MRF to invest around Rs 4,000 crore in next 3 yrs

Company becomes global partner for World Cup Cricket 2015

Tyre manufacturer MRF Ltd has said that over the next three years it would invest around Rs 4,000 crore, to build up additional capacity and to introduce new products. The company also entered into tie up with the International Cricket Council (ICC), to be the global partner of the upcoming ICC Cricket World Cup, as a lead sponsor of the event.

The company would leverage the partnership to promote MRF as a global brand, increasing brand awareness in its key overseas markets, said the company senior official.

MRF is planning to expand its capacity, in facilities including Hyderabad, Trichy and Goa, with an investment of Rs 4000 crore in next three years. It currently has a capacity of 1.2 lakh tyres a day, said Koshy Varghese, executive vice president, marketing at MRF.

While he refused to share on what the capacity would be with the expansion, which has already started, he said that the expansion would bring in 1.1 times the investment as turnover.

The investment would be from internal accruals and there would not be any fund raising for this, he said.

He added that while the overall market was not good in the recent past, the company managed with its aftermarket sales. In the Passenger car segment, where the company is a leader, it has 28-30% market share in the aftermarket sales and 25% in the OEM segment.

The company is also taking cost cutting measures in order to improve its performance.

On the partnership deal exchanged between MRF's Chairman and Managing Director K M Mammen said MRF will have access to multiple branding opportunities at all the game venues during the World Cup and at other promotional events held by the ICC across the world. The company did not reveal sponsorship cost.

This would help the company to increase brand awareness in the geographies including the Indian subcontinent, ASEAN countries, Middle East and Africa.

"We intend on leveraging the partnership to bring further awareness to MRF as a global brand to millions of potential consumers and partners across the world," said Mammen.

"We are one of the largest tyre companies in India. We are going to leverage this in other geographies. There are quite a few geographies where cricket is looked forward to, with very large Indian Diaspora in these markets," Varghese.

"There are other consumers also we feel can be tapped into and cricket is one such route. We look forward to ICC making us enter into someone these important markets," he said.

N Srinivasan, who welcomed MRF as a global partner for the world cup, said that he wish more Indian companies followed MRF in partnering with ICC for the World Cup.

The World Cup cricket is expected to start on February 14, 2015 with New Zealand taking on Sri Lanka in a day match in New Zealand. A total of 49 matches would be played across 14 venues in New Zealand and Australia. Apart from 10 full members, 4 qualifiers - Afghanistan, Ireland, Scotland and the United Arab Emirates - will take part in the tournament.

MRF is currently ranked amongst the top 16 global tyre companies with a turnover of Rs 14,000 crore, currently has exports to 80 countries and has office in key markets. Its spend on advertisement is 0.91 percent of the turnover. The overseas market contributes to 10-12% of the company's turnover at present.

MRF, which has been leveraging its association with cricket in brand building, says that 16 players who trained at MRF Pace Foundation have played for India. Over the years, cricket players including Sachin Tendulkar, Richard Hadlee, Brian Lara, Steve Waugh were brand ambassadors for the brand. The current brand ambassadors are Virat Kohli, Gautam Gambhir, Shikhar Dhawan and Sanju Samson.