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MRF Ltd.

BSE: 500290 Sector: Auto
NSE: MRF ISIN Code: INE883A01011
BSE 16:01 | 27 Mar 2018 MRF Ltd
NSE 05:30 | 01 Jan 1970 MRF Ltd
OPEN 70208.95
52-Week high 74499.00
52-Week low 51148.00
P/E 29.69
Mkt Cap.(Rs cr) 30,697
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 70208.95
CLOSE 69983.00
52-Week high 74499.00
52-Week low 51148.00
P/E 29.69
Mkt Cap.(Rs cr) 30,697
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

MRF Ltd. (MRF) - Director Report

Company director report

Ten Year Financial Summary 2014-16 2014 2013 2012 2011 2010 2009 2008 2007 2006
( Rs. Crore) Sales 22495.36 14640.94 13444.75 13054.03 10637.03 8080.45 6141.94 5715.52 5036.75 4233.66
Other Income 210.92 73.47 37.40 39.73 33.14 29.13 34.40 40.83 24.17 27.07
Total Income 22706.28 14714.41 13482.15 13093.76 10670.17 8109.58 6176.34 5756.35 5060.92 4260.73
Profit before Taxation 3410.27 1338.89 1226.80 833.12 893.65 534.66 398.48 211.39 260.96 99.81
Provision for Taxation 1082.55 441.00 424.59 260.76 274.23 180.68 145.45 66.83 89.18 19.90
Profit after Taxation 2327.72 897.89 802.21 572.36 619.42 353.98 253.03 144.56 171.78 79.91
Share Capital 4.24 4.24 4.24 4.24 4.24 4.24 4.24 4.24 4.24 4.24
Reserves 6790.09 4513.40 3640.90 2853.56 2293.53 1686.44 1357.18 1116.55 981.91 820.05
Net Worth 6794.33 4517.64 3645.14 2857.80 2297.77 1690.68 1361.42 1120.79 986.15 824.29
Fixed Assets Gross 9205.63 6954.43 5834.14 5477.16 4874.07 3865.62 3020.57 2866.24 2289.77 1955.99


Your Directors have pleasure in presenting to you the Fifty Fifth Annual Report and theAudited Financial Statements for the 18 months period ended 31st March 2016.

As per section 2(41) of the Companies Act 2013 all Companies are required to have auniform financial year. This requirement is to be complied within two years from thecommencement of the Companies Act 2013. Therefore the Board of Directors have extendedthe financial year 1st October 2014 to an eighteen months period ending 31st March 2016and the same has been approved by the Registrar of Companies Chennai.

Consequentlythis Report which is attached to the financial for a period of 18 monthsi.e. 1st October 2014 to 31st March 2016.

Hence the figures for the period under review are not comparable with the previousfinancial year ended 30th September 2014

Financial Results ( Rs. Crore)
1st October 2014 to 31st March 2016 1st October 2013 to 30th September 2014
[18 months period] [12 months period]
Total Income 22706 14714
Profit before tax 3410 1339
Provision for taxation 1082 441
Net Profit 2328 898

Performance Overview

During the 18 months period ended 31st March 2016 your Company’s total incomeincreased to Rs. 22706 crore from Rs. 14714 crore in the previous 12 months period ended30th September2014. Across the board there was an overall increase in production in allsegments adding up to a 9% increase in total tyre production. During the period under yearending 31st March of every review the price of natural rubber and the fuel price havesoftened resulting in lower raw material cost. Reduction in material cost has been passedon to customers by way of selling price reduction. This has commenced on finally resultedin lower top line growth. This apart your Company could achieve improved results due tothe various initiatives taken to improve its operating efficiencies and also through thecost reduction measures statements is undertaken over a period of time.

The Company’s exports stood at Rs. 1856 crore for the 18 months period ended 31stMarch 2016 as against Rs. 1332 crore for the 12 months period ended 30th September2014.

As required under Regulation 34 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the management discussion and analysis report is attachedand forms part of this Annual Report.


Two interim dividends of Rs. 3 each per share (30% each) for the 18 months period ended31st March 2016 were declared by the Board of Directors on 27th July2015 and on 29thOctober2015. The Board of Directors is now pleased to recommend a final dividend of Rs.94 per share (940%) on the paid up equity share capital of the Company for considerationand approval of the shareholders at the annual general meeting. With this the totaldividend for the entire 18 months period works out to Rs. 100 per share (1000%). The totalamount of dividends aggregates to Rs. 42.41 Crore.

The Directors recommend that after making provision for taxation debenture redemptionreserve and proposed dividend an amount of Rs. 2284.62 Crore be transferred to generalreserve. With this the Company’s Reserves and Surplus stands at Rs. 6790.09 Crore.

