MIRA INFORM REPORT

Report Date :

09.12.2008

IDENTIFICATION DETAILS

Name :	MRF LIMITED
Registered Office :	New No. 114, (Old no. 124) Greames Road, Chennai – 600 006, Tamilnadu
Country :	India
Financials (as on) :	30.09.2007
Date of Incorporation :	05.11.1960
Com. Reg. No.:	18-004306
CIN No.: [Company Identification No.]	L25111TN1960PLC004306
TAN No.: [Tax Deduction & Collection Account No.]	CHEM07088E
PAN No.: [Permanent Account No.]	AAACM4154G
Legal Form :	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 and 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 50000000
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 :	New No. 114, (Old no. 124) Greames Road, Chennai – 600 006, Tamilnadu, India
Tel. No.:	91-44-28292777
Fax No.:	91-44-28295087/28294089
E-Mail :	mrfmktg@vsnl.com mrfexpo@vsnl.com mrfmalt@md2.vsnl.net.in mrfshare@md3.vsnl.net.in mrfshare@mrfmail.com
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 :	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
Office :	C – 79, Ground Floor, Okhla Industrial Area, Phase – I, Delhi, India E-mail : mrfpaint.del@gnmds.global.ems.vsnl.net.in No. 2, Ground Floor, Plot No. 374, Build Arch Terrace, Sitla Devi Temple Road, Mahim, India Tel. No. 91-22-24463565 E-mail : mrfpaint.bby@gnbom.globalnet.ems.vsnl.net.in Tarapore Towers, Fifth Floor, 826, Anna Salai, Chennai, Tamilnadu, India E-mail : mrfpaint.mds@gnmds.globalnet.ems.vsnl.net.in No. 2, New Taratolla Road, Kolkata, West Bengal, India Tel. No. : 91-33-24589830 E-mail : imrfpaint.ccu@gncal.globalnet.ems.vsnl.net.in

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

KEY EXECUTIVES

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 and 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 (As on 30.09.2007) :-

PARTICULARS	Unit	Licensed Capacity	Installed Capacity	Actual Production
Automobile Tyres	Nos.	@	24850000	22713766
Automobile Tubes	Nos.	@	26000000	23385121
Tread Rubber	MT	7946	8943	1327
Pre-cured Treads	MT	@	24000	6607
Bicycle Tyres	Nos.	2000000	2000000	Nil
Bicycle Tubes	Nos.	2000000	2000000	Nil
Rubberised Tank Tyres & Boggie Wheels	Nos.	15000	15000	Nil
Conveyor Belting	MT	@	3000	3223
Specialty Surface Coatings	KL	@	2000	2191

GENERAL INFORMATION

No. of Employees :

5369

Bankers :

v State Bank of India, Madame Cama Road, Mumbai

v National Bank of Abu –Dhabi – Dubai

v Standard Chartered Bank – Dubai

v Bank for Foreign Trade of Vietnam

v Syndicate Bank

Facilities :

SECURED LOANS	30.09.2005 [Rs In Millions]
Term Loan From Bank [Secured/ to be secured by hypothecation of Specific items of machinery] (Repayable within one year – Rs. 143.300 millions)	777.000
Other loans : Banks (Secured by hypothecation of stock-in-trade, stores and spare parts and book debts)	2562.200
Total	3339.200
Unsecured Loans
Fixed Deposits (Repayable within one year – Rs. 79.500 millions)	182.600
Short term Loan and Advances
From a Bank	398.600
Other loans and Advances	650.100
Term Loan from Bank (Repayable within one year)
From others:
Dealer Security Deposit	2272.000
Sales Tax Deferral Scheme (Repayable with in one year – Rs. 37.100 millions )	891.800
Total	4395.100

Banking Relations :

Satisfactory

Auditors :

v Sastri and Shah

Chartered Accountants

Chennai, Tamilnadu, India

v M. M. Nissim & Company

Chartered Accountants

Mumbai, Maharashtra, India

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

v MRF Lanka Private Limited

Membership :

v Confederation of Indian Industry

CAPITAL STRUCTURE

(As on 30.09.2007) :-

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
		Total	Rs. 100.000 millions

Issued Capital :

No. of Shares	Type	Value	Amount
4241214	Equity Shares	Rs.10/- each	Rs. 42.412 millions

Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
4241143	Equity Shares	Rs. 10/- each	Rs. 42.411 millions
	1) 554461 Equity shares allotted as fully paid up pursuant to a contract without payments being received in cash
	2) 1781118 Equity Shares allotted as fully paid up by way of bonus Shares by Capitalisation of Reserves.

