MIRA INFORM REPORT

Report Date :

23^RD May, 2006

IDENTIFICATION DETAILS

Name :	MRF LIMITED
Registered Office :	124 Greams Road, Chennai – 600 006, Tamilnadu, India
Country :	India
Financials (as on) :	30.09.2005
Date of Incorporation :	5^th November 1960
Com. Reg. No.:	18-4306
CIN No.: [Company Identification No.]	--
TAN No.: [Tax Deduction & Collection Account No.]	CHEM07088E
PAN No.: [Permanent Account No.]	AAACM4154G
Legal Form :	A Public Limited Liability company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturing and Marketing of automobile tyres, automobile tubes, tread rubber, pre cured treads, bicycle tyres, bicycle tubes, rubberised tank tyres & boggie wheels, conveyor belting and speciality surface coatings.

RATING & COMMENTS

MIRA’s Rating :

Aa

RATING		STATUS	PROPOSED CREDIT LINE
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large

Maximum Credit Limit :	USD 30000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well-established, reputed and respectable company having fine track. Available information indicates high financial responsibility of the company and its’ directors. Fundamentals are strong and healthy. Market reputation is favourable. The company is progressing exceedingly well. Its’ payments are always correct and as per commitments. The company can be considered good for any normal business dealings.

LOCATIONS

Registered Office :	124 Greams Road, Chennai – 600 006, Tamilnadu, India
Tel. No.:	91-44-28292777
Fax No.:	91-44-28295087/28294089
E-Mail :	1. mrfmktg@vsnl.com 2. mrfexpo@vsnl.com 3. mrfmalt@md2.vsnl.net.in 4. mrfshare@md3.vsnl.net.in
Website :	http://www.mrftyres.com
Overseas Office :	v P.O. Box 626871, Al Maktoum Hospital Road, Deira, Dubai, UAE Tel. 91-04-2239657 Fax. 91-04-2239660 E-mail. mrfdubai@emirates.net.ae Contact Person - Biju Abraham Thomas, General v 1764, Calvert Drive, Cuyahoga Falls, OHIO 44223 USA Tel. 91-001-330-9291594 Res. 91-001-330-9283096 Fax. 91-001-330-9290306 E-mail. jkillian@neo.rr.com
Factory 1 :	v Tiruvottiyur, Chennai, Tamilnadu, India v Vadavathoor, Kottayam Kerala, India v Usgao, Ponda, Goa, India v Icchiputhur, Arakonam, Tamilnadu, India v Sadasivapet, Medak, Andhra Pradesh, India v Eripakkam Village, Nettapakkam Commune, Pondicherry, India v Sipcot Industrial Complex, Gummidipoondi, Tamilnadu, India

DIRECTORS

Name :	Mr. K. M. Mammen
Designation :	Chairman & Managing Director
Age:	53 Years
Qualification :	B. A.
Experience :	29 Years
Date of Joining :	01.06.1985
Previous Employment :	Devon Machines (Private) Limited
Name :	Mr. Arun Mammen
Designation :	Joint Managing Director
Name :	Mr. K. M. Philip
Designation :	Whole-time Director
Age :	65 Years
Qualification :	B.A.
Experience :	44 Years
Date of Joining :	05.11.1960
Name :	Dr. K. C. Mammen
Designation :	Director
Name :	Mr. K. D. Parakh
Designation :	Director
Name :	Mr. Ashok Jacob
Designation :	Director
Name :	Mr. S. Nandagopal
Designation :	Director
Name :	Mr. V. Sridhar
Designation :	Director
Name :	Mr. Vijay R. Kirloskar
Designation :	Director
Name :	Mr. N. Kumar
Designation :	Director
Name :	Mr. Ranjit I. Jesudasen
Designation :	Director
Other Personal
Name :	Mr. D. M. Choksi
Designation :	Company Secretary
Name :	Mr. Ravi Mannath
Designation :	Additional Company Secretary
Name :	Mr. Kurian and Kurian
Designation :	Legal Advisors

BUSINESS DETAILS

Line of Business :	Manufacturing and Marketing of automobile tyres, automobile tubes, tread rubber, pre cured treads, bicycle tyres, bicycle tubes, rubberised tank tyres & boggie wheels, conveyor belting and speciality surface coatings.
Products :	Item Code No. (ITC Code) 4011 Product Description New Pneumatic Tyres of Rubber Item Code No. (ITC Code) 4013 Product Description Inner Tubes of Rubber Item Code No. (ITC Code) 401290.04 Product Description Tyre Flaps Item Code No. (ITC Code) 400610.00 Product Description Camel Black Strips for Retreading Rubber
Imports from :	Europe and Far East
Terms :
Purchasing :	L/C and Credit terms

