New Delhi: Tyre maker MRF is looking to acquire plants overseas and rubber plantations in countries like Thailand, Cambodia and Vietnam to tackle rising raw material costs, a senior company official said on Friday.
The company also said its new plant in Tamil Nadu, which has been set up at the investment of Rs 800 crore, is expected to start operations in January-February 2012. It is likely to help MRF generate 15% increase to its yearly sales.
“We may look at acquiring plants outside (India). We have not come across anything as yet. If we do get we will acquire,” MRF Limited executive vice president (marketing) Koshy K Varghese told reporters here.
He said the firm would preferably look at acquisitions abroad rather than taking the usual organic growth path.
Varghese, however, did not provide further details saying the acquisition has to fit with the current operation and it is too early to name any firms it is in talks with.
The company, which crossed Rs 10,000 crore turnover last financial year, said the current fiscal is likely to see lower profit margin due to the rising raw material prices.
“Last two years, we have been growing at 30%. We have crossed Rs 10,000 crore. This fiscal would not be as good as the previous year especially because raw material prices having gone up very steeply,” he said.
In order to cope with the surging input cost, the company said it is looking at efficient ways to procure rubber besides planning to acquire and manage rubber estates abroad.
“We may look at rubber estates overseas to bring down cost. Today most of the rubber that we procure is either bought domestically or we import rubber but if we could manage rubber estates abroad, we can take advantage,” Varghese said.
Asked which countries the company is looking at acquiring the rubber estates, he said it could be in Thailand, Cambodia and Vietnam.
“Rubber growing countries are not many... Thailand, Cambodia, Vietnam. These are the places where rubber grows... so we have to look only at these places,” he said while declining to give further details, including the time period and the size of the deal.
On the expansion plans in the country, Varghese said the company is bullish that post the commercial operation, the eighth plant at Trichy in Tamil Nadu will add 15% to its turnover.
“Our yearly spend on capex is Rs 900-1,000 crore, out of which Rs 800 crore would be on our Trichy plant,” he said, adding that the new plant would add another 15% to the company’s turnover.
At present, the company has seven plants across the country.