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		30.09.2007	30.09.2006	30.09.2005
SHAREHOLDERS FUNDS
1] Share Capital		42.400	42.400	42.400
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		9819.100	8200.500	7498.100
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		9861.500	8242.900	7540.500
LOAN FUNDS
1] Secured Loans		3339.200	2436.800	2995.700
2] Unsecured Loans		4395.100	4192.100	4103.900
TOTAL BORROWING		7734.300	6628.900	7099.600
DEFERRED TAX LIABILITIES		102.300	124.300	0.000
DEFERRED PAYMENT CREDIT		616.300	659.700	0.000
TOTAL		18314.400	15655.800	14640.100
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		6567.500	6496.700	5368.100
Capital work-in-progress		2430.300	662.600	1519.900
INVESTMENT		720.200	702.300	137.500
DEFERREX TAX ASSETS		0.000	0.000	16.300
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	6933.400	5656.300	5535.600
	Sundry Debtors	5519.200	5393.600	4623.400
	Interest Accrued on investment	0.00	0.000	0.600
	Cash & Bank Balances	731.700	533.200	460.200
	Other Current Assets	0.000	0.000	2.100
	Loans & Advances	2373.000	1795.000	1120.000
Total Current Assets		15557.300	13378.100	11741.900
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	4847.300	4358.900	3205.800
	Provisions	2113.600	1225.000	937.800
Total Current Liabilities		6960.900	5583.900	4143.600
Net Current Assets		8596.400	7794.200	7598.300
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		18314.400	15655.800	14640.100

PROFIT & LOSS ACCOUNT

PARTICULARS		30.09.2007	30.09.2006	30.09.2005
Sales Turnover		44065.500	37242.000	34371.300
Other Income		24.170	270.700	892.500
Total Income		4430.720	37512.700	35263.800
Profit/(Loss) Before Tax		2609.600	634.000	553.400
Provision for Taxation		891.800	199.000	150.300
Profit/(Loss) After Tax		1717.800	435.000	403.100
Export Value		4934.100	5041.000	4265.700
Import Value		8737.300	4773.800	NA
Expenditures :
	Manufacturing Expenses	NA	NA	911.900
	Administrative Expenses	NA	NA	2869.300
	Raw Material Consumed	29848.700	26258.600	21255.900
	Miscellaneous Expenses	NA	NA	141.700
	Salaries, Wages, Bonus, etc.	NA	NA	1702.400
	Interest	492.400	492.700	406.000
	Power & Fuel	NA	NA	1804.500
	Depreciation & Amortization	1534.100	1456.600	1103.200
	Other Expenditure	9822.400	8670.800	4515.500
Total Expenditure		41697.600	36878.700	34710.400

QUARTERLY RESULTS

Year	31.12.2007 1^st Quarter	31.03.2008 2^nd Quarter	30.06.2008 3^rd Quarter
Sales Turnover	11555.700	12148.300	12743.700
Other Income	53.100	54.100	50.400
Total Income	11608.800	12202.400	12794.100
Total Expenditure	10329.600	10658.500	11698.300
Operating Profit	1279.200	1543.900	1095.800
Interest	136.200	161.300	164.400
Gross Profit	1143.000	1382.600	931.400
Depreciation	349.100	385.300	445.800
Tax	276.400	341.100	167.000
Reported PAT	517.500	656.200	318.600