PRODUCTION STATUS

PARTICULARS	Unit	Licensed Capacity	Installed Capacity	Actual Production
Automobile Tyres	Nos.	@	19772000	17596948
Automobile Tubes	Nos.	@	18600000	16052918
Tread Rubber	MT	7,946	8,943	1548
Pre-cured Treads	MT	@	24,000	5971
Bicycle Tyres	Nos.	20,00,000	20,00,000	--
Bicycle Tubes	Nos.	20,00,000	20,00,000	--
Rubberised Tank Tyres & Boggie Wheels	Nos.	15,000	15,000	--
Conveyor Belting	MT	@	3,000	2778
Specialty Surface Coatings	KL	@	2,000	2114

GENERAL INFORMATION

No. of Employees :

8077

Bankers :

v State Bank of India

v Chennai, Tamilnadu, India

Facilities :

	30.09.2005
Secured Loans
Term Loan From Bank [Secured by hypothecation of Specific items of machinery acquired]	430.000
Bank (Secured by hypothecation of stock-in-trade, stores and spare parts and book debts)	2565.700
Total	2995.700
Unsecured Loans
Fixed Deposits	410.700
From Banks – Commercial Paper	440.200
Term loan from bank	650.000
Dealers Security Deposit	1670.600
Sales Tax Deferral Scheme	932.400
Total	3940.400

Banking Relations :	Satisfactory
Auditors :	v Sastri & Shah Chartered Accountants Chennai, Tamilnadu v M. M. Nissim & Company Chartered Accountants Mumbai, Maharashtra
Associate :	v Tiruvottiyur, Chennai, Tamilnadu, India v Vadavathoor, Kottayam Kerala, India v Usgao, Ponda, Goa, India v Icchiputhur, Arakonam, Tamilnadu, India v Sadasivapet, Medak, Andhra Pradesh, India v Eripakkam Village, Nettapakkam Commune, Pondicherry, India v Sipcot Industrial Complex, Gummidipoondi, Tamilnadu, India
Subsidiaries:	v Funskool (India) Limited v MRF Corporation Limited v MRF International Limited
Membership :	v Confederation of Indian Industry

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
9000000	Equity Shares	Rs.10/- each	Rs. 90.000 millions
100000	Taxable Redeemable Cumulative Preference Shares	Rs.100/- each	Rs. 10.000 millions
GRAND TOTAL			Rs.100.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
4241143	Equity Shares	Rs.10/- each	Rs.42.400 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS	30.09.2005	30.09.2004	30.09.2003
SHAREHOLDERS FUNDS
1] Share Capital	42.400	42.400	42.400
2] Reserves & Surplus	7498.100	7191.700	6999.600
NET WORHT	7540.500	7234.100	7042.000
LOAN FUNDS
1] Secured Loans	2995.700	1663.200	1917.300
2] Unsecured Loans	4103.900	3940.400	2808.600
TOTAL BORROWING	7099.600	5603.600	4725.900
TOTAL	14640.100	12837.700	11767.900
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]	5368.100	4192.200	3984.700
Capital work-in-progress	1519.900	1240.100	520.700
INVESTMENTS	137.500	762.100	751.100
Deferred Tax Assets	16.300	36.600	54.600
CURRENT ASSETS, LOANS & ADVANCES
Interest Accrued on investment	0.600	0.600	--
Inventories	5535.600	4820.400	4031.800
Sundry Debtors	4623.400	3983.600	3963.200
Cash & Bank Balances	460.200	367.200	402.600
Other Current Assets	2.100	1.600	1.600
Loans & Advances	1120.000	1364.200	1353.300
Total Current Assets	11741.900	10537.600	9752.500
Less :
Current Liabilities	3205.800	2924.000	2691.100
Provisions	937.800	1006.900	604.600
Total Current Liabilities	4143.600	3930.900	3295.700
Net Current Assets	7598.300	6606.700	6456.800
Miscellaneous Expenses	0.000	0.000	0.000
TOTAL	14640.100	12837.700	11767.900