Industrial Relations

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

Prospects for the Current Year

Two successive monsoon failures has hit the automobile industry quite hard in 2015-16but Indian industry’s tenacity has seen off this sluggish phase with optimism and amodest level of success despite the agrarian distress that characterized the period.Further hopes of recovery in the tyre industry are tied to a resurgence of growth in theoverall economy. The positive sentiment shown by the manufacturing sector in recent monthswill definitelyhave an impact on the demand in the tyre industry both for the OriginalEquipment Manufacturer [OEM] and the Replacement markets. The increased capacity built upby the various industry players will see heated competition with severe price discountingbeing the norm and it is critical to protect your Company’s turf in the commercialtyres and the two wheeler segments which will be under severe pressure.

A normal monsoon is predicted for the new season and it is believed this will help thefarm sector to show stronger performance in the coming year with an attendant spike inrural demand that will hopefully help drive an all-round recovery in the nextfiscal. With the above your Company hopes to record satisfactory results on account ofMRF’s high brand preference and trust reposed by customers in MRF products.

Performance of Subsidiaries

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

The consolidated financial statements include the financial results of its subsidiarycompanies.

Pursuant to the provisions of section 136 of the Companies Act 2013 the financialstatements consolidated financial statements alongwith the relevant documents and auditedaccounts of subsidiaries are available on the website of the Company.

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

Directors’ Responsibility Statement

As required under section 134(3)(c) of the Companies Act 2013 your Directors statethat: a) In the preparation of the annual accounts the applicable Accounting Standardshave been followed and that there are no material departures; b) They have in selectionof the accounting policies consulted the statutory auditors and applied themconsistently making judgments and estimates that are reasonable and prudent so as to givea true and fair view of the state of affairs of the company at the end of the financialyear and of the profit and loss of the Company for that period; c) Proper and sufficientcare has been taken for the maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting fraud and other irregularities; d) Annual accounts have been prepared on agoing concern basis; e) Internal financial controls had been laid down and followed by thecompany and such internal financial controls are adequate and were operating effectively;and f) Proper systems to ensure compliance with the provisions of all applicable laws havebeen devised and such systems were adequate and operating effectively.

Risk Management

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

Adequacy of Internal Financial Control

Your Company has in place adequate internal financial controls with reference tofinancial statements commensurate with the nature and size of its business operations.

Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo

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

Corporate Social Responsibility

As required under section 135 of the Companies Act 2013 the CSR Policy was formulatedby the CSR Committee and thereafter approved by the Board. CSR Policy is available on theCompany’s website The details of the CSRinitiatives undertaken during the 18 months period ended 31st March 2016 and otherdetails required to be given under section 135 of the Companies Act 2013 read with rule8(1) of the Companies (Corporate Social Responsibility Policy) Rules 2014 are given inAnnexure II forming part of this Report.


Mr. K M Philip Whole-time Director of the Company stepped down from the Board of theCompany with effect from 31st March 2015 on account of his advancing age. Mr. K M Philiphas been on the Board of MRF from its inception in 1961. The Board places on record itssincere appreciation and gratitude to Mr. K M Philip for the valuable services rendered byhim during his tenure on the Board and in his capacity as the Whole-time Director of theCompany.

The Companies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 prescribe gender diversity in the Board. Accordingly the Board hasappointed Dr. (Mrs) Cibi Mammen and Mrs. Ambika Mammen as additional directors of theCompany with effect from 12th February 2015 and 23rd April 2015 respectively and theywill hold office till the ensuing annual general meeting. Notices along with the requisitedeposit in terms of section 160 of the Companies Act 2013 have been received frommembers proposing their candidature for the office of director liable to retire byrotation at the forthcoming annual general meeting of the Company. As required by section152 of the Companies Act 2013 Mr. Rahul Mammen Mappillai Whole-time Director of theCompany retires by rotation at the ensuing annual general meeting and is eligible forre-appointment. The notice convening the annual general meeting includes the proposal forappointment/re-appointment of the above Directors.

The Company has received declarations of independence from all the IndependentDirectors confirming that they meet the criteria of independence as prescribed undersection 149(6) of the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.

Performance evaluation of the Board its Committees and Directors

The Board of Directors has made a formal annual evaluation of its own performance andthat of its committees pursuant to the provisions of the Companies Act 2013. Theevaluation was done based on the evaluation criteria formulated by nomination andremuneration committee which includes criteria such as fulfilment of specific functionsprescribed by the regulatory framework adequacy of board meetings attendance andeffectiveness of the deliberations etc. The Board and the nomination and remunerationcommittee also carried out an evaluation of the performance of the individual directors(excluding the director who was evaluated) based on their attendance participation indeliberations understanding the Company’s business and that of the industry and inguiding the Company in decisions affecting the business and additionally in case ofindependent directors based on the roles and responsibilities as specified in Schedule IVof the Companies Act 2013.

Corporate Governance

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

The information pertaining to the number of Board meetings held the constitution ofthe Audit Committee Remuneration Policy of the Company criteria under section 178(3) ofthe Companies Act 2013

Related Party Transactions and the Vigil Mechanism under the various provisions of theCompanies Act 2013 have been disclosed in the Corporate Governance Report which formspart of this report.