KEY RATIOS

Year	30.09.2007	30.09.2006	30.09.2005
Debt-Equity Ratio	0.86	0.91	0.86
Long Term Debt-Equity Ratio	0.56	0.56	0.51
Current Ratio	1.58	1.62	1.68
TURNOVER RATIOS
Fixed Assets	2.56	2.40	2.26
Inventory	8.00	7.57	6.64
Debtors	9.23	8.45	7.99
Interest Cover Ratio	6.30	2.27	1.89
Operating Profit Margin(%)	9.20	6.08	5.44
Profit Before Interest And Tax Margin(%)	6.16	2.64	2.23
Cash Profit Margin(%)	6.46	4.45	3.96
Adjusted Net Profit Margin(%)	3.41	1.01	0.75
Return On Capital Employed(%)	18.39	7.40	5.57
Return On Net Worth(%)	18.98	5.41	3.47

LOCAL AGENCY FURTHER INFORMATION

HISTORY

Subject is a well known India's No. 1 tyre manufacturing company headquartered in Chennai, which was incorporated on 5th November 1960. The Company manufactures the largest range of tyres in India and is the market leader with the largest market share in almost every segment of the tyre industry, product portfolio of the company includes Tyres, Pretreads and Conveyor Belts. MRF is into a league of its own with six manufacturing plants in India located in Tiruvottiyur and Arakonam in Tamil Nadu, Kottayam in Kerala, Ponda in Goa, Medak in Andhra Pradesh, and the most recent one in the Union Territory of Pondicherry. A distribution network of the company is over 2,500 outlets in India and also MRF has overseas offices in United Arab Emirates, Bangladesh and Vietnam. Apart from the domestic, the company exports its products to over 75 countries worldwide.

After the huge success in the tread rubber industry in the year 1961, MRF entered into the manufacture of tyres, by establishing technical collaboration with the Mansfield Tire & Rubber Company of, USA. Around the same time, the company registered as a public company and also set up a pilot tyre manufacturing plant at Tiruvottiyur, Chennai, India. Later, in 1963, the company made a foundation stone for the Rubber Research Centre at Tiruvottiyur to commemorate the inauguration of the factory. The main plant was commissioned in the year 1964 and also in the same year, MRF ventured into the export market by setting up an overseas office at Beirut (Lebanon) to develop this market, which was amongst India's very first efforts in export. Also the company marked the birth of the now famous 'MRF Muscleman'. In 1967, MRF became the first Indian company to export tyres to USA - the birthplace of tyre technology. During the year 1980, the company had entered into a technical collaboration with the B. F. Goodrich Tyre Company, USA that paved the way to a significant exercise in new product development and quality improvement. MRF had introduced Nylogrip tyres for two-wheeler vehicles and also introduced Legend, a premium segment nylon car tyre in the year 1985 and 1987 respectively.  

The Company made the collaborations in the year 1989 with Hasbro International USA, the world's largest toy maker, and thereby launched Funskool India, Vapocure Australia, to manufacture polyurethane paint formulations and Pirelli Italy, for Conveyor & Elevator Belting. MRF was voted by the Far Eastern Economic Review in the year 1995 as one of the 10 leading corporate groups in India. In 1996, a factory dedicated entirely for the manufacture of radial tyres, was set up at Pondicherry. During the year 1999, the company was selected as the most ethical company in India by 'Business World' magazine. In 2000, MRF had launched the Smile campaign for the Indian roads. In the year of 2001, the company won the No. 1 award for Customer Satisfaction by J.D. Power Asia Pacific as its credentials. Subsequently, during the year 2002, for the second year in succession, MRF won the No. 1 award for Customer Satisfaction from the same J.D. Power Asia Pacific. In 2004, MRF had received the highest rankings in the study in four of the five factors determining overall satisfaction with tyres appearance, durability, traction and handling. Also in the same year, the company made tie up with Maruti Udyog to boost motorsports in India. During the year 2004-05, the product range of the company had expanded with Go-kart & Rally tyres and tyres for two/three wheelers. MRF had received the TOP Export Awards from CAPEXIL as well as AIRIA for the period ended 2005. The Company had launched premium truck tyre Super Lug 50-FS in the year of 2007.