PROFIT & LOSS ACCOUNT

PARTICULARS	30.09.2005	30.09.2004	30.09.2003
Sales Turnover [including other income]	29948.100	25938.200	21927.600
Profit/(Loss) Before Tax	553.400	429.000	1677.500
Provision for Taxation	150.300	141.00	503.700
Profit/(Loss) After Tax	403.100	288.000	1173.800
Export Value	4272.200	3555.300	3197.500
Import Value	4945.100	3442.400	2254.400
Total Expenditure	29352.90	25095.900	6993.400

QUARTERLY RESULTS

PARTICULARS	31.12.2005 [1^st Quarter]	31.03.2006 [2^nd Quarter]
Sales Turnover	8171.800	8796.000
Other Income	6.000	11.600
Total Income	8177.800	8807.600
Total Expenditure	7548.600	8245.900
Operating Profit	629.200	561.700
Interest	101.800	126.500
Gross Profit	527.400	435.200
Depreciation	307.900	342.500
Tax	80.300	34.300
Reported PAT	139.200	58.400

200512 Quarter 1 - Expenditure Includes (Increase)/Decrease in Stock in Trade Rs (528.20)million Consumption of Raw Materials Rs 6079.00 million Staff Cost Rs 445.80 million Other Expenditure Rs 1552.00 million Tax Includes Fringe Benefit Tax & Net of Deferred Tax EPS is Basic & Diluted Status of Investor Complaints for the quarter ended December 31, 2005 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 04 Complaints disposed off during the quarter 04 Complaints unresolved at the end of the quarter Nil 1. The above financial results which were reviewed by the Audit Committee was taken on record by the Board of Directors at their meeting held on January 27, 2006. 2. Provision for Taxation has been made in respect of Income presently determined, subject to appropriate revision / adjustment on final determination of Income for the year. 3. Figures have been regrouped wherever necessary.

200603 Quarter 2 - Expenditure Includes (Increase)/Decrease in Stock in Trade Rs (12.00)million Consumption of Raw Materials Rs 6116.80 million Staff Cost Rs 487.10 million Other Expenditure Rs 1654.00 million Tax Includes Fringe Benefit Tax & Net of Deferred Tax EPS is Basic & Diluted Status of Investor Complaints for the quarter ended March 31, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 02 Complaints disposed off during the quarter 02 Complaints unresolved at the end of the quarter Nil 1. The above financial results which were reviewed by the Audit Committee, were taken on record by the Board of Directors at their meeting held on April 24, 2006. 2. Provision for Taxation has been made in respect of Income presently determined, subject to appropriate revision / adjustment on final determination of Income for the year. 3. Figures have been regrouped wherever necessary.

KEY RATIOS

PARTICULARS	30.09.2005	30.09.2004	30.09.2003
Debt-Equity Ratio	0.86	0.72	0.70
Long Term Debt-Equity Ratio	0.51	0.45	0.46
Current Ratio	1.68	1.83	1.90
TURNOVER RATIOS
Fixed Assets	2.24	2.21	2.04
Inventory	6.59	6.76	6.68
Debtors	7.93	7.53	6.74
Interest Cover Ratio	2.10	3.91	3.34
Operating Profit Margin(%)	5.25	6.88	8.92
Profit Before Interest And Tax Margin(%)	2.01	3.68	5.30
Cash Profit Margin(%)	3.99	5.04	6.29
Adjusted Net Profit Margin(%)	0.75	1.84	2.68
Return On Capital Employed(%)	4.99	8.95	12.17
Return On Net Worth(%)	3.47	7.70	10.47

STOCK PRICES

Face Value	Rs.10/-
High	Rs.3099.20/-
Low	Rs.2821.00/-

LOCAL AGENCY FURTHER INFORMATION

History

MRF Ltd., incorporated in 1960 to take over the business of the Madras Rubber Factory, MRF later went public in 1961. The company has its works at Chennai, Arakkonam, Medak, Kottayam, Pondicherry, Gummidipoondi and Goa. All MRF plants were accredited with ISO-14001 and its corporate funtions have been certified ISO-9001-2000 for its quality management.  

 The company manufactures tyres and tubes in collaboration with Mansfield Tyres and Rubber, US. Its products include Nylogrip, Zigma, Tyredrome, etc. Its subsidiary companies are MRF Corp and MRF International. The company tyres are being exported to 75 countries worldwide. 

 MRF diversified into conveyor belts in collaboration with Pierelli, Italy, and in 1991-92, tied up with Vapocure, Australia, to manufacture polyurethane paint formulations and later into tyre machines in collaboration with Abex, US. It also diversified into speciality surface coatings, conveyor belts and leather.  