Particulars of Employees

The disclosures pertaining to remuneration and other details of directors and employeesas required under section 197(12) of the Companies Act 2013 read with rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 have beenprovided in the appendix forming part of this report. Having regard to the provisions ofsection 136(1) read with its relevant provisions of the Companies Act 2013 the AnnualReport excluding the aforesaid information is being sent to the members of the Company.The said information is available for inspection at the Registered Office of the Companyduring working hours and any member interested in obtaining such information may write tothe Company Secretary and the same will be furnished to the members. The Company has putin place a formal policy in line with The Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013. During the 18 months period underreview the Company has not received any complaint under the Act.


Your Company accepted deposits for an amount of Rs. 5.68 crore during the 18 monthsperiod ended 31st March 2016. Four deposits aggregating Rs. 0.12 crore remain unclaimedas at the close of the 18 months period ended 31st March 2016.

There were no defaults in respect of repayment of any deposits or payment of interestthereon during the 18 months period under review. The Company has not accepted anydeposits which are not in compliance with the requirements of the Act.

Awards received during the period

Your Company won the Forbes Super 50 Company Award and the Brandz Top 50 Award forbeing one of the country’s most valuable brands and has also been awarded the"Top Export Award" by the Chemical And Alliedconfirmingcompliance ProductsExport Promotion Council India (CAPEXIL) and "Highest Export Award" by the AllIndia Rubber Industries Association for 2015-2016.


As per the Companies Act 2013 auditors are permitted to hold office a maximum periodof 10 years continuously. The law provides time of three years to comply with the newrequirements. Messrs. Sastri & Shah Chennai and M M Nissim & Co. Mumbai havebeen the Joint Statutory Auditors of the Company for more than 10 years. In order tocomply with the requirements of law Messrs. M M Nissim & Co. Chartered AccountantsMumbai have informed the Company that they do not wish to seek re-appointment at theforthcoming annual general meeting. The Board of Directors on the recommendations of theAudit Committee at the meeting held on 3rd May 2016 have decided to recommend to theshareholders the appointment of Messrs. SCA AND ASSOCIATES Mumbai (Firm Regn. No.101174W) as the Statutory Auditors of the Company for a period of 5 years from theconclusion of the Fifty Fifth annual general meeting until the conclusion of the Sixtiethannual general meeting of the Company subject to ratification annually by shareholdersif required by law. Messrs. SCA AND ASSOCIATES have given their consent to act as JointStatutory Auditors and have also confirmed that their appointment if made shall be inaccordance with the provisions of the Companies Act 2013.

The Board has also decided to recommend re-appointment of Messrs. Sastri and ShahChennai (Firm Regn. No. 003643S) the other joint Statutory Auditor who retire at theconclusion of the forthcoming 55th annual general meeting for a further periodof one year till the conclusion of the 56th annual general meeting of theCompany.

Cost Audit

The Board of Directors on the recommendation of the Audit Committee has approved there-appointment of Mr. C Govindan Kutty Cost

Accountant as Cost Auditor of the Company for the financial year ending

31st March 2017 under section 148 of the Companies Act 2013 and recommendsratification of his remuneration by the shareholders at the ensuing annual generalmeeting.

Secretarial Audit

Pursuant to provisions of section 204 of the Companies Act 2013 read with Rule 9 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 yourCompany engaged the services of Mr. K Elangovan Elangovan Associates CompanySecretaries Chennai to conduct the Secretarial Audit of the Company for the 18 monthsperiod ended 31st March 2016. The Secretarial Audit Report (in Form MR-3) is attached asAnnexure-III to this Report. The Secretarial Auditor’s Report to the shareholdersdoes not contain any qualification

Voluntary Delisting of Company’s Equity Shares from the Madras Stock ExchangeLimited

Consequent to the decision taken by Madras Stock Exchange for voluntary de-recognitionand exit as a Stock Exchange the equity shares of the Company have been removed from thelist of Listed Securities of Madras Stock Exchange with effect from 04th February 2015.

Extract of Annual Return

An extract of Annual Return in Form MGT-9 as on 31st March 2016 is attached asAnnexure-IV to this Report.

Extension of Annual General Meeting

Consequent to the approval granted by the Registrar of Companies Chennai for extendingthe financial year of the Company to 31st March 2016

Registrar of Companies has vide order dated 20th November 2015 granted extension oftime for conduct of the annual general meeting of the Company by 3 months.

Other Matters

There are no material changes and commitments affecting the financial position of theCompany between the 18 months period ended 31st March 2016 and the date of thisReport.

During the period under review there were no material and significant orders passed bythe regulators or courts or tribunals impacting the going concern status and theCompany’s operations in future.

Details of loans guarantees and investments covered by the provisions of section 186of the Companies Act 2013 are given in Note 27 of the Notes to the financial statements.


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

On behalf of the Board of Directors
Chennai K M MAMMEN
3rd May 2016 Chairman & Managing Director