In May 2008, MRF signed the memorandum of understanding (MoU) with government of Tamil Nadu for the new MRF plant to be located at Perambulur, Trichy and also for expansion of its existing plants in Tamil Nadu. MRF plans to foray into the aviation tyre space with the unveiling of Aero Muscle, a product born out of in-house research and perfected over the last three years. 

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, subject established its first office at 334, Thambu Chetty Street, Madras (now Chennai), Tamil Nadu, India.

1952

Subject 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

The company 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, subject had become the market leader with a 50% share of the tread-rubber market in India. So effective was subject'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, subject entered into the manufacture of tyres. The company established a technical collaboration with the Mansfield Tire and 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

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

1973

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

1978

The company 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

The company’s turnover crossed INR one billion.

1980

Subject 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.

The company took a major policy decision to be aggressive on the racing circuits.

1983

Subject 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

The company Nylogrip tyres for two-wheeler vehicles were launched.

1986

Subject 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

Subject 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 and Elevator Belting.

1989

MRF launched the MRF ZIGMA CC Radial synchronising with the MRF World Series Cricket Tournament for the Jawaharlal Nehru Trophy sponsored 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.

The company was selected as one of India's most admired Marketing Companies by the readers of the
A and M magazine.

1995

The company's turnover crossed INR 15 billion. Subject 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

Total Income 4260.73, 3482.09 Profit before tax and exceptional Items 63.40 59.52 Add/[Less]: Exceptional Items 36.41* (4.78) Profit before Taxation 99.81 55.34Provision for Taxation 19.90 15.03Net Profit 79.91 40.31 

Purchase tax provision written back/sales tax refunds due for earlier years on account of a favourable judicial decision. 

Despite unprecedented increase in cost of raw materials, immense competition in the industry with prices and discounts posing a challenge in passing on the increase in the cost to the customers, the company has achieved satisfactory results last year due to cost cutting measures undertaken over a period of time. 

Two interim dividends of 30% each for the year ended 30th September, 2006 were declared by the Board of Directors on 20-07-2006 and on 30-10-2006. The Directors now recommend to the Annual General Meeting the declaration of final dividend of 140% for the year ended 30-09-2006. With this, the total dividend for the entire year works out to 200%. The total amount of dividends aggregates to Rs.84.8 Millions. 

The Directors recommend that after making provision for taxation and proposed dividend, the amount of Rs.702.4 Millions be transferred to General Reserve. With this, the company's reserves and surplus stand at Rs.8200.5 Millions. 

Industrial Relations 

The Company maintained a cordial industrial relations atmosphere across all its manufacturing units except at Tiruvottiyur plant where after prolonged negotiations with the union, the Company had to regrettably resort to a lock out effective 3rd December, 2007 as such discussions did not result in any solution to issues of indiscipline as well as long pending non-implementation of the agreement clauses regarding industrial engineering norms. 

The Management Discussion and Analysis Report gives an overview of the developments in human resources/industrial relations during the year. 

Exports 
The Company achieved an Export Turnover of Rs. 4923.400 millions for the year ended 30th September, 2007 as against Rs. 5025.500 millions for the previous year inspite of fierce competition. The appreciation of Rupee against the US $ has however been a major blow to exports. 

Dealer network all across the globe has been strengthened with marketing support and the strategies to achieve a dominant market share have been put in place. 

Offices in Dubai, Vietnam and Australia continue to play a vital role in providing market information to fine tune strategies of the company. 

Prospects For The Current Year 

The volatility in the price of natural rubber as well as crude continues to be a matter of concern and needs to be watched closely. It is hoped that the raw material cost situation will stabilize during the current year. The steep increase in the inflow of imported tyres especially from China could be a matter of concern and they hope that the Government would take adequate measures to ensure a level playing field. In order to remain competitive and to improve and sustain profitability, the company is focusing on cost reduction and cost optimization process across the plants. 

Management Discussion And Analysis Report 

(within the limits set by the Company's competitive position) 

The core business of MRF is manufacturing, distribution and sale of tyres, tubes and flaps for various kinds of vehicles, The management discussion and analysis given below discusses the key issues for various sectors of the business. 