 It has launched a steel-belted premium radial tyre variant called MRF ZVTS'. While this tyre augments the company's overall range of radials, it also marks a step forward in terms of technology, performance and superior ride quality. It has become an original equipment supplier(OES) of radial tyres to Tata Indica. 

 Volvo, the only MNC which has entered the truck market in India, is sourcing most of its tyre requirements from MRF. 

 MRF was declared the most ethical company by 'Business Magazine' in its survey in 1999. 

 The Company's speciality coatings has launched MRF Durothane, an economical, multi-purpose, 100% polyurethane for metal, wood and plastic surfaces in 2004. Further the company ha launched MRF Cento, an elegant 100% polyurethane finish for wood surface, both interior and exterior and this is available in both glossy and matte finishes. 

 During 2004-2005, the companies expanded its reach by exporting its products to countries like Finland, Canada and Turkey. MRF commenced export of Motor Sport Tyres. The company also exported MRF Pre-Treads Bangladesh, Fiji and a few other countries. A company MRF Lanka (Pvt) was incorporated in Srilanka for the manufacture of Pre-treads and other related products during this period. The company also expanded its capacity of Automobile Tyres and Automobile Tubes from 17372000 Nos to 19772000 Nos and from 16000000 Nos to 18600000 Nos respectively during this period.

Volvo, the only MNC which has entered the truck market in India, is sourcing most of its tyre requirements from the company.

1946

A young entrepreneur, K. M. Mammen Mappillai, opened a small toy balloon manufacturing unit in a shed at Tiruvottiyur, Madras (now Chennai).

1949

Although the "factory" was just a small shed without any machines, a variety of products, ranging from balloons and latex-cast squeaking toys to industrial gloves and contraceptives, were produced. During this time, MRF established its first office at 334, Thambu Chetty Street, Madras (now Chennai), Tamil Nadu, India.

1952

MRF ventured into the manufacture of tread rubber. And with that, the first machine, a rubber mill, was installed at the factory. This step into tread-rubber manufacture, was later to catapult MRF into a league that few had imagined possible.

1955

MRF soon became the only Indian-owned unit to manufacture the superior extruded, non-blooming and cushion-backed tread-rubber, enabling it to compete with the MNC's operating in India at that time.

1956

The quality of the product manufactured was of such a high standard that by the close of 1956, MRF had become the market leader with a 50% share of the tread-rubber market in India. So effective was MRF's hold on the market, that the large multinationals had no other option but to gradually withdraw from the tread rubber business in India.

1961

With the success achieved in tread rubber, MRF entered into the manufacture of tyres. MRF established a technical collaboration with the Mansfield Tire & Rubber Company of USA. Around the same time, it also became a public company. It set up a pilot plant for tyre manufacture at Tiruvottiyur, Madras (now Chennai).

1963

On June 12, 1963, India's first Prime Minister, Late Pandit Jawaharlal Nehru laid the foundation stone for the Rubber Research Centre at Tiruvottiyur to commemorate the inauguration of the Tiruvottiyur factory.

1964

With the commissioning of the main plant in 1964, MRF also made progress in the export of tyres. An overseas office at Beirut (Lebanon) was established to develop the export market, and it was amongst India's very first efforts on tyre exports. This year also marked the birth of the now famous MRF Muscleman.

1967

MRF became the first Indian company to export tyres to USA - the very birthplace of tyre technology.

1973

MRF scored a major breakthrough by being among the very first in India to manufacture and market Nylon tyres passenger tyres commercially.

1978

MRF developed the MRF Superlug-78, a sturdy tyre for heavy-duty trucks. The tyre was a significant improvement over its existing products, and went on to become the country's largest selling truck tyre in later years.

1979

MRF's turnover crossed INR one billion.

1980

• MRF entered into a technical collaboration with the B.F. Goodrich Tyre Company of USA, which was involved with the development of tyres for the NASA space-shuttle. With this began a significant exercise in quality improvement and new product development.
• MRF took a major policy decision to be aggressive on the racing circuits.

1983

MRF began a rapid product development programme for new vehicles entering India.

1984

Sales crossed INR two billion. MRF tyres were the first tyres selected for fitment onto the Maruti Suzuki 800 - India's first small, modern car.

1985

MRF Nylogrip tyres for two-wheeler vehicles were launched.

1986

MRF was selected by the National Institution of Quality Assurance for their most prestigious award. Pitted against 20 tyre companies worldwide, MRF also won 6 Quality Improvement Awards instituted by the B.F. Goodrich Tyre Company from USA.

