirements of the customers and environmental concerns. In a step towards making thetyre production sustainable we started R&D trails on using raw materials derived fromenvironmentally sustainable sources such as biomass and waste materials. This is inpartnership with a reputed Indian industry. We are also exploring the feasibility ofmaking tyre production sustainable using Nanomaterials and other smart materials.

b) New product development With the broad vision of making tyre production sustainableyour Company has initiated several projects on developing low rolling resistance (RR)tyres.

c) New process development New process techniques have been adapted to reduce energyconsumption increase productivity and improve consistency of the process.

d) Modernization of machinery Modernization of machinery is done to achieve higherlevel of accuracy and to improve productivity. Manufacturing process is being automated toreduce manual intervention and to improve quality.

2. Benefits derived as a result of the above efforts

a) Product improvement to

A low RR tyre being fuel efficient emits less CO2 the environment thuscontributing to mitigating Global Warming. Our low RR tyres are in regular use bymultinational majors. b) Cost reduction Usage of alternate raw material and new materialsources has helped in reducing the cost. Alternate materials are used to improve processefficiency.

Improvements achieved in power & fuel consumption higher machine utilization andreduction in waste loss have yielded cost reduction. c) New product developmentDevelopment of new design and usage of advanced materials have resulted in development ofnew products to meet the stringent customer requirements.

d) Import substitution

Usage of indigenous materials and process equipments might help in replacing importedmaterials and result in substantial cost savings.

e) Manpower optimization usage of modified process and modern machineries has helped inoptimizing manpower usage in factories.

3. Details of imported technology (Imported during last 3 years reckoned from thebeginning of the financial year): N.A

4. Expenditure incurred on Research and Development:

Rs in Crores
1st April 2016 to 31st March 2017 1st October 2014 to 31st March 2016
[12 months period] [18 months period]
R & D Expenses
(a) Capital 158.92 6.34
(b) Recurring 40.76 48.55
Total 199.68 54.89


Rs in Crores

1st April 2016 to 31st March 2017
[12 months period]
Foreign Exchange Earnings:
FOB Value of Exports 1151.31
Freight & Insurance 11.66
Dividend 0.11
Others 4.07
Foreign Exchange Outgo: 3105.27


On behalf of the Board of Directors
Chennai K M MAMMEN
4th May 2017 Chairman & Managing Director