Industry Structure and Development 

The tyre industry consists of major tyre companies producing truck tyres and other range of tyres and certain smaller companies making only non-truck tyres. The market for tyre is primarily driven by the vehicle manufacturers whose growth determines the market size. 

Among the vehicle manufacturers, in the commercial vehicles segment, Tata Motors and Ashok Leyland lead with Volvo, Eicher Motors, Force Motors, etc. coming into the market in recent times. The segment is undergoing a change since multi axle vehicles are more in demand and the manufacturers are accordingly changing their product mix. 2006-07 saw a very high growth of around 34% (YOY) in heavy commercial vehicles. The growth in the light commercial vehicles was 31% (YOY) which is mainly driven by the introduction of the TATA ACE vehicle. 

The passenger cars and 3 wheeler segment also witnessed a high growth of 18% (YOY) and 28% (YOY) respectively in the last year. Tractors have also witnessed an impressive growth in recent times while the motorcycle segment continues to grow year after year. 

The volatility in the price of natural rubber as well as crude continues to be a matter of concern and needs to be watched closely. 

Discussion And Analysis 

This year saw the introduction of the Superlug 50 FS tyre - a path breaking innovation yielding greater fuel economy and Superlug 505 the highest mileage bias ply tyre. 

MIZE products continue to have high preference in the market place. This has been manifested by MRF winning the J.D. Power Asia Pacific award for "Highest customer satisfaction with original tyres" for the fifth time and also recognized as the " Most trusted Indian Tyre Company" in the TNS 2006 global corporate social responsibility study. MRF has reached this stature on account of its products and policies. 

Exports 
The Company achieved an export turnover of Rs 4923.400 millions for the year ended 30th September, 2007 as against Rs. 5025.500 millions for the previous year. The margins on exports were under pressure due to the appreciating rupee, Necessary steps have been taken for improving the margins for the next year. 

The Company's extensive network of dealers all across the globe has been strengthened with marketing support and the introduction of a range of products. Focus markets have been identified and strategies to achieve a dominant market share have been put in place. Seeing the potential for both conveyor belts and pre-cured rubber, efforts have been taken to identify and build markets for these premium products. 

The Company has won the CAPEXIL - Top Export Award and AIRIA Top Export Award for the year 2006-07. 

Conveyor Belts 

The demand has been quite buoyant from export and domestic markets on account of the performance of their product. Apart from the domestic market, the product is exported to major markets of Australia, Europe and South America. The turnover for conveyor belt has gone up from Rs. 485.900 millions in the year 2005-06 to Rs. 528.600 millions in 2006-07. 

Speciality Coatings 

The Speciality Coatings division achieved a turnover of Rs. 433.600 millions as against Rs 38.48 Crete in the previous year, a growth of around 13% over previous year. The profit after depreciation and taxes is Rs. 20.800 millions, which works out to a growth of 53% over the previous year. 

There was a major increase in the cost of almost all inputs during the year due to steep increase in the cost of petroleum products. The improved profitability was on account of improved product mix and better prices realised from the market. They made arrangements to meet the market demand from their industrial and decorative clients by out-processing the material under their strict supervision. The second out-processing unit will be on stream by the middle of December, 2007 and consequently their production capacity will go up substantially. 

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. 

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

TRADE REFERENCES:-

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

FIXED ASSETS :

· Land and Building,

· Plant and Machinery,

· Moulds,

· Vehicles

OTHER INFORMATION:-

Contingent Liabilities not provided for:

(i) Guarantees given by the banks - Rs.243.200 millions (Previous Year - Rs.193.400 millions).

(ii) Letters of Credit issued by the banks - Rs.1454.800 millions (Previous Year - Rs.812.600 millions).

(iii) Customs Duty on import of equipments and spare parts under EPCG Scheme - Rs.88.900 millions (Previous Year - Rs.72.400 millions).

(iv) Claims not acknowledged as debts:

(a) Disputed Sales Tax demands pending before the Appellate Authorities/High Court - Rs.48.600 millions (Previous Year - Rs.33.000 millions).