1987

MRF crossed the INR three billion mark and also became the No. 1 tyre company in India. MRF Legend, the premium nylon car tyre was introduced.

1988

The MRF Pace Foundation was set up, with international pace bowler, Dennis Lillee as its Director. Not long thereafter, pace bowlers trained at the Foundation were selected for the Indian Cricket Team.

1989

By 1989, MRF was the clear market leader in every tyre segment. Once again, in recognition of excellence, MRF was awarded the Visvesvaraya Award for the Best Business House in South India and the Economic Times Harvard Business School Award for the Best Corporate Performance. MRF collaborated with Hasbro International USA, the world's largest toy makers, and launched Funskool India. The company also entered into collaborations with Vapocure, Australia to manufacture polyurethane paint formulations and with Pirelli for MUSCLEFLEX Conveyor & Elevator Belting.

1989

MRF launched the MRF ZIGMA CC Radial synchronising with the MRF World Series Cricket Tournament for the Jawaharlal Nehru Trophy sposered by the company. The Chief Minister of Tamil Nadu, Dr. M. Karunanidhi, awarded MRF the Special Export Award. MRF also opened the MRF Tyredrome, India's first tyre company-owned wheel care complex at Madras (now Chennai).

1990

MRF brought the 6th World Cup Boxing Championship to Mumbai - the first of its kind - with 39 countries participating. The event was telecast live on TV networks worldwide.

1993

K. M. Mammen Mappillai was awarded the Padmashri Award of National Recognition for his contribution to industry - the only industrialist from South India to be accorded this honour until that time. MRF also became the first tyre company in India to cross the INR 10 billion mark. In addition, the company was voted by the Far Eastern Economic Review, as one of the ten leading Corporate Groups in India and a Leader in Asia.

MRF was selected as one of India's most admired Marketing Companies by the readers of the
A & M magazine.

1995

The company's turnover crossed INR 15 billion. MRF was chosen for fitment on the Daewoo Cielo. This year too MRF was voted by the Far Eastern Economic Review as one of the 10 leading Indian Companies.

1996

In the Golden Jubilee year, MRF's turnover crossed the INR 20 billion milestone. A special factory dedicated entirely to the manufacture of radials was started at Pondicherry. MRF Tyres were also chosen for fitment on the Ford Escort, Opel Astra and Fiat Uno. Further proof of its superior quality.

1999

MRF was declared the most ethical company by "Business World" magazine in its survey.

2000

MRF launched the Smile campaign on Indian roads.

2004

MRF's turnover crossed INR 30 billion mark

Fixed Assets :

Land and Building, Plant and Machinery, Moulds, Vehicles Others.

The company imports raw materials, components & spares parts and capital goods.

It is in trade terms with:-

v R. Mendez & Sons

v Span Chemicals

v Rotomech Industry

v Continental Equipment India Private Limited

v Aristo Packers Private Limited

v Noble Synthetics Limited

v Blue Bell Polymers

v Synthetic & Polymers

v Gopal Metal Containers

v SPGC Metal Industries Private Limited

v Laffans Petro Chemicals Limited

v Raveshia Pigments Limited

v Insap Engineers Private Limited

Financial

Despite unprecedented increase in cost of raw materials and their inability to pass on completely the increase in the cost to the customers, the Company has achieved satisfactory results due to cost cutting measures undertaken over a period of time. Two interim dividends of 30% each for the year ended 30th September, 2005 were declared by the Board of Directors on 21-07-2005 and on 25-10-2005. The Directors now recommend to the Annual General Meeting the declaration of Final dividend of 140% for the year ended 30-0§-2005. With this, the total dividend for the entire year works out to 200%. The total amount of dividends aggregates to Rs. 84.800 Millions . The Directors recommend that after making provision for taxation and

proposed Dividend, the amount of Rs.306.400 Millions be transferred to General Reserve. With this, the Company's Reserves and Surplus stand at Rs. 7498.100 Millions . Industrial Relations The overall industrial relations in all their manufacturing plants were cordial and harmonious throughout the year and the production and productivity were maintained at the desired levels.Exports Company's exports for the year ended 30th September,2005 were at Rs. 4265.700 Millions as against Rs. 3549.900 Millions for the previous year. This works out to an increase of almost 21%.

Future plan of Action

Sophisticated models are being continuously introduced by the multinational automobile manufacturer in passenger car segment. The performance requirements are stringent for these tyres. Continuous R&D efforts are being taken to meet the precise tolerances required by the original equipment manufacturers. New products for the specific requirement of the automobile sector for both domestic and export markets are continuously developed. There is a tremendous growth In the export market including PCTR. R&D efforts are taken to meet the stringent global standards as demanded by the foreign companies. R&D efforts are also taken to optimize the processing stages for improving the capacity utilization. This would result in reducing the processing cost and meeting the productivity requirements. R&D efforts are taken for developing aircraft tyres to meet the defence requirement.

PERFORMANCE OF THE COMPANY

The sales turnover of the Company during the year has registered a growth of 13.96% from Rs.29932.400 Millions in 2003-04 to Rs.34109.400 Millions in 2004-05. The Gross Profit amounted to Rs.2025.000 Millions against Rs.2082.600 Millions in the previous year. After provision for depreciation, interest and income tax, the net profit for the year stood at Rs.403.100 Millions (after adjusting exceptional item) as compared to Rs.288.000 Millions (after exceptional item of expenditure) in the previous year. Profit for the current year includes profit on sale of investments amounting to Rs.234.300 Millions . Export Incentives are lower during the current year since we have changed over from DEPB to DEEC scheme of imports.

HUMAN RESOURCES

All the units and offices of the Company maintained cordial and harmonious industrial relations throughout the year. The Company, through continued efforts has been able to settle grievances and improve productivity. Internal and external training programmes for knowledge, skill and behaviour continued during the year, which improved productivity of the employees at all levels. During the year, 8005 man-days of training have been done covering 5061 staff and 15772 workmen through 304 programmes. The total number of employees on the rolls of the Company as on 30th September, 2005 is 9239. The Company has adopted TPM across all the units and offices to bring about a change in the work culture to achieve excellence in

products, operation and services. Regular audits are conducted to ensure the proper implementation of TPM practices and policies. The efforts of cross-functional teams from various units have provided inputs, which have yielded results in areas of cost efficiency and

enhanced productivity. The awareness of safety and environment has been enhanced with

regular training programmes. All their units have been awarded certifications in ISO 14001.

AS PER WEBSITE

MRF Ltd., incorporated in 1960 to take over the business of the Madras Rubber Factory, MRF later went public in 1961. The company has its works at Chennai, Arakkonam, Medak, Kottayam, Pondicherry, Gummidipoondi and Goa. All MRF plants were accredited with ISO-14001 and its corporate funtions have been certified ISO-9001-2000 for its quality management. The Automobile Tyres and Automobile Tubes are having installed capacities of 150,00,000 and 145,00,000 respectively as on September,2003. 

 The company manufactures tyres and tubes in collaboration with Mansfield Tyres and Rubber, US. Its products include Nylogrip, Zigma, Tyredrome, etc. Its subsidiary companies are MRF Corp and MRF International. The company tyres are being exported to 65 countries worldwide and it has also having distribution network of 2500 outlets within India.

 MRF diversified into conveyor belts in collaboration with Pierelli, Italy, and in 1991-92, tied up with Vapocure, Australia, to manufacture polyurethane paint formulations and later into tyre machines in collaboration with Abex, US. It also diversified into speciality surface coatings, conveyor belts and leather.

 It has launched a steel-belted premium radial tyre variant called `MRF ZVTS'. While this tyre augments the company's overall range of radials, it also marks a step forward in terms of technology, performance and superior ride quality. It has become an original equipment supplier(OES) of radial tyres to Tata Indica. 

 Volvo, the only MNC which has entered the truck market in India, is sourcing most of its tyre requirements from MRF.

WORKING OF THE COMPANY: 

 Financial Results: 

  During the year under review, the Company attained the following financial results: 

   (Rs. Crore) 2003-2004 2002-2003 

 Total income 3047.97 2607.68Profit before tax and Exceptional item 84.23 94.01Add/(Less): Exceptional Item (41.33)* 73.74Profit before Taxation 42.90 167.75Provision for Taxation 14.10 50.37Net Profit 28.80 117.38 

 * The Exceptional item of expenditure of Rs.41.33 Crore represents Additional Excise Duty for the period upon 31-03-2000, which was originally permitted to be utilized for payment of Cenvat by Finance Act, 2003 (Rs. 73.74 Crete representing CENVAT credit upto September, 2002, was taken credit of in the previous year) since partly withdrawn by Finance Act, 2004, provided for. 