(b) Disputed Excise/Customs Duty demands pending before the Appellate Authorities/High Court – R & 9Z570.000 millions (Previous Year - Rs.916.200 millions).

(c) Contested ESI Demands pending before the High Court - Rs.1.300 millions (Previous Year - Rs.1.300 millions).

AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 30th SEPTEMBER, 2006 [Rs in Millions]				CONSOLIDATED FINANCIAL RESULTS
	9 Months  ended  30/06/06	3 Months  ended  30/09/06	Year ended  30/09/06	Year ended 30.09.06
Sales/Income from operations (Including Export Incentives)	30536.800	11946.300	8933.700	42484.100
Less: Excise Duty	3621.300	1473.300	1064.200	5094.600
Other Income	63.200	61.000	126.200	123.400
Total Expenditure
a) (Increase)/Decrease in stock in trade	57.200	50.200	(179.500)	106.400
b) Consumption of raw materials	18711.500	7439.700	5832.100	26152.900
c) Staff Cost	1436.100	565.200	457.900	2002.400
d) Other Expenditure	4936.100	1737.400	1571.400	6671.600
Interest	363.200	129.500	94.800	492.900
Depreciation	1043.300	413.300	319.100	1457.300
Profit before tax (1+2-3-4-5)	435.300	198.700	199.900	629.400
Add/(Deduct): Exceptional Item	--	364.100	(41.800)	364.100
Profit Before Taxation	435.300	562.800	158.100	993.500
Provision for Taxation (including Fringe Benefit Tax and Net of Deferred Tax)	156.000	43.000	44.600	200.500
Net Profit (8-9)	279.300	519.800	113.500	793.000
Paid-up Equity Share Capital (Face Value of Rs.10/- each)	42.400	42.400	42.400	42.400
Reserves Excluding revaluation reserves	--	--		8200.300
Basic and diluted EPS for the period	Rs. 65.85	Rs. 122.56	Rs.56.77	Rs.186.98
Aggregate of non-promoter shareholding -
No. of Shares	3120129	3121679	3132168	3121679
% of Shareholding	73.57 %	73.61 %	73.85%	73.61%

SEGMENTWISE REVENUE, RESULTS AND CAPITAL EMPLOYED [Rs in Millions]				CONSOLIDATED FINANCIAL RESULTS
	9 Months  ended  30/06/06	3 Months  ended  30/09/06	Year ended  30/09/06	Year ended 30.09.06
Segment Revenue
(a) Rubber Products	26662.700	10464.200	37126.900	26152.900
(b) Others	316.000	69.800	385.800	386.400
Total	26978.700	10534.000	37512.700	37512.900
Segment Results - Profit Before Tax and Interest from each segment
(a) Rubber Products	753.000	336.100	1089.100	1084.100
(b) Others	45.500	[7.900]	37.600	38.200
(c) Exceptional Item	--	364.100	364.100	364.000
Total	798.500	692.300	1490.800	1486.400
Less: Other Unallocable, expenditure (net of unallocable Income)	363.200	129.500	492.700	492.900
Total Profit Before Tax	435.300	562.800	998.100	993.500
Capital Employed (Segment Assets - Segment Liabilities)
(a) Rubber Products			14897.000	14886.900
(b) Others			136.700	150.500
Total Rubber Products include Tyres, Tubes, Flaps, Tread Rubber and Conveyor Belt			15036.700	1503.7400

Notes:

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 20th December, 2006.

The Board has recommended a Final dividend of 140 % for the year ended 30.09.2005, which along with the two interim dividends of 30% each already paid, works out to 200%.

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.

Details of Number of Investor Complaints for the quarter ended 30.09.2006 - beginning-0, received-5, disposed of-5.

Figures have been regrouped wherever necessary.

UNAUDITED FINANCIAL RESULTS FOR THE THREE MONTHS ENDED 31^ST DECEMBER, 2007

Rs in Millions

PARTICULARS	Quarter Ended		Previous Accounting Year ended 30/09/2007 (Audited)
	31.12.2007	31.12.2006
1 Gross Sales/Income from operations (Including Export Incentive)	13116.500	12079.300	50412.000
Less: Excise Duty	1560.800	1501.000	6302.000
Net Sales / Income from operations	11555.700	10578.300	44110.000
2 Other Income	53.100	37.800	197.200
3 Total Income (1+2)	11608.800	10616.100	44307.200
4 Total Expenditure
a) (Increase)/Decrease in stock in trade and work in progress	414.600	[161.500]	[634.300]
b) Consumption of raw materials	7335.800	7466.300	30312.200
c) Purchase of traded goods	22.700	26.600	170.800
d) Staff Cost	597.100	539.000	2400.200
e) Depreciation	349.100	347.400	1534.100
f) Other Expenditure	1959.400	1855.700	7422.200
Total	10678.700	10073.500	41205.200
5 Interest	136.200	111.200	492.400
6 Profit before tax (3) - (4+5)	793.900	431.400	2609.600
7 Provision for Tax	276.400	141.800	891.800
8 Net Profit after Tax (6-7)	517.500	289.600	1717.800
9 Paid-up Equity Share Capital (Face Value of Rs.10/- each)	42.400	42.400	42.400
10 Reserves Excluding revaluation reserves	--	--	9819.100
11 Earning per Share (EPS)
Basic and diluted EPS (Rs. per Share)	1220.300	682.800	4050.500
12 Public Shareholding
No. of Shares	3115698	3122090	3113119
% of Shareholding	73.46%	73.63 %	73.40 %

Notes:

1. The above results have been subjected to Limited Review by the Statutory Auditors, reviewed by the Audit Committee and approved by the Board of Directors at its meeting on 31^st January, 2008.

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 Relevant Previous Year as per Income Tax Act.

3. In pursuance of the provisions of the Accounting Standard 17 concerning Segment Reporting issued by the Institute of Chartered Accountants of India, Rubber Products and Others reported by the Company in earlier periods as two segments, have been grouped together as the only business segment in which the company operates.

4. The company had declared a token lock out for one day on 30.11.2007 at its Tiruvottiyur Factory in Chennai and thereafter since there was no change in the situation, lock out was declared at the said factory from 3.12.2007 which is still continuing.

5. Figures have been regrouped wherever necessary.

6. Details of Number of Investor complaints for the quarter ended 31.12.2007 - Beginning - 0, Received - 1, Disposed of - 1.

FINANCIALS - Five Years Financial Summary

(Rs. in Millions)	2007	2006	2005	2004	2003
Sales	50367.500	42336.600	34371.300	29894.300	25419.700
Other Income	241.700	270.700	449.600	585.400	657.100
Total Income	50609.200	42607.300	34820.900	30479.700	26076.800
Profit Before Taxation	2609.600	998.100	553.400	429.000	1677.500
Provision for Taxation	891.800	199.000	150.300	141.000	503.700
Profit after Taxation	1717.800	799.100	403.100	288.000	1173.800
Share Capital	42.400	42.400	42.400	42.400	42.400
Reserves	9819.100	8200.500	7498.100	7191.700	6999.600
Net Worth	9861.500	8242.900	7540.500	7234.100	7042.000
Fixed Assets Gross	22897.700	19559.900	17878.500	15344.700	13488.000

PRESS RELEASE

BSE   17-Sep-2008

MRF Limited has informed BSE that the Company will publish the Annual Audited Financial Results including audited financial results for the fourth quarter within a period of 3 months of end of the accounting year of the Company ended September 30, 2008. In view of the above, the Unaudited Financial Results for the Quarter ended September 30, 2008 will not be published.

BSE   02-May-2008

MRF Limited has informed BSE regarding a Press Release dated May 02, 2008 in connection with "Signing of Memorandum of Understanding with Government of Tamil Nadu". Press Release: "Mr. K M Mammen, Chairman and Managing Director, MRF Limited and Mr. M F Farooqui, Secretary to Government, Industries Department, Government of Tamil Nodu today signed the Memorandum of Understanding in the presence of the Hon'ble Chief Minister of Tamil Nadu for the new MRF plant to be located at Perambulur, Trichy, an industrially backward district in Tamil Nadu, and also for expansion of its existing plants in Tamil Nadu. This will be MRF's third plant to be established in the State of Tamil Nadu. The other factories in Tamil Nadu are located at Tiruvottiyur and Arakonam. In the terms of the MOU, the State Government has offered incentives to the Company in line with the Government's New Industrial Policy, 2007. The Company will initially invest Rs 900 crores for ramping its radial tyre capacity by 3,50,000 radial tyres with a plan to double the capacity to 7,00,000 radial tyres in the second phase. MRF is acquiring nearly 290 acres of land for its new facility in Perambulur. Besides the two plants in Tamil Nadu, MRF Limited has manufacturing facilities in Puducherry, Kottayam, Goa and Medak. MRF today is the number one tyre manufacturing Company in India producing a large range of tyres. MRF had a humble beginning manufacturing toy balloons in 1949 with the establishment of a factory in Tiruvottiyur, Madras. MRF started manufacture of tyres / tubes from 1961. MRF today exports tyres to nearly 75 countries worldwide. The plant at Perambulur, Trichy will employ cutting-edge technology by installing the latest equipments available for the production of radial tyres. This facility has been planned to provide a major thrust to MRF's production capacity especially passenger and truck radials to keep pace with the rising demand in the automobile industry."

BSE   29-Apr-2008

MRF Limited has informed BSE that the Company's shares have been delisted from the following Stock Exchanges : 1. The Delhi Stock Exchange Association Limited 2. The Calcutta Stock Exchange Association Limited 3. Bangalore Stock Exchange Limited 4. Cochin Stock Exchange Limited

BSE   02-Apr-2008

MRF Limited has informed BSE that the members at the 47th Annual General Meeting (AGM) of the Company held on March 20, 2008, inter alia, have accorded the following: 1. Adoption of the Balance Sheet as at September 30, 2007 and the Profit & Loss Accont for the year ended on that date and the Reports of the Directors and Auditors. 2. Declaration of a Final Dividend of 140% on the Paid-up Capital of the Company as on September 30, 2007. 3. Re-appointment of Mr. V Sridhar, Mr. S Nandagopal, Dr. K C Mammen as Directors of the Company. 4. Re-appointment of Messrs. Sastri & Shah, Chennai and M M Nissim & Co., Mumbai as Auditors of the Company from the conclusion of this Annual General Meeting till the conclusion of next Annual General Meeting of the Company on remuneration, terms & conditions. 5. Re-appointment of Mr. Arun Mammen as Managing Director of the Company for a period of 5 years commening from April 01, 2008 on remuneration, terms and conditions. 6. Appointment of Mr. Rahul Mammen Mappillai, son of Mr. K M Mammen, Chairman & Managing Director of the Company, to hold office or place of profit in the Company as Vice President - Planning & Development, with effect from April 01, 2008 on revised monthly remuneration.

BSE   05-Feb-2008

With reference to the earlier announcement dated December 03, 2007 about the continuation of the lock out from the commencement of first shift on December 03, 2007 at the Company's plant at Tiruvottiyur, Chennai, In this regard the Company has issued the following Press Release" "The Management of MRF Limited is pleased to inform all concerned that consequent to the assurance of the Hon'ble Chief minister of Tamil Nadu Dr. Kalaignar M Karunanithi and the Hon'ble Minister for Electricity Thiru Arcot N veerasamy on the immediate resolution of the issues leading to the work stoppage/strike and consequent lock out with Government's intervention and on their advise for immediate reopening of the factory, it is decided to lift the lock out effective 7.00 am on February 05, 2008 which was declared vide Notice dt. December 03, 2007 at Tiruvattiyur Factory of MRF Limited The Management of MRF Limited also advise the workman to extend co-operation with the management and the Government for amicable resolution of issues at the earliest. This decision of Management is without prejudice to its rights and contentions in the proceedings before the High Court. The Management takes this opportunity to express its gratitude to the Hon'ble Chief Minister and Hon'ble Minister for Electricity."

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.49.22
UK Pound	1	Rs.73.04
Euro	1	Rs.63.14

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 EXPLANATIONS

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
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

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