 In spite of increase in the cost of inputs and their inability to pass on the cost increases in selling prices, the Company has managed to achieve satisfactory results due to focused cost cutting measures undertaken over a period of time. 

 Two interim dividends of 30% each for the year ended 30th September, 2004 were declared by the Board of Directors on 29-07-2004 and on 15-10-2004. The Directors now recommend to the Annual General Meeting the declaration of final dividend of 140% for the year ended 30th9-20e4. With this, the total dividend for the entire year works out to 200%. The total amount of dividends aggregates to Rs.84.800 Millions . 

 The Directors recommend that after making provision for taxation and proposed Dividend, the amount of Rs.192.100 Millions be transferred to General Reserve. With this, the company's Reserves and Surplus stands at Rs.7191.700 Millions . 

AWARDS RECEIVED DURING THE YEAR: 

 The Company has received the Top Export Award from AIRIA and Special Export Award from CAPEXIL for the year 2003-2004. 

 RESEARCH & DEVELOPMENT (R & D): 

 1. Specific Areas in which R & D carried out by the Company: 

 a) Alternate source development. 

 b) Evaluation and Development of new raw materials.

 c) New products and new designs development. 

 d) New processes Development. 

 e) Development and modernization of equipment and machinery. f) Import Substitution. 

 2. Benefits derived as a result of the above R & D: 

 The R & D activities are co-ordinated in their separate, independent, fully equipped R & D Center in the R & D laboratories at all manufacturing units, the R & D laboratory for Natural Rubber at Kottayam and the shop floor of all their manufacturing operations.

 Alternate sources for raw materials are developed by critical evaluation at the R&D center and by carrying out actual trial runs at their various manufacturing units. This results in identifying more sources for cost optimization and ensuring adequate supplies. 

 New innovative raw materials are regularly evaluated in their products and selected materials are introduced for process and product performance enhancement. 

 New designs are developed to obtain specific performance requirements as required by the Original Equipment automotive customers and market demands. 

 New products are continuously developed for various applications such as: 

 a) Domestic Original Equipment Manufacturers b) Domestic replacement marketc) Defence sectord) Export markete) Farm Servicef) Off the Roadg) Tyres for Rallies and Racesh) Retread marketi) Belting industry 

 Efforts are continuously taken in the development of new innovative processes which has resulted in improved product consistency. 

 Structured R & D efforts in Engineering are carried out for developing machinery to suit the specific requirements of the manufacturing plants resulting in process, productivity and product performance improvements.

 Modification and adaptation of imported engineering equipments to meet specific needs have resulted in significant benefits of cost optimization and adaptation to the local environmental and operational needs. 

 Development of domestic suppliers for the imported raw materials have helped in optimizing the cost and reduced dependency on imports. 

Racing and Rallying

MRF tyres are developed in the toughest lab known to man

MRF is the pioneer of motor racing in India. The gruelling race track has been the laboratory for testing their tyres. Every MRF tyre designed is the result of a special acid test (that’s sheer torture) on the race and rally tracks. Sharp turns, abrupt braking and straight stretches of steaming asphalt. Excruciating conditions... but then only the tough can survive, and only the toughest win.

At MRF, all this is put to good use. MRF’s tyre experts and rubber technologists are present at every stage, and epecially during those crucial moments, to study tyre behaviour.

MRF tyres are made to run at speeds exceeding 150 Kmph, at which they are exposed to extreme conditions of heat 1and traction. The molecular stability of the rubber compounds is tested against severe gravitational stress. Their experts observe, analyse and gather information at the pits and the dirt track, which they pass on to the R&D department. This is then reviewed and used to develop safer, better quality tyres, not only for formula cars and racing bikes, but also for cars that rough it out on the tough Indian roads everyday.

MRF Tyredrome

The MRF Tyredrome has contemporary computerised equipment to diagnose and correct wheel related problems. The MRF Tyredrome is manned by factory-trained, experienced engineers and technicians.

  MRF Tyredrome Services

An Automatic Car-Wash that cleans the car inside out. The inside of the car is vacuum-cleaned, while brushes wash out the grime and dust on the outside with a special wax-based detergent.

Computerised Wheel Alignment with a state-of-the-art machine that provides zero-error readings, ensuring precise and accurate alignment of the wheels.

Compucentric Wheel Balancing: Dynamic balancing of wheel assembly results in increased tyre life and enhanced ehicle stability.

Electro-Pneumatic Tyre-Changing enables damage-free mounting and dismounting of tyres.

Brake Testing, using self-rotated rollers to test the braking efficiency of individual wheels.

Optical Headlamp Aligning with equipment that enables optimal luminance and focussing of the headlamps.

For the comfort and convenience, you can relax in their cool, luxurious lounge and watch car and tyre related video films while the car is in their expert care.

MRF net plummets 75%

Their Corporate Bureau / Chennai December 24, 2004

MRF Ltd (MRF) has witnessed a 75.46 per cent dip in net profit at Rs 288.000 Millions for the year ended September 30, 2004 against Rs 1173.800 Milliosn recorded in the same period last year.

The board has recommended a final dividend of 140 per cent on the paid-up capital for 2004, taking the aggregate dividend for the year to 200 per cent, including two interim dividends of Rs 30 each.

According to information in a press release, MRF has registered a 16.67 per cent increase in total income to Rs 3,0341.700 Millions in the current year against Rs 2,6004.400 Millions achieved last year.

The company claims the results achieved were in spite of adverse market conditions that included increase in cost of inputs and its inability to pass on the cost increase in selling prices.

MRF’s gross profit before taxation and exceptional item fell by 10.40 per cent at Rs 842.300 Millions the year ended September 30, 2004 (Rs 940.100 Millions ).

The company had something to celebrate on the front of exports with an increase of 9.81 per cent in the current year at Rs 3511.800 Millions (Rs 3167.200 Millions ). The depreciation provided for the current year stood at Rs 958.800 Millions as against Rs 919.100 Millions in the previous year.

MRF is hopeful that the improvement in the commercial vehicle market will help improve the offtake of tires gradually over time.

However, the steep increase in price of natural rubber, petroleum based inputs and lower availability of some materials internationally is proving to be a hitch to the company. It expects that cost-cutting measures and market preferences for its products will help in the present situation.

The company’s annual general meeting will be held on March 17, 2005 and the transfer books and register of members will remain closed on March 07 and March 17, 2005 for the payment of final dividend for the year ended September 30, 2004 to those shareholders whose name appear on the register of members on March 17, 2005.

KM Mammen,
Chairman & MD, MRF Ltd.

Mr. K.M. Mammen, born in 1949 is the Chairman and Managing Director of MRF Limited, India's largest Tyre Company, which is also diversified in Speciality Surface Coatings: Leather Products: Educational Aids for Children in the form of Toys, Games and Puzzles. The present turnover of MRF is over Rs.23000.000 Millions . MRF is also one of the Country's leading Trading Houses and was given the Top Export Award by CAPEXIL for its Sterling performance. MRF is holding the 12th position among the tyre companies in the world. MRF is a recipient of J.D. Power Customer Satisfaction Award.

Mr. Mammen had his initial education at the Madras Christian College School and thereafter graduated from the Madras Christian College. He then went to the U S A where he had training with their erstwhile Collaborators, The Mansfield Tire & Rubber Co.

Mr. Mammen joined MRF Limited as its Whole Time Director in 1981 and became its Vice Chairman and Managing Director in 1986.

Besides being associated with several Chambers of Commerce, Board of successful companies, he is a sponsor and promoter of Sport. He has taken keen interest in Motor Racing and Rallies in which he has carved out a place for India on the world map. Cricket has received a great amount of his personal attention which is reflected in the success of the MRF Pace Foundation and International events like the "MRF World Series for Jawaharlal Nehru Cup".

MRF Pace Foundation imparts training in fast bowling not only to Indian Players but also to Players of other cricketing countries also.

He is a Vice President of Tamil Nadu Cricket Association, Chennai and President of Madras Christian College Alumni Association, Tambaram, Chennai. He is a Director of the Board of Madras Christian College. He is a member in the Executive Committee of Federation of Indian Chambers of Commerce & Industry (FICCI). He is a member in the Development Council for Tyres and Tubes, Ministry of Commerce & Industry and the National Council of Confederation of Indian Industry (CII). He is in the Board of Goa Institute of Management. He was Vice Chairman of the Automotive Tyre Manufacturers' Association.

He is the father of two sons and his favourite sport and pastime are playing Squash and Golf and watching Cricket and Tennis.

CMT REPORT [Corruption, Money laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.45.85
UK Pound	1	Rs.85.82
Euro	1	Rs.58.62

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	8
PAID-UP CAPITAL	1~10	9
OPERATING SCALE	1~10	8
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	9
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	9
--RESERVES	1~10	8
--CREDIT LINES	1~10	9
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		76

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions