a report on organization study at mrf

A REPORT ON ORGANIZATION STUDY AT

MRF Ltd,KOTTAYAM

PRINCE JOSE

REG NO: B4GMBA2609

Under the Guidance of

Mr.PRINCE T.C

Submitted in Partial Fulfillment of the Requirement for the award of degree

Master of Business Administrationto the Kannur University

P.K RAJAN MEMORIAL CAMPUS

PALATHADAM

2014 - 2016

1 - ORGANISATION STUDY AT MRF LTD,KOTTAYAM

DECLARATION

I Prince Jose, 3rd semester MBA student of P.K Rajan Memorial Campus, Palathadam,

hereby declare that this report on ORGANISATIONAL STUDY AT MRF Ltd. Kottayam,

under the guidance of Mr,Prince T.C, P.K Rajan Memorial Campus, Palathadam, in partial

fulfilment of the requirement for the award of the degree of Master of Business

Administration is a bonafide work done by me. I also declare that this report has not been

previously formed the basis of award of any Degree, Diploma, Associate ship, Fellowship or

any other similar title of this or any other University or Institution.

Place: PRINCE JOSE

Date:


ORGANISATION CERTIFICATE

Date: ……………………………………..

Place: ……………………………….


CERTIFICATE

This is to certify that the Organization Study Report entitled “AN ORGANISATION STUDY

AT MRF Ltd. Kottayam” submitted to Kannur University in partial fulfilment of the

requirements for the award of the degree Master of Business Administration is a bonafide

work done by Mr.Prince Jose, (Reg. No.B4GMBA2609), 3rd Semester MBA Student, P.K

Rajan Memorial Campus Palathadam,from 1st Sep 2015 to 30th May 2015 under my

supervision and guidance.

Head of the department Faculty guide

Date: ……………………………………..

Place: ……………………………….


ACKNOWLEDGEMENT

On completion of my Organizational Study Report , I feel deeply indebted to many. Let me

avail this opportunity to express my deep sense of gratitude.

Let me put on my head my deep appreciation for Mr.Balakrishnan,Head of the

department,for permitting me to undertake this organization study as a part of the

Curriculum

With profound gratitude,I wish to convey my sincere thanks to Mr.Prince T.C Faculty

Mentor, P.K Rajan Memorial Campus, Palathadam, for his kind guidance and

encouragement given to me during the preparation of this report.

Thankfully I express my gratitude to Mrs. Prameela Skariah, Asst. Manager, Welfare,

MRF Ltd, Vadavathoor, Kottayam, Kerala for her help in collecting the data and valuable

suggestions required for the study.

My special thanks to Mr.Lal Varghese,Training Oficer, MRF Ltd, Vadavathoor, Kottayam,

Kerala for her support and help.

I am thankful to all the officials of MRF Ltd, Vadavathoor, Kottayam, Keralafor providing a

good environment that helped me to complete this study within the specified time.

I take this opportunity to extend my gratitude to my parents and other family members for their

encouragement on completing this work.

My sincere thanks to the God Almighty for having showered all the blessing to complete this

work.

Prince Jose


TABLE OF CONTENTS

Chapter Title Page No:

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

Executive summary

Introduction

Profile of the industry

Profile of the Organisation

Data Analysis and Interpretaion

Findings,Recommendations and conclusions

Bibliography

9

11

17

29

94

103

108


LIST OF TABLES

Table Title Page No:

Table – 3.1

3.2

3.3

3.4

3.5

Kottayam Unit-Facts & Figures

Product Volume

MRF Sales Network

Financial Performance

10 years Financial Summary

49

54

85

89

92


LIST OF CAHRTS & FIGURES

Chart Title Page No:

Chart-3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

3.10

3.11

3.12

3.13

3.14

3.15

3.16

Chart4.1

Site Map

Organisation Chart of MRF Corporate Office

Organisation Structure of MRF Kottayam

UnitStructure of Production Department

Structure of Quality Assurance Department

Structure of Technical department

Structure of Engineering Department

Structure of Industrial EngineeringDepartment

Structure of Security Department

Structure of HR Department

Structure of Accounts & Finance Department

Structure of Marketing Department

Financial Performance:

Profit

Reserves

Sales

Net Worth

Structure of Porter’s five force analysis

46

50

51

55

60

65

72

74

78

80

82

85

89

90

90

91

99


EXECUTIVE SUMMARY

The objective of this study entitled “An Organizational Study of MRF LTD., Kottayam” is to

highlight the real life situations under the domain of business and organizational world of

MRF LTD., Kottayam.

The report covers the overall organizational structure, departments, functions, procedures and

functions, procedures and policies of the company. The functional areas, products, services of

the company have been well studied and documented in the report. The study also includes

the SWOT (Strength, Weakness, Opportunity and Threats) analysis of the company in the

present situation which is an output of the 6week observational study at the company. IT is

intended to analyze comprehensively and understand thoroughly the various departments,

services, functions and company`s approach towards using technology, Corporate Social

Responsibility and work environment.

In the present business world, manufacturing industry has grown significantly since last few

decades and is also faced by cutthroat competition in every area. MRF, established in 1946, is

one of the largest tyre manufacturing companies in the world.

During the study information was gathered relating to Organizational structure, various

departments, and their functions, products, quality policies, procedures and SWOT analysis

of the company. The study is based on the relevant data and materials obtained from the

organization. Also direct interviews were held with high authorities and staff members to get


more accurate and up to date information. Each activity of the company was studied carefully

with the available data and material.

Nowadays the competition in tyre industry has increased. Foreign and domestic players have

come into picture. The management of MRF is concerned with keeping in touch with the

customers and non-customers expectations and provides better quality of services.

Four main attributes like Quality, Cost effectiveness, responsiveness and being customer

centric/sensitiveness are the major attributes one considers to identify ones attitude towards

the company.


CHAPTER-1

INTRODUCTION


INTRODUCTION

About The Tyre Industry:

The tyre industries in India come into existence with establishment of trading outlets by U S

based Fire Stone Tyre and Company in1922 and followed by Dunlop Rubber Company in

1926.The Indian Tyre industry has witnessed a Cumulative Annual Growth Rate (CAGR)

7.7% over the last decade. Economic expansion, investments and road developments have all

contributed to this

Increase in demand for vehicles. This has helped the growth in the tyre industry. The tyre

industry is the major consumer of the domestic rubber production. The tyre industry is mainly

dominated by organized sector; the unorganized sector holds in bicycle tyres. The major

players in the organized sector consist of MRF, Apollo tyres, Ceat, and J K Industries, which

account of the 63% of the organized tyre market.

About The Company:

MRF Ltd was established in the year 1946. The company name is an acronym for “Madras

Rubber Factory”. It was started by KM MammenMappilai at Thiruvattiyur Chennai. In the

year 1951, the company took up the manufacture of trade rubber. MRF Ltd was incorporated

towards the end of 1960 and was converted into Public Limited Company in 1961. Since then

it has emerged as the largest tyre manufacturer in India and 12th largest in the world with

turnover of Rs 10637 Cr. with capacity of six million tyres from six production units in India.

With a profit margin of 1.3% in tyre manufacturing sector, MRF hold 24% of market share.


MRF tyres are rolled out of six interdependent facilities, which are built over 450 acres and

with over 15,000 dedicated people. MRF has over 3000 strong dealer network with 180

offices. What this means is that the company boasts of the largest range of tyres in India -

from heavy duty truck tyres to 2-wheeler tyres, The MRF Pace Foundation is synonymous

with training and teaching the world's best fast bowlers.

Objective of the Study

The study was conducted at Madras Rubber Factory Limited (MRF Ltd), Vadavathoor,

Kottayam, Kerala. MRF Ltd. is one of the well known, most advanced and leading

manufacturers and exporters in tyres. The organization study was conducted in order to

understand the functioning of the various departments and activities undertaken by them;

organizational structure; roles and functions of different departments; the vision, mission, and

objectives of the company, its product profile, rules and regulations in the company etc.

Organizational study covered all functional aspects of the organization.

Scope of the study

By doing this we can get a basic idea how Organizational activities are going out in the real

world and we can see how they are managing every activity, procedures and policy. As an

MBA student I also get a chance to know how organizational activities are going on and have

a real experience.


METHODOLOGY

Research cannot be contacted abruptly; the researcher has to plan the research process

systematically. The research process includes a number of steps. If all the steps are taken in

systematic manner the research conducted become quite effective.

Types of Data

There are two types of data;

Primary data

Secondary data

Primary data

Primary data is those data collected by the researcher for the first time, it is fresh in nature.

This data do not exist in records or publications. Here primary data is collected through

departmental study through interactions with different department heads and staffs.

Secondary data

Secondary data comprises of the data which have already been collected by

another researcher for some other purpose and currently available. The secondary data was

collected from the internal records of the company, library reference and internet.

LIMITATIONS

1. Less time available for an interview or conversation with the workers.


2. Only limited persons could be covered under the study

3. The workers were busy with their work

4. Sensitive information was not shared by the company.


CHAPTERISATION

The Organisation Study has been presented in the following format:

The first chapter deals with the introduction of the study which includes; introduction

about the industry and company, importance of the study, objectives of the study,

methodology, limitations and chapterisation.

The second chapter highlights the industry profile

The third chapter deals with company profile. It consists of the study of the company,

organisation chart, different operations, products and departments of the company.

The fourth chapter contains the SWOT analysis.

The fifth chapter gives the findings, suggestions and conclusions of the study.


CHAPTER- 2

INDUSTRY PROFILE


INDUSTRY PROFILE

RUBBER INDUSTRY

Rubber is an organic substance from natural resources or synthesized artificially which has

the prescribed properties of extensibility, strechability and toughness. The scientific name of

Rubber is “Heaven Brasiliensis”. It acquired this name because of its ability to erase.

Nearly 85% of the plantations are in the hand of small farmers. The industry pays highest

wages to its workers more than those who can earn from other plantations. A rubber tree can

help tap regularly throughout the tree remains productive for 30 to 40 years. Indians per

hector yield of rubber is the highest in the world (about 1500 kg)

The natural rubber from just 25%of the world requirements the rest is made up with synthetic

rubber items from petroleum. But natural rubber is still essential for certain products-nearly

50%to60% of auto and track tyres is natural rubber where synthetic rubber is used for

production of tubes.

The Indian Tyre Industry

The foreign companies dominated the Indian tyre industry till 1960; however in the latter part

of 60’s and early 70’s the Indian industrial, Entrepreneurs’ made a stylish entry into the


market alongside collaboration with the automobile sector foundation with in the country.

The tyre industry saw the entry of players and with the winds and liberation blowing a midst

hue and cry, swept the entire land in 1992 and brought about the role of joint ventures within

the industry.

Ever since the first Indian tyre company, Dunlop Rubber Company (Indian) was

incorporated in 1926, the type industry has grown rapidly and today it is an Rs.9000 crore

industry. The Indian tyre industry produce the complete range of tyres required by the Indian

automotive industry, except for aero tyres and some specialized tyres. Domestic

manufactures produce for trucks, buses, passenger cars, jeeps, light trucks, tractors (front,

rear, and trailer), animal drawn vehicles, scooters, motorcycle, mopeds, and bicycles and off

the road vehicle and special defense vehicle.

Indian has 2.61 lakh vill ages, connected by 6.23 lakh kms to metal led roads and 9.81

lakhs kms of unmetalled roads. These villages are linked to small town and cities. There

exists a vast potential for the tyre industry in India. The fortune of the tyre industry depends

on the agricultural and industrial performance of the economy, the transportation needs and

the production of vehicles. Hence, this is a very sensitive industry, which has to adapt itself to

a highly volatile environment.

While the tyre industry is mainly dominated by the organized sector, the unorganized

sector holds away in bicycle tyres. The major players in the organized tyre segment consist of

MRF Tyres, Apollo Tyres, Ceat, and Jk Industries, which account for 63 percent of the

organized tyre market. The other key players include Modi Rubber, Kesoram industries, and


Goodyear India, with 11 percent, 7 percent and 6 percent respectively. Dunlop, Falcon, lyre

Corporation of India Limited (TCIL), TVS Srichakra, Metro tyres and Bal Krishna Tyres are

some of the other players in the industry.

The Indian tyre industry evolves itself around some silent features like:

Adaptability

Innovation

Export

Technology progression

Wide product range for divers’ usage.

The Original Indian tyre market can be categorized into three. They are;

equipment market

Replacement market

Export market

MRF, the largest tyre manufacture in the country, has strong brand equity. While it

rules supreme in the industry, other players have created richest markets of their own. The


tyre industry is a major consumer of the domestic rubber production. Natural rubber

constitutes 80% of the material content in Indian tyres. Synthetic rubber constitutes only 20%

of the rubber content of the tyre in India. Worldwide, the ratio of natural rubber to synthetic

rubber is 30:70. Apart from natural and synthetic rubber, rubber chemical are also widely

used in tyres. Most of the RSS- 4 grade natural rubber required by the Indian tyre industry is

domestically sourced, with only a marginal amount being imported. This is an advantage for

the industry, since natural rubber constitutes 25% of the total raw material cost of the tyres.

The two types of synthetic rubber used in tyres are Poly Butadiene Rubber (PBR) and

styrene Butadiene Rubber (SBR). The former is used in most of the tyres, while the latter is

mainly used in the radials for passenger cars. Synthetic rubber accounts for 14% of the raw

material cost. Unlike in the case of natural rubber, India imports 60% of its synthetic rubber

requirements.

On the export front, the Indian tyre companies need to explore newer markets as the

existing market for bias truck tyre which accounts for about 45% of the total export volume is

nearing saturation. This apart, with rationalization caching up in the foreign markets, the

Indian tyre companies need to graduate to radial tyres so as to protect their share in the export

market.

At present, radicalization of tyre is low in India except of the car tyre market where

95% of the tyres are radicalized while cross ply tyres is preferred in all other categories.


Cross ply tyres are preferred owing to poor road conditions, overloading in trucks, higher cost

of radial tyres and poor awareness among the tyre users in the country.

The tyres basically produced in India are

Crossply

Radial tyre

Raw materials

The main raw materials for tyre are;

Rubber

Carbon black

Nylon cord

Chemicals.

GLOBAL SCENARIO

Thailand, Indonesia, China, Malaysia, Vietnam are the major producers of rubber in

the world.

The global production fluctuates between 6-8 million tons, with the production of

Million tons in 2003, of which Asian countries have produced 6.76 million tons.


On the consumption front, global natural rubber consumption is 7.89 million tons of

which 1.9 million ton was consumed in India and China alone. The total synthetic

rubber consumption was 1.13 million ton.

Around 60% of the global rubber production is used by the transportation sector. In

this sector, natural or synthetic rubber cannot be used individually and has to be

blended.

MAJOR WORLD MARKETS

Tokyo Commodity Exchange, Singapore Commodity Exchange, Osaka Mercantile

Exchange are the major exchange undertaking futures trading of rubber. Kurla Lampur,

London, New York is the major physical markets.

Government policy (Tyre policy)

Tyre Industry Delicensed since in 1987

All categories of new tyre can be exported freely.

All categories of new tyre can be imported freely.

No wto bound rates for tyres and tubes.

All raw materials required for the manufacture of tyres can be imported freely

Custom duties: Tyres

Normal rates of basic custom duty 10%


Concessional customs duty under trade agreements

Asian Pacific Trade agreement

(Formerly known as Bangkok agreement) 8.60%

Indo Sri Lanka free trade agreement nil duty

SAPTA 5%

India Singapore comprehensive Economic nil duty

Cooperation Agreement

Excise Duty: Tyres

When imported from Bangladesh, Bhutan, Maldives, Nepal is 10%

Predicted scenario of the industry

Globally, the original Equipment Manufacturer segment constitutes only 30 percent of the

tyre market, exports 10 percent and the balance from the replacement market. In India, the

scenario is quite different. Nearly 85 percent of the total tyre demand in the country is for

replacement. This anomaly has placed the retreaders in a better position than the tyre

manufacturers. Retreading is looming over the tyre industry as a colossal threat. The

Coimbatore based Elgi Tyres and tread Ltd., the largest retreader in India, is giving the tyre

barons sleepless nights.

Retreading is replacing the worn-out tread of the old tyre with a new one. The popularity of

retreading stems from the fact that it costs only 20 percent of a new tyre but increases its life


by 70 percent to 80 percent. Most of the transporters in India retread their tyres twice during

its lifetime, while a few fleet owners even retread thrice. In their zealousness to economize

costs, they overlook the reality that retreading reduces the quality of the tyre. It is highly

popular in the south unlike in the north where the transporters overload their trucks and have

to ply their vehicles in a rough terrain, an environment in which buying a new tyre is the best

option.

THREATS

The industry, already bogged by over capacity, is facing a severe threat of dumping of cheap

tyres by South Korea. Under the Bangkok agreement, signed between India and South Korea

in 1976, import of tyres from the latter into India would attract a concessional duty of 33

percent as against the normal tariff of 40 percent.

Two years ago, the industry estimated the growth in the passenger car radial demand at 20

percent per annum. However, the auto recession has hit them badly. But South Korea made a

killing by dumping cheap car radial tyres and walked away with 11 percent of the tyre

market.

Another threat to the industry is the price of its raw materials, most of which are petroleum

by-products. Carbon, synthetic rubber and nylon tyre cord are offshoots of petrochemicals.

Thus, the future of the industry will swing with the supply of crude oil.

The biggest threat, however, is yet to fully materialize. It will be from global majors like

Bridgestone and Michelin, which control 36 percent of the global tyre market. These players

have set up their bases in South-east Asia and the slump of the markets in this region coupled

with the vast growth potential of the Indian market, is beckoning them towards India.


Bridgestone has tied up with ACC for a 100 percent radial tyre unit and Michelin is also

marketing its products through retail outlets. The industry is driven more by volumes than by

margins and each of the big five in the global tyre industry Continental, Michelin, Goodyear

India, Pirelli and Bridgestone generate an annual tyre production equivalent to the total

demand of the Indian market.

Major Market Player s and Their Market Share

Last Price Market Cap.

(Rs. cr.)

Sales

Turnover

Net Profit Total Assets

Apollo

Tyres72.50 3,654.18 5,490.74 198.25 2,859.55

MRF 6,956.00 2,950.14 7,463.74 353.98 2,643.17

Balkrishna

Ind155.50 1,503.04 1,394.30 208.73 1,125.10

JK Tyre &

Ind100.75 413.67 4,831.22 61.32 1,553.60

Ceat 102.05 349.46 3,516.33 22.28 1,058.11

TVS

Srichakra306.00 234.31 706.39 29.82 260.29


Some of the major players in the Indian tyre industry are MRF, Ceat, JK industries,

Apollo tyres, Bridgestone India, Goodyear India, Falcon Tyres and TVS Srichakra.

Name of the company Market Share

MRF Ltd (Market Leader) 24%

Apollo Tyres Ltd. 21%

JK Tyre & Industries 18%

Ceat Ltd. 13%

Others 24%


The prospectus of tyre exports from India appears healthy; following efforts by

Indian companies to increasing entering into out sourcing agreement with tyre producers in

South-east Asia, Eastern Europe and Latin America. Overall, tyre manufacturers are likely to

tap the export market in an effort to boost sales. The increasing exports of bus and truck tyre

from India to developing countries is because of the fact that developing countries is because

of the fact that developing countries are unable to source them from developed countries as

these are no more

produced there. Tyre imports are unlikely to pose a threat to the domestic industry, given that

domestic prices are lower than international tyre prices.

In the domestic market, tyre manufacturers are expected to increasingly focus on expanding

their dealership networks and explore possibilities of tie-ups among themselves to penetrate

the growing customer base. They are also likely to pursue innovative measure to improve

customer awareness.

The consolidation of the Indian tyre industry is likely to continue in the coming years through

mergers among existing players. The industry is likely to expand through a combination of

organic and inorganic growth. While organic growth would come from raising efficiency

levels, inorganic growth would be achieved through alliances and mergers & acquisitions.


CHAPTER 3

PROFILE OF THE ORGANISATION


COMPANY PROFILE

Madras Rubber Factory, popularly known as MRF, is a major tyre manufacturing company

located in India. MRF is mainly involved in making vehicle tyres. It is India's largest

tyremanufacturing company.

The company was established in the year 1946. The company name is an acronym for Madras

Rubber Factory. MRF Ltd was started by a young pioneer called K.M.MAMMEN

MAPILLAI as small toy balloon manufacturing unit in a small shed at Thiruvattiyur in

Chennai. Since then over this long 67 years it has emerged as the largest tyre manufacturer in

India. It is also the world’s 12th largest tyre manufacturing company. It is one of the largest

rubber companies both worldwide and in Indian private sector. MRF holds more than 20% of

the market share. It is the only tyre company to straddle the continent with giant

manufacturing facilities at Chennai, Arkonam, Kottayam, Goa, Medak, Pondicherry, and

Tiruchirappalli.

The company carters to all vehicle segment from commercial vehicle and passenger cars to 2 -

3 wheelers and tractors and has a strong presence in both radial and cross ply segments. It is

also involved in a range of other activities via subsidiaries. Funskool India, a joint venture

between Hasbro and MRF LTD. is a major toy manufacturing company in the country. MRF

Pre-treads offers world class procured is presently under the leadership of VinuMammen, son

of the Late K.M.MammenMappilai.

It has a distribution network of more than 2500 outlets in the country, overseas offices in

United Arab Emirates, Bangladesh and Vietnam and export tyres in over 75 countries

globally. MRF LTD. enjoys of manufacturing the largest range of tyres in India and it has the

highest brand preference for superior quality, appearance and wearability. It manufactures the


largest range of tyres in the country and is the market leader with the largest market share in

almost every segment of the tyre industry.

MRF Ltd. is the 1st Indian company to export tyres to the U.S., the very birth place of the tyre

technology. It is also the 1st company in India to manufacture and market Nylon tyres and

passenger tyres commercially. In 2011, the company’s turnover crossed INR 100 billion

mark.

MRF Ltd. is the pioneer in motor racing tyres in India. MRF tyres are made to run at speeds

exceeding 150 km/h, at which they are exposed to extreme conditions of speed and traction.

The molecular stability of the rubber compounds is tested against severe gravitational stress.

MRF’s tyre experts and rubber technologists are present at every stage to observe, analyze

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 safer and better quality tyres, not only for the

formula cars and racing bikes, but also for cars that rough it out on the tough Indian roads

every day.

MRF brands are the market leaders in almost every segment. MRF brands are:

Super Lug (truck tyre)

Shakthi (tractor tyre)

Zigma (radial car tyre)

Nylogrip (2 wheeler tyre)

Legend (conventional car tyre)

Evolution of MRF


A race from the birth to success . . .

It was in late 1946, a period that was characterized by the indomitable spirit of freedom

and the “will to win” among Indians. A young pioneer called K.M.MammenMappilai

started a small toy balloon manufacturing unit in a small shed at Thiruvattiyur in

Chennai. There were no machines in the unit but it had an employee with bubbling

enthusiasm, innovative ideas and a great vision he was owner himself.

Any product that could be made from rubber, without machine was produced. From

balloons to latest cast squeaking toys, industrial gloves and contraceptive, the list is very

long.

1949-Established 1st office at 334, ThambuChetty Street, Chennai.

1952-1st machine (a rubber mill) was established at the factory and ventured into

manufacture of tread rubber.

1955-Started competing with foreign companies operating in India by becoming the

only Indian company to manufacture superior, extruded, non-blooming and cushion

backed tread rubber.

1956-Becomes the market leader in tread rubber with 50% share of Indian market.

1961-Becomes a public limited company. Entered into a technical collaboration with

MansfieldTyre Company of USA and a pilot plant for tyre manufacturing was

established at Thiruvattiyur.

1963-Full fledgedtyre plant and rubber research centre were inaugurated by India’s 1st

Prime Minister Pandit Jawaharlal Nehru.

1964-Started an overseas office in Beirut (Lebanon) to develop export market.

1967-Becomes the 1st Indian company to export tyres to USA, the birth place of tyre

technology.


1970-Kottayamplant becomes operational.

1971-Goa plant was built in record time of 18 months.

1972-With the setting up or Arkonam plant, MRF becomes the only tyre company in

India with four manufacturing facilities.

1973-Launched India’s 1st Nylon car tyre.

1978-Launched Super Lug 78 which later became the largest selling truck tyre in India.

1979-Turnover crossed Rs.100 crores.

1980-Entered into a technical collaboration with BF Goodrich Tyre Company of

USA.

1984-Becomes the 1sttyre to be selected for fitment on Maruthi-800.

1986-Won 6 awards for quality improvement from BF Goodrich; pitted against 20 tyre

companies worldwide. Also won the National Institution for Quality Assurance award.

1987-Becomes the No: 1 tyre company in India by crossing the Rs.300 crores

turnover. Since then MRF has maintained its No: 1 position.

1988-MRF Pace Foundation was set up with Dennis Lillie as its Director.

1989-Collaborated with the world’s largest toy maker, Hasbro International and

launched Funskool India, the most modern toy project in Asia.

MRF collaborated with Vapocure of Australia to produce poly-urethane paint

formulations.

MRF Zigma Radials were launched along with MRF World Series Cricket which was

one of the country’s most spectacular cricketing and marketing events.

The 5th unit for manufacturing tyres and tubes was opened at Medak in Andhra

Pradesh.

MRF TyreDrome became India’s 1sttyre company owned wheel care complex.


MRF collaborated with Pirelli to manufacture conveyor belts called Muscle Flex. The

same year MRF brought the World Boxing Championship to India.

MRF bagged Visweswarayya Award for the Best Business House in South India. It also

bagged the Harvard Business School Award for the Best Corporate Performance.

1991-Moved into its own corporate office which soon became a land mark in Chennai.

1993-Beacame the 1st Indian tyre company to cross a turnover of Rs.1000 crores. With

this the company found a place among the 10 most respected corporate groups in India.

It was a proud moment for the company when its founder K.M.MammenMappilai was

honoured with the “Padmashree” for his contribution to industry, the only industrialist

from South India to be accorded with this honour.

1996-In the Golden Jubilee year the company crossed a turnover of Rs.2000crores and

also setup a new plant at Pondicherry for manufacturing radial tyres.

1999-Was declared as the Most Ethical Company by the Business World in its

survey.

2004-Crossed a turnover of Rs.3000 crores.

2006-Turnover crosses Rs.5000 crores.

2007-Launched Super Lug F5 and Super Lug 505, a premium mileage rear fitment

truck tyre.

MRF launches ZSLK tyres.

2008-Won JD Power Award for the 6th time.

2010-Ranked highest in the JDPower Asia-Pacific 2010 India Original Equipment

TyreCustomer Satisfaction Index (TCSI) Study. This is for the 7th time that MRF has

been awarded this honour.

Won the Top Export Award from Chemicals & Allied Products Export Promotion

Council(CAPEXIL) for 2009-10.


2011-MRF launches Revz, India’s 1st radial for 2 wheelers.

MRF inaugurated its 7th manufacturing facility at Ankenpally at Medak District in

Hyderabad, Andhra Pradesh exclusively for radial tyres.

Turnover crosses Rs.10000 crores mark.

Rankedhighest in theJDPower Asia-Pacific 2010 India Original Equipment

TyreCustomer Satisfaction Index (TCSI) Study for the 8th time.

2012-New plant at Perambalur, near Tiruchirappalli in Tamil Nadu will be

operational. This will be MRF’s 8th independent plant in India.

2013-Won the JD power award for the 10th time.

MRF's Aero Muscle becomes the only Indian tyre to be chosen for the legendary

fighter jet - Sukhoi 30 MKI

Team MRF’s Guarav Gill wins his first Asia-Pacific Rally Championship

The Muscle Man

The corporate ethos is perfectly represented by the brand symbol The MRF Muscleman-

embodying strength, reliability and durability; the very qualities of the tyres it represents.

The mere mention of the world “MRF” is bound to bring the muscleman to the mind of

Indians. The muscleman has evolved in 1964 soon after MRF began exporting tyres. Over the

past 33 years it has evolved from a mere corporate mascot to a symbol of strength, reliability


and durability. Now the muscleman grew to become India’s most trusted and well recognized

symbol for tyres.

In the 1960’s the Indian tyre market was completely controlled by the large multinational

companies. Around this time MRF opened tyre factory at Thiruvattiyur in Tamil Nadu. With

that came a task of recognizing an appropriate corporate brand symbol. In this process of

developing suggestions for the symbol, some enterprising employees conducted an informal

market survey by interviewing people from all over the country about their expectations from

a god tyre. One day a truck driver at a road side dhabha (tea stall) somewhere in Western

India hit upon the rigid idea when he said “a good tyre should have all the qualities of a

pehelwan(strongman). And by this simple statement, the muscle man was born.

Organizational Goal

The organizational goal of MRF Ltd. is “to maintain global standardsthrough continuous

improvement in the quality of product and services in order to maintain market

leadership.”

The main strategy of the company in today’s competitive world is “cut cost and win the

battle.” As the number of accidents in similar factories is comparatively more, the emphasis

of the company is “accidentfree safe production.”

MRF Ltd achieves the objectives by taking the following actions;

Product/process improvement by performance monitoring and prompt service to the

customers.

Upgradation of all the machinery to meet the increasing needs of customer.


Continuous training is given to all employees in order to acquire necessary skills and

knowledge and improve the quality of work life

Mission & Vision

MRF is a leader in the Indian tyre industry and a significant global player providing customer

delight and enhancing shareholder value. MRF has well defined quality environmental safety

and health training and human resource policies. The vision of MRF is “to realize their

policies and implement the contents letter and spirit.”

It is the vision of MRF to emerge as prominent global player in the field of polymers (plastic

and rubber) and make India a global super power in terms of technology and quality of life.

It is the mission of MRF to realize zero defects, zero break-downs, zero accidents, zero

pollution and thereby to have zero losses.

Values

Customer: We will be responsive to the needs of our customers.

Learning: We will continuously improve our service innovatively & expeditiously.

People: We will trust and respect our employees.

Community & Partners: We will be transparent and sensitive in our dealings with all

stake holders.


Policies of MRF

1. Quality Policy

The main quality objective of the company is “tomaintain market leadership through

continuous quality performance”

2. Safety Policy

Safety and health of the employees shall be the first priority of the company. It is the

responsibility of each and every individual in the organization, regardless of the position he

occupies, to ensure that everyone in the factory returns home without any injury. The

company offers “accident free safe production” not only in letter but also in spirit, for the

benefit of one and all through this policy.

3. Environmental Policy

The environment Policy of MRF Ltd. is “to manufacture the company’s products in an

environmentally friendly and safe manner.”

This is to maintain products in an environmentally friendly and safe manner. To achieve this

goal, all the MRF plants, together with corporate office shall:

Minimize the impact of our manufacturing activities on the environment especially the

air, water, and soil.

Comply with all applicable regulatory requirements

Develop environmental performance evaluation procedures for continuous monitoring


Optimizes the consumption of resources (water, energy and raw materials) by

minimizing wastage, recovering and recycling where ever possible.

Up gradation of the machinery and pollution control equipment when required

Train all our employees to perform their activities in an environmentally responsible

land safe manner

At the plant level, the respective Senior General Managers/ General Managers are

assigned the responsibility of carrying out the environmental system by collaborating

with corporate functions..

4. Training Policy

The training policy of MRF LTD. is “to provide and develop knowledge, skills and

behavior of the company’s employees to continuously improve their performance.”

MRF plants along the corporate office join hands to accomplish the following:

Competency evaluations conducted each year identify and document the training needs

of the employees.

Design and publish the training calendar and schedule.

Monitor and evaluate training process and out come to asses and to decide the next

training cycle requirement.

Collaboration of the activities along with the activities of human resource department

plants.

Management


The success or failure of a company is determined by the performance of its management. It

has to play a major role in many crucial functions. Management of MRF is lead by

Mr.K.M.Mammen, son of Mr.MammenMappilai who started this company about 66 years

ago.

Board of Directors

K.M.Mammen - Chairman & Managing Director

ArunMammen - Managing Director

K.M.Philip - Whole Time Director

Rahul MammenMappilai - Whole Time Director

Dr.K.C.Mammen - Director

K.D.Parakh - Director

Ashok Jacob - Director

V.Shridhar - Director

Vijar.R,Kirloskar - Director

N.Kumar - Director

Ranjith.I.Jesudasen - Director

S.S.Vaidya - Director

Dr.Salim Joseph Thomas - Director

Ravi Mannath - Secretary

Production Units


1) Thiruvattiyur, Tamil Nadu (for automobile tyres)

2) Arkonam, Tamil Nadu (for bicycle, scooter and auto rickshaw tyres)

3) Goa (for automobile tyres and procured tread rubber)

4) Kottayam, Kerala (for automobile tyres, tubes, procured tread rubber)

5) Medak, Andhra Pradesh (for automobiles)

6) Pondicherry (for radial tyres)

7) Gummidippondi, Tamil Nadu (for radial tyres)

8) Perambalur, Tamil Nadu (for future requirements)

Awards & Achievements

FORD WORLD EXCELLENCE AWARDS

MRF won the silver award and is the only Indian company to win this excellence award.

TNS

MRF voted the "Most Trusted"Tyre Company in India by TNS 2006 global CSR study.

J D POWER ASIA PACIFIC

MRF won the award for customer satisfaction not once but 10 times till date.

CAPEXIL

MRF won the award for exports.

Brand Ambassadors

Former brand ambassadors

Indian batting maestro Sachin Tendulkar, cricketing legends Bryan Lara & Steve Waugh.

Current brand ambassadors


The young Indian batting stars GautamGambhir, Rohit Sharma &Ashrafull (Bangladesh)

Subsidiaries

Funskool India Ltd.

Product-o-Drome

Paint & Specialty coatings.

MRF Pre-treads

MRF Pace Foundation

MRF Power House

MRF TyreDrome

MRF Muscle flux Conveyor Belting

Sister Concerns

MalayalaManorama

Manorama Vision

MM Foam

Philip’s Coffee

Devon Machines

Plantation

COLT Computers

MazhavilManorama TV channel


Product Range

Automotive tyres are the main products of the company.

Truck tyres-tube type and tubeless type

Light truck tyres

Special tyres for defence

Tyre for industrial applications

Agricultural tractor and tiller tyres

Off the road tyres-solid tyres and earth mover tyres

Passenger tyre-bias ply and radial

2/3 wheeler tyres

Specialized tyre for motor rallies

Non Tyre Products:

Automotive tubes

Toys

Flaps

Conventional tread rubbers

Pre-cured tread rubber

Vulcanizing solution

Tyre repair materials

Conveyor belts

MRF Wood coat

MRF metal coat


MRF glass coat

MRF velour

MRF auto coat

MRF Kottayam Unit

MRF limited, Kottayam are one of the most modern plants that was setup in 1969 at

Vadavathoor about 7km from Kottayam town in the state of Kerala, a hamlet lying on the

outskirts of Kottayam district. About 10 crores of land was purchased in Vadavathoor village

during 1968 and the foundation stone for the factory building was made by late Sri.

K.M.Cherian. Availability of intelligent and motivated labor, natural rubber in large quantity

(Kottayam is the land of 3 L’s-Latex, Letters & Lakes), cheap power etc. Tariffs, tax

concession and transportation facilities were the main reason behind the choice of Kottayam

as the 2nd manufacturing facility of MRF.

A factory building with in the area of 34200 sq. ft was constructed during the period of 1968-

69 and Ban-Bury (internal mixer) of 3A size with a capacity to mix of 10 meter per day was

erected and commissioned on 21st July 1969, with strength of 7 workmen. Presently it is the

most advanced technology mixing unit and a fully fledged manufacturing unit providing truck

and tractor tyres.

In the view of high productivity and very good performance in general, the mixing capacity

was enhanced by installing a second Ban-Bury of 11A size with a capacity to mix 48 meter

per day during march 1970, with the permission of Goa government. A license to manufacture

400000 automotive tubes per annum was transferred and started production of tubes with 7

quarrying presses. To enhance the mixing capacity, Ban-Bury of 11 D size were installed in


1978 to meet the increasing demand for mixing. At present 6000 tones of various compounds

are dispatched to different units.

Another new product introduced in MRF Kottayam unit during 1993 was flap production. The

management also decided to start tyre production Kottayam unit taking amount of various

incentives on tax and power announced through a new industrial policy by the Kerala

Government. The tyre plant with an initial plan to produce 200 numbers of tractor rears and

600 numbers of tractor front tyres per day was inaugurated by Chairman Sir

K.M.MammenMappilai on 30th May 1994. Commissioning of tyre plant was the beginning of

a new era in the history of Kottayam unit. Initially tractor front tyres were produced and then

it diversified into passenger tyres, tractor rear and truck tyres of various sizes. Cement house

was also built to prepare various cements and paints required at tyre plant and also for the

production of vulcanizing solution.

A new plant, mainly for PCTR (Pre-Cured Tread Rubber) production was commissioned in

the year 2000. This new plant now houses a 6” cold feed extruder for extruding re-threading

materials and PCTR slugs, PCTR curing presses, 48” calendar for production of tyre repair

materials, 68” fabric calendar, German tuber for flap slug extraction, flap curing presses, tyre

finishing and repair, tyre clinic, textile lab, finished goods storage and shipping.

With the growth in the number of tyre presses and subsequent increase in the requirement of

bladders (which were being supplied by other units of MRF) Kottayam unit started producing

bladders for its use and also for supplying to other units. The bladder press is located in the

tube plant.

As a new product, solid tyre production was introduced at Kottayam unit in 2004. This solid

tyre curing presses are located in tube plant.


Site Map

Chart-3.1


MIXING PLANT

RM GODOWN

BD MIXING

PCTR PLANTTYRE PLANT

TUBE PLANT

ENGG. STORE

CANTEEN

ADMINISTRATION OFFICE

Employee Details

Office Managers - 29

Management Staffs - 159

Clerical Staffs - 58

Sub-staffs - 8

Watchman & Fireman - 52

Workers - 1079

Trainees - 78

Casuals - 17

Temporary Workmen - 155

Canteen Contractor’s Workmen - 40

Total - 1738

Working hours at Kottayam Plant (24 hours)

There are 3 shifts of 8 hours each.

1st shift - 7 am to 3 pm

2nd shift - 3 pm to 11 pm

3rd shift - 11 pm to 7 am

General shift - 8 am to 4:30 pm

Trade Unions

MRFEU - MRF Employers Union

MRFEA - MRF Employees Association

MRFES - MRF Employees Sangh


Plants in MRF Kottayam Unit

1) Tube Plant

2) Tyre Plant

3) Mixing Plant

4) PCTR Plant

Products at Kottayam Plant

1) Automotive Inner Tube

2) Automotive Tyre

3) Retreading and repair material

4) Flap

5) Bladder

6) Pre-cured tread rubber

7) Vulcanizing solution

8) Curing Bags/Envelope

9) Mastication

International Certifications for Kottayam Plant

ISO 9001:2000 Quality Management System

ISO 14001:1996 Environment Management System

ISO TS:6949 Technical Standards

CQC


Kottayam Unit-Facts & Figures

Built-up area Six lakh square feet

Management staff 252

Regular workmen 1115

Casual workmen 399

Total finished goods production 3400 MT/ month

Total turnover of finished goods Rs.42 crores/ month

Mixed stock sent to other units 7000 MT/ month

Tyre production 52000 tyres/ month

Total production of tubes, envelopes

and curing bags

263000/ month

Flap production 82000/ month

Tread Rubber Production

(conventional)

160 MT/ month

PCTR production 330 tonnes/ month

Table – 3.1

Organisation Structure


Organisation Chart of MRF Corporate Office


Chairman & Managing Director

Joint Managing Director

Manufacturing Units

Director Manufacturing

Director R & D

Director Accounts

Director Engineering

Director Marketing

Whole Time Director

Director Material &

Export Division

Electrical Maintenance Civil Engineering Mechanical MaintenanceGeneral Supervisor Time office

Security OfficerQuality Assurance OfficerTechnical Officer AssistantManagerPlanning

Assistant ManagerAccounts

ManagerPlant IPlant IIPlant IIIPlant IV

Guards

Technical Supervisor

Supervisor

Quality AssuranceSupervisor

OperatorsStaff Foreman

SupervisorWorkersOperatorsOperatorsWorkersStaff Supervisor

WorkersWorkers

Plant Engineering Manager

Plant Accounts ManagerPlant HR Manager Plant Senior Security OfficerPlant Production Manager Plant Industrial Engineering ManagerPlant Quality Assurance ManagerPlant Technical Manager

GM

Chart3.2

Organisation Structure of MRF Kottayam Unit

Chart3.3


Thiruvattiyur Kottayam Goa Arkona Medak Pondicher Gummidippondi Perambalur

FUNCTIONAL AREAS

DEPARTMENTS

MRF Ltd gives an insight about the functioning of the different departments. Each department

is headed by the general manager who possesses expertise, knowledge in the area under his

supervision. There always exists an ergonomic atmosphere which is often made possible by

the close interaction between all members in each department. The top management moulds

the strategies and policies that make sure that the middle management implements them.

Weekly interdepartmental meeting aims at bringing coordination between the different

departments. Open forums are held once in a week in all plants where the employees can raise

their concerns, suggestions etc.

The various departments headed at MRF Ltd Kottayam can be enlisted below:

1. Production department

2. Production Planning Department

3. Quality Assurance Department

4. Technical Engineering Department

5. Plant Purchase Department

6. Raw materials Stores Department

7. Shipping (dispatch) Department

8. Engineering Department

9. Industrial Engineering Department

10. Safety Department


11. Security Department

12. Human Resource Department

13. Accounts Department

14. Marketing Department

1. Production Department

Production is the primary function of the company and hence all other functions are support

functions. Production is carried out in four plants at Kottayam unit. They are:

Tube plant Plant1

Tyre plant Plant2

Mixing plant Plant3

PCTR plant Plant4

The following are the main functions of production department.

Planning for production processEvery month, a monthly plan is given to the plant by

central planning. Based on the monthly plan- planning department will prepare a simulation

plan by dividing the month into 3 segments of 10 day each.

Material indent and receipt

The daily requirement of raw material is calculated at each plant after considering the

available inventory and the schedule production for the next day raw material indented is

made to raw material store.


Processing

Processing is carried out per the technical specification.

Product identification and traceability

Inspection

Product Volume

Table – 3.2


Product Volume

Tyres 2437 no./day

Tubes 8433 no./day

Flops 2677 no./day

PCTR 16 mts./day

Structure of Production Department

Chart-3.4


Production Manager

Asst. Manager

Production Plant - II

Asst. Manager

Production

Plant - III

Asst. Manager

Production Plant - II

Asst. Manager

Production Plant - I

Operatives Operatives Operatives

Supervisor Supervisor Supervisor

Operatives

Supervisor

2. Production Planning Department

Production plan for the coming month will be issued form the Central Planning at Corporate

office. Based on this, plant planning in-charge will issue the monthly simulation plan to

central planning, plant production and to shipping. Based on the monthly plan and the

inventory norms the monthly requirements of raw materials and consumables will be prepared

by plant planning and is sent to central planning, Corporate purchase and to Raw material

stores. Monthly requirement of raw materials is calculated from software and it is validated

every six months.

Based on the monthly simulation plan for the whole of Kottayam unit, each plant make its

own simulation plan and indents required materials from raw materials stores. The simulation

plan for 3 segments of 10 days each is prepared and micro planning is done based on that.

Since the plant sends work-in-process materials to other plants, a simulation plan is also

prepared for work-in-process material production and is send to concerned departments of

MRF units to which these in process materials are sent. In case of any revision in monthly

plan, the revised requirements and plan will be sent to the concerned parties.

Production details report is sent to central planning on a daily basis for the previous day’s

production. Plan Vs Production report is published every 10 days and also on a monthly basis.


3. Quality Assurance Department

Quality is considered as the most effective tool to improve productivity, to achieve cost

effectiveness, to improve profitability and market share and to remain competitive in the

global market. In the business environment of today, quality impacts not only the products

and services but also many other relevant entities such as process, systems, people and

organization.

A low level quality can be caused by the weakness either in the design of the product, or in its

manufacture. It is therefore appropriate to distinguish between quality of design and quality of

manufacture. Two products which have the same use but which are designed in different ways

can be of different quality of design. Quality of design is evident in the specifications to

which the product will be manufactured. A product may confirm in varying degrees to the

specification. This varying degree of confirmation to the specification will lead to varying

degree of quality of manufacture.

Functions of Quality Assurance Department

Quality assurance department’s primary aim is customer satisfaction. Hence its prime

duty is to ensure that all customer complaint should be taken seriously and is to be

communicated to all concerned. Problem solving tools are employed to ensure that the

problem is solved and error proofing methods are adopted to ensure that such problems don’t

occur again.

Improve the profitability of the company by reducing defects and waste generation.

This is done by initiating projects for waste reduction and forming task forces for close follow


up. Specific targets are fixed in each area for waste reduction and forming task forces for

close follow up. Specific targets are fixed in each area for waste reduction and quality

improvement and it is done in co-ordination with all other connected departments.

The main function of quality assurance department is process audit and final product

inspection. This will include monitoring the inspection status of incoming materials, in-

process materials, process parameters and finished product inspection. Ensuring identification

and traceability of all materials is also the function of QA.

Educating workmen on Quality Standards and the consequences of not following

quality norms is also done.

Audits on suppliers and outside godowns are conducted periodically to ensure the materials

are of the required quality and also to ensure that they are stored in the proper manner.

Whenever a finished product is returned to the factory due to any defect those products are

inspected, the reasons found out and communicated to everybody concerned. It is then

disposed in a suitable manner and recorded.

Slow moving and non-moving items are tracked at regular intervals to avoid material getting

deteriorated due to prolonged storage and to avoid producing material which is not needed by

the market.

Quality Policy of MRF

The quality policy of MRF is to maintain market leadership through continuous quality

improvement. To achieve this goal, all the MRF plants and the corporate office shall pay

particular attention to the following:


Product process improvement by field or plant performance monitoring and prompt

service to the customer

Upgradation of machinery to meet the increasing needs of the customer.

Continuous training of all employees in order to acquire necessary skills and

knowledge.


Structure of Quality Assurance Department

Chart-3.5


Quality Assurance in

Charge Plant I

SupervisorSupervisor

Quality Assurance in Charge Plant IV

Quality Assurance in

Charge Plant II

Operators

Supervisor

Quality Assurance in Charge Plant III

Supervisor

Operators Operators Operators

Manager Quality Assurance

4. Technical Department

Technical department at the corporate level carries out R&D activities and the results of

those activities are transferred to the plants. Some of the activities carried out at corporate

technical are new moulds, selection and evaluation of new and alternative sources, selection

and evaluation of alternative materials, finished product testing and analysis, heat engineering

and assisting plants in problem solving.

The results of research and developments are translated into practical applications at the plant

level. At the same time, other routine functions like testing of incoming materials, process

monitoring and product testing at each stage is also carried out.

Activities

1) New product development.

2) New compound development.

3) Designing and inspection of new moulds.

4) Selection & Evaluation of new alternative source.

5) Selection and evaluation of alternative.

6) Finishes product listing and analyzing.

7) Arresting plants in problem solving.

Raw Material Testing

All raw materials are tested and released if they confirms to the specifications. When the

material is received, raw material stores personnel arrange for collection of samples from the


received material as per sampling plan. The sample is given to raw material testing lab along

with sample transfer note/ visual inspection report.

Raw materials are tested as per BSP (Basic Standard Practices), standard test procedure and

are compared with the specification issued by corporate technical. If the material does not

confirm to specification, more samples are tested and released if it is OK. If any of the re-

tested samples are not OK, then the samples are sent to corporate lab and the material is

accepted or rejected based on corporate advice. If the material is rejected, then raw material

rejection note is prepared and the material is returned to the supplier by raw material stores.

In-Process Material Testing

In process materials are tested by technical as per the plan to check whether any deviation

from the specification has happened either in the material used or in the process.

Finished Product Testing

Finished product testing is done both in the plant and at corporate technical departments. This

is done to ensure that the product produced confirms to the required standards. In case of

tyres, ply adhesion, mounted tyre dimension, and cut tyre analysis are done in the plant. For

PCTR and flap, cured dimensions and weight are checked.

Process Control


Process control is effected by checks or tests conducted regularly. The data generated during

tests and audits are used to control the process. Changes are made if required in the

specifications to achieve process ability targets, the changes are documented through plant

changes letters. If there is any problem, the process / product will be analyzed for variations

in raw materials, or process conditions. Any deviation found will be corrected or alternative

source of raw material will be tried. Process will be repeated to check whether it is OK.

New Product Introduction

Whenever a new product is introduced, a TPOR (Technical Program Opening Report) is

received from corporate technical along with corporate specification, project schedule and

new size production plan. Based on the TPOR, a micro plan will be prepared by Head- plant

technical and it will be approved by the originator of TPOR. This is then given to the

concerned technical in-charge who prepares the activity plan. Plant specification is generated

based on the corporate specification.

Analysis of the finished products is done and necessary corrections if any are incorporated

into the specification. The product is released for re-evaluation or for completion of the

project schedule. The product is sent for in-plant testing, corporate testing and performance

report is published. The performance during bulk evaluation is published. Then if it is

satisfactory, the product is released for regular production in consultation with corporate

technical, and is documented through a TA (Technical Authorization) or PLC (Plant Change

Letter).


Control of Non-Conforming Product

It is the responsibility of technical department to dispose of the non-conforming materials in

suitable manner. Non conforming materials are tied with a red tag (non conforming material

tag) which contains all the relevant details like the MRF code of the held material, quantity,

reason for holding, date and shift of production, date and shift of holding etc.

Technical in-charge reviews the non-conformance and takes a decision on the method of

disposal and this is recorded on the non conforming material tag. The disposal is then

followed up by production.

Tool Change

Whenever there is a tool change the concerned specification is given by plant technical

department. In case of a new size tool, it has to be Okayed by technical before being put in

production.

Finished Product Re-Classification

Finished products which don’t confirm to first quality norms are kept separately are jointly

inspected by production, technical and quality assurance. Based on joint decision, the material

is either sent as seconds, repaired or scrapped.


Structure of Technical department

Chart- 3.6

5. Plant Purchase Department

The items purchased by the plant can be categorized as follows:

Items which come under the head capital expenditure.

Items which come under engineering spares (non-capital expenditure)


Manager Plant Technical

Technical in Charge Plant I

SupervisorSupervisor

Technical n Charge Plant IV

Technical In charge Plant II

Workmen

Supervisor

Technical in Charge Plant III

Supervisor

Workmen Workmen Workmen

Stationary and miscellaneous items (items which don’t come under the preview of raw

materials)

Services (repairing for machinery)

Procedure followed for purchasing

Any person who needs a material can make a purchase on request but it has to be authorized

by the department head. This has to be routed through engineering store.

In case of items involving capital expenditure, it should be capital authorization number. In

case of engineering spares of non-capital nature, this is not required.

Based on the indent, necessary quotations are invited and purchase order is released. The copy

of purchase order is sent to the supplier, intender, accounts, stores, corporate office PEM and

a file copy for plant purchase.

Procedure followed for repairing

For repair and maintenance of equipment or machinery, indent is raised and it is authorized by

PEM and item is sent to the party from engineering stores via gate pass. The item is

dismantled and the exact nature of work to be done is finalized and quotation is raised by the

outside party. This is communicated to the intender. Further clarifications and follow up is

done by the intender. After getting the approved repair quotation from the indent/department,

necessary work order is released by purchase department. Copies are distributed as in case of

spares, indenter has to follow up the repair machinery and again when it comes back after

repair; it is routed through engineering store.


6. Raw Material Stores

Raw material stores will receive a copy of the raw material requirement for the month which

is prepared and sent by the plant planning. This is also sent to the central planning and central

purchase by plant planning. Based on the requirement, central purchase arranges for

procurement of materials and issues a delivery schedule to the plant. Delivery schedule is the

schedule by which the supplier will release the specified quantity of raw materials at the

specified dates to the plant.

Raw materials, consumables, fuel etc are received at the factory gate in line with the delivery

schedule and plant purchase orders. The documents are verified to ensure that the materials

are from approved sources and the correct quality as ordered is delivered.

Weighing of the load is done. GAE (Goods Arrival Entry) is made and the load is re-directed

to the unloading point through the security department. The unloading point is usually the raw

material warehouse, but sometimes the materials are unloaded at the plants where it is

consumed. In case of fuel, oil etc. it is unloaded at the storage area.

At the unloading point, visual inspection is carried out and then the materials are stored with

the proper identification tags showing the primary status of the material (Hold/Pending fir

Test). Each material has a specified storage and it is placed in that storage area.

Sample transfer/visual inspection report is prepared and samples are collected for testing as

per the documented sampling plan. The sampled bag is identified and the sample is sent to

technical department for testing. GRN (Goods Received Note) is prepared at this point.


After testing the samples, technical department informs the test result through the material

releases/rejection/hold note printed at the bottom portion of the sample transfer/visual

inspection report. Based on the test result green color sticker captioned “OK” is affixed if the

material is OK, RED color sticker captioned “REJECTED” is affixed if the material is not fit

for use and ORANGE color sticker captioned “HOLD” is affixed if it needs further test to

arrive at a concrete decision.

Materials are issued to the production as per the indent raised by the production in each plant.

Stock inventory and stock status reports are prepared every month. Rejected materials are sent

back to the supplier and the cost is recovered. Transferring of materials to other plants is also

monitored.

7. Shipping (Dispatch) Department

Finished goods will be received from inspection/ packing area size wise, batch wise or

lot wise on the basis of production Transfer Note. Physical verification of goods is done at the

time of receipt and receipt tags are put. Proper storage and identification of finished goods is

the responsibility of shipping department.

Finished goods will be stored size wise on pallets with transfer slips showing the size,

quantity, date of receipt etc. Tractor rear tyres .truck tyres and such others will be stacked on

floor. Stacking norms for finished goods, where ever specified will be followed.

Shipping will publish Daily Dispatch Simulation Plan and copies of it will be sent to

plant planning, central planning and QAD. Daily Dispatch plan is prepared based on

simulation plan, allocation plan and urgency as intimated by central planning /marketing,


transportation time required, availability of truck, shelf life of the product etc. Trucks are

checked before loading to ensure that damages will not occur to goods.

Daily production Receipts and transfer are fed into computer and reports are generated.

Daily details are transmitted to central planning /EDP/Marketing and data are consolidated

for report generation and monitoring .Dispatch report is published for every 10 day

period .Non moving /slow moving items report is published monthly and distributed to

central planning ,plant planning ,QA ,plant head, marketing etc.

Shipping coordinates with central planning to get allocation for none moving and slow

moving items. Tread rubber/cushion which exceeds the shelf life of 3 months and damaged

products/tyres packed with wrong tubes will be given to production.

Statutory registers and returns as required are properly maintained and submitted. New

defective tyres are brought for tyres for repairs from outside godowns and inspections by

central exercise authorities are arranged .Statutory registers and returns as required are

properly maintained and submitted

8. Engineering Department

Engineering department functions are divided into Mechanical, Electrical, Instrumentation,

Civil & Environmental engineering. The main functions are new machinery lay out

preparation ,erection and commissioning of new machinery ,preventive maintenance,

breakdown maintenance, condition monitoring and over hauling of machinery and other

related equipments.

Erection ,commissioning ,operation and maintenance of utility items like generator ,boilers,

compressors, pumps, freezer lines and cooling towers and maintenance of material handling


systems like lift, hoist and gantry are done by engineering. The maintenance of equipments at

pump house and training centers are also done.

Mechanical Maintenance

Preventive maintenance schedule for the particular week is taken and the necessary

materials ,tools, manpower and spares are arranged .The scheduled maintenance activities are

carried out based on work instructions and experience.

Based on the number and nature of breakdowns in each machine during the year, the

preventive maintenance schedule is reviewed and a new schedule is prepared for the next

year.

Breakdown Maintenance

The defective machinery is identified either by production or by engineering and a

maintenance request is generated and arranges for the tools, maintenance personnel and spare

parts. The machine is then released for maintenance. The required maintenance jobs are

carried out and the machine is thoroughly checked. If the machine is OK, then it is handed

over to production. Otherwise necessary corrections are again done.

Every month, down time analysis is done and permanent corrective actions are initiated in

case of recurring failures. Mean time between failure and mean time to repair are the

measures adopted to track the improvement.


Electrical Engineering

MRF Kottayam unit falls under the EHT (Extra High Tension) consumer category. The

incoming power supply for this unit is 110 KV. The total connected load of the unit is roughly

30000 HP. The maximum demand is 10000 KVA. For backup power supply, the unit has 3

generators of 1000 KVA each and 1 generator of 5000 KVA capacity.

Civil Engineering

Civil Engineering department does the work of project proposals, drawings and estimates as

per requirements for construction and extension of factory buildings, equipment foundation,

plant offices and construction of cable and pipeline trenches, storm water drains and site

development work.

Environmental Engineering

This branch is mainly concerned with monitoring of factors which affect the environment and

finding ways by which they are minimized or eliminated. Water, air & sound pollution are the

main factors which come under preview of environmental engineering.


Structure of Engineering Department

Chart – 3.7


Plant Engineering Manager

Civil Engineer

Electricians

Supervisors

Manager Electrical

Maintenance

Mechanics

Supervisors

Manager Mechanical

Maintenance

Instrumentation Engineer

9. Industrial Engineering

Major Activities:

Conducting studies for fixing Standards and Crew Strength in all areas.

Negotiating of disputes by participating.

Participating in discussions for setting labor disputes

Manpower requirement assessment

Planning o Factory Layout

Expansion Project Coordination

Preparation and publication of MIS Reports

Works related to long term agreement.

computation of production bonus

Resource planning – manpower, machinery and equipments

Long term agreement related works

Calculation of chairman’s award

Calculation of production bonus

Connectivity between factories, head office and others plants, maintenance of network

connectivity in all areas of the plant, administration of local e-mail service, maintenance of

computers, printers other accessories.

ERP Activities – Maintenance of leased line connectivity between factory and head office and

other plants, maintenance of network connectivity in all areas of the plants, maintenance of

network connectivity in all areas of the plant, administration of local e mail

service ,maintenance of computers printers and other accessories.


ERP SYSTEMS in MRF Ltd was replaced by SAP systems in 2009

Structure of Industrial Engineering Department

Chart – 3.8


Plant Industrial Engineering Manager

Recourse Panning in Charge

Assistant Manager Industrial Engineer

10. Safety Department

Responsibility of this department is to ensure the working ambience to all the personnel

within the factory and the premises. The safety officer through the mechanism of audits and

subsequent reporting – Feedback, builds in the safety consciousness and the safety culture

within the personnel.

Safety policy of MRF

“It is the policy of the company that the safety & health of the employees shall be our

1st priority”

“It is the responsibility of everyone in this organization, regardless of the position he

occupies, to ensure that everyone in the factory returns home to his beloved ones without any

injury today and every day”

“We shall observe this policy not only in letter but also in spirit and offer “ACCIDENT

FREE SAFE PRODUCTION” for the benefit of one and all.

Procedures and guidelinesNecessary procedures, rules and guide lines for the effective

implementation of this policy, without prejudice to the statutory requirements, are formulated

by Chief Safety officer and Plant Safety officer. They will also render necessary advice and

assistance to all management staff in the effective implementation of these policy respective

sections, plants departments and the unit as a whole.


Methodology for Prevention of Accidents

1. Training

2. Enforcement of safety rules and guidelines.

3. Safety audit

4. Corrective and preventive action

5. Safety awareness promotional activities

11. Security Department

Industrial safety in the public and private sector can be defined as protection of men,

materials, machines, buildings, classified information, and the company operations and to

provide protective services against fire, theft, damage to the company assets and the

installation. Protect the valuables of the company as well of the employees.

The main functions of security department are:

Control over accessibility

Check against theft, pile rages

Control over the movement of personnel and materials at the gate

Checking in/out raw materials, empty vehicles, carrying finished goods, vehicles

carrying scrap items etc.

Control and checks on the company hired taxes and security of bills.


Co-ordination of security duties with private security agencies and preparation of bills.

Control and check over the entry of contract works.

In case of an accident in the factory, it is the responsibility of the security department to

provide the victim with first aid. The security department should also take them to the

appropriate place by using the ambulance if necessary. The inflow and outflow of inventory,

personnel are regulated and monitored by the security department.

Search Operation

All workmen is liable on entering, leaving or while remaining inside the factory premises and

searches by the security personnel. The search clause is made applicable to the workmen only.

The following are subjected to search at the gate:

Workmen

Contract Casual Labor

Suppliers

Drivers, Cleaners and Private Vehicles

Commercial Vehicles

Company Vehicles

Important documents to be maintained:

Standing Orders/Security Manual

Duty Register (Staff & Watchmen)

General Diary

Key Register

Visitors Register


Material Movement Register

Vehicle Register

Telephone Message Book

Structure of Security Department

Chart – 3.9

12. Human Resource Department

The Human Resource Department is known as the heart of an organization. It performs a

number of activities concerned with the employees of their organization. It interacts with

other departments to ensure effectiveness of the company.

Functions


SENIOR SECURITY OFFICER

Officer Security

Watchmen Firemen

Any employee newly recruited will be exposed to the following areas.

Introduction about the company

Evolution of the concept of quality and its relevance to the contemporary industrial

production.

Safety

External competitive environment and organizational culture

Factory discipline

Basic process flow in the plant in which they are place.

Activities

1) Recruitment and Selection of employees

2) Performance Appraisal

3) Welfare activates

4) Training

5) Industrial relation and labor management

6) Canteen service

7) File management.

Other activities controlled by HR Department are:

Medical insurance scheme

Family welfare canteen

Co-operative Society

Recreation club

Time Keeping


The office time is also come under the HR Department. The office time carries out the

following function.

Attendance detail

Leave details

Wage calculation

Daily reports.

Working hours (24 hours)

1st shift : 7am-3pm

2nd shift : 3pm-11pm

3rd shift : 11pm-7am

General shift : 8am-4.30pm

Structure of HR Department


Plant Human Resource Manager

Deputy Manager –

Human Resources

HR Officer Canteen Supervisor

Welfare Coordinator

Time Officer Training officer

Chart -3.10

13. AccountsDepartment

This department keeps account of all the financial transactions of the company. The

accounting period of MRF is from October 1st of one year to September 31st of the next year.

MRF has a fully computerized accounting system that facilitates fast operations of its various

functions. All the transactions of production unit starting from the issue of goods received to

the final documentation is computerized. The strategy that the company has adopted is to go

for credit transaction and payment will be made in one month of time.

The Functions of accounts department at the plant level has been divided into:

1. Financial account

2. Cost account

3. Wages and Salaries

4. Sales tax

Financial Accounts

This branch deals with all types of cash payments and receipts. This will include payment for

engineering and raw materials purchase, petty cash payments, operation and reconciliation of

bank accounts ,payment to the government in the form of taxes and levies ,payment of

PF ,deduction from salary and payment of loan outstanding and insurance premium of


employees ,fright payments, payment in lieu of travel allowance ,medical re imbursement etc.

Cash receipts in the case of scrap sales and any other cash receipt will also come under this

branch of accounts.

Cost Accounts

This branch deals with forecasting ,budgeting, analyzing and reporting the income and

expenditure of the company .The budget for expenditure is prepared using standard costing

principles and it is compared with the actual expenditure .Any variation from the budget is

analyzed to find the exact reason and it is reported to the top management.

Wages & Salary

Computation of wages and salary is done by this section of accounts department. Wages of

workmen are fixed in the long term agreement and are calculated on a daily basis depending

on various factors like grade, working hours, output achieved etc.

Sales Tax

All matters related to sales tax are handled by this section. Monthly returns for sales tax are

filed on behalf of sales depots. VAT (Value Added Tax) system has been introduced and all

matters related to this are also looked after by this branch of accounts. “C” forms for

purchases from outside the stare and “F” forms are issued for receipt of goods from depots.

Structure of Accounts & Finance Department


Plant Account Manager

Chart – 3.11

14. Marketing Department

MRF Kottayam doesn’t have a marketing department. Marketing management is the

functional of management concerned with planning, organizing, directing and controlling the

activities related to the marketing of goods and services to satisfy the customer’s needs which

are ever changing.

Objectives

Creating demand

Customer satisfaction

Increasing the goodwill of company

Increasing the market share


Manager Raw Materials

Asst .Mgr Plant Accounts

Asst. Mgr. Engineering Stores

Officer Shipping

Officer Engineering Purchase

Supervisors Supervisors Supervisors

Supervisors

Wages Officer

Costing Officer

Auditing Sales tax & Excise

Materials Handling Workmen

Supervisors

Supervisors

Raising the standard of living of the consumer community

Marketing Strategy & Network

MRF has emerged as one among the market leaders in the tyre manufacturing sector in the

world. It was awarded J.D. Asia Pacific for customer satisfaction 8 times. This achievement is

possible only because of MRF’s marketing strategies, product quality and after sales service

to customers. MRF has a wide marketing network, which hosts 68 sales centers, 2500

distributors and exports to over 75 countries. Tyre and tyre related products are sold under the

brand name “MRF” and distributed in domestic markets through sales offices, dealers and

franchises. The Corporate Executive Director, based in Chennai, guides the marketing

activity. In Kerala, the district office is at Ernakulam.

MRF Sales Network

NORTH SOUTH EAST WEST

New Delhi Chennai Kolata Mumbai

Agra Ananthpur Asansol Ahmedabad


Bareilly Bangaluru Cuttack Aurangabad

Bikaner Belgaum Dhanbad Baroda

Chandigarh Calicut Guwahati Bhopal

Faridabad Combatore Muzaferpur Goa

Haldwani Ernakulam Patna Indore

Hissar Hubli Ranchi Jabalpur

Jaipur Hyderabad Siliguri Jodhpur

Jalandhar madurai Nerul

Table – 3.3

Structure of Marketing Department

Corporate


Corporate Executive Director (Marketing)

Regional Sales Manager

District Office

Sales Department

Chart – 3.12

INTERDEPENDENCE OF DEPARTMENT

MRF Ltd gives an insight about the functioning of the different departments. Each department

is headed by the general manager who possesses expertise, knowledge in the area under his

supervision. There always exists an ergonomic atmosphere which is often made possible by

the close interaction between all members in each department. The top management moulds

the strategies and policies that make sure that the middle management implements them.

Weekly interdepartmental meeting aims at bringing coordination between the different

departments. Open forums are held once in a week in all plants where the employees can raise

their concerns, suggestions etc.

All the different activities that go on in a business are interdependent and work together to

create value for the customer and wealth for the business. The different departments of the

business are interdependent; that is, they rely on each other and work together to achieve the

objectives of the business. Within a business, it is the role of management to coordinate all

the organizational departments and ensure that they work together for the overall success of

the business. These departments support the main goals of the business. They are very

dependent on each other, and it is very important to understand the interrelationships between

them. The way that one functions might decide to achieve its goals could affect the whole

business, so considerable cross-functional coordination is required.

In MRF Ltd there is a functional interdependence between different departments as different

functions communicate with each other in order to meet the business aims and objectives.


Dealers & Agents

In MRF Ltd., the purchase function is carried out by the purchase department of the

respective unit or plants and is responsible for procurement of the unit requirement.

The heads of the material department and purchase department are accountable for

effective discharge of purchase functions within the framework of purchase policy of

the company.

The production planning department is the most vital link between product design and the

production department. The production planning department provides the necessary facilities

and technical know- how for the manufacture of the product.

Human Resource department is directly related to all the other departments as it controls all

the manpower requirements in the organization.

1Production is the functional area where the raw materials are converted into finished

products through a series of production process. It is done by keeping quality conscious in

mind. The quality assurance department ensures the quality right from the procurement of raw

materials, at each stage of production and just before packaging. Production department also

functions by collecting information both from materials as well as marketing department.

Production department checks the quality of the raw materials and if it does not meet the

standards report it to the purchase department. The material department deals with the

purchase of raw materials and supplies the raw materials to the production department.

The interdependence of quality control department with the production, finance, quality

assurance and HR department is necessary as it deals with products, its quality, payments and

man power. They check the quality of product packed before dispatch.

The interrelation of finance department is between materials, production, marketing,

advertising, export, quality assurance and HR departments. In addition to the major functions

of budgeting, raising funds internally and from financial institutions and utilization of funds


for growth of performance, it deals with all the internal and external cash and payment

transactions.

Public relation has to be thought of as a long term strategy and to implement this long term

strategy in a phased manner. Appropriate short term strategy are to be evolved and

implemented to build up and maintain the tempo.

Sales and servicing activity is one of the most important function in fulfilling the objectives of

the organization and needs of the customers. It has the activity of selling the product as per

customer requirement and maintain the customer satisfaction.


Financial Performance Trends

During the years under review, the company achieved the following financial results:

(In crores)

Heads/Years 2013 2012 2011

Total Income 13482.15 13093.76 10670.17

Profit before Tax 1226.80 833.12 893.65

Provision for Taxation 424.59 260.76 274.23

Net Profit 802 572 619.42

Table – 3.4 Source: Secondary Data.

2004-sep

2005-sep

2006-sep

2007-sep

2008-sep

2009-sep

2010-sep

2011-sep

2012-sep

2013-sep

42.9 55.34 99.81260.96 211.39

398.479999999999

534.66

893.65 833.12

1226.8

profit (Crores)profit

Chart – 3.13


2004-sep 2005-sep 2006-sep 2007-sep 2008-sep 2009-sep 2010-sep 2011-sep 2012-sep 2013-sep

719.170000000001749.81 820.05981.91

1116.551357.18

1686.44

2293.53

2853.56

3640.9

Reserves (Crores)Reserves

Chart – 3.14



2989.43 3437.134233.66

5036.755715.52 6141.94

8080.45

10637.03

13054.03 13444.75

Sales (` Crores)Sales (` Crores)

Chart – 3.15


723.41 754.05824.2900000000

01 986.15 1120.791361.42

1690.68

2297.77

2857.8

3645.14

Net Worth(` Crores)Net Worth(` Crores)

Chart -3.16


Company has crossed a sales turnover of Rs.13000 crores in the year 2012 which is a

landmark achievement. This reflects a sales growth of 32%. The growth was primarily driven

by a remarkable turnaround in the automobile market, lower interest rates and the general

recovery of business. During the year, there was an unprecedented increase in the price of

natural rubber and other key raw materials, which has impacted the performance of the

company. Despite the above, the company could achieve improved results due to better

operating efficiencies, value systems and cost cutting measures which the company has

undertaken over a period of time.

10 years Financial Summary

(Rs. in

Crores) 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004

Sales 13444.75 13054.03 10637.03 8080.45 6141.94 5715.52 5036.75 4233.66 3437.13 2989.43

Other Income 37.40 39.73 33.14 29.13 34.40 40.83 24.17 27.07 44.96 58.54


Total Income 13482.15 13093.76 10670.17 8109.58 6176.34 5756.35 5060.92 4260.73 3482.09 3047.97

Profit Before

Taxation 1226.80 833.12 893.65 534.66 398.48 211.39 260.96 99.81 55.34 42.90

Provision for

Taxation 424.59 260.76 274.23 180.68 145.45 66.83 89.18 19.90 15.03 14.10

Profit after

Taxation 802.21 572.36 619.42 353.98 253.03 144.56 171.78 79.91 40.31 28.80

Share Capital 4.24 4.24 4.24 4.24 4.24 4.24 4.24 4.24 4.24 4.24

Reserves 3640.90 2853.56 2293.53 1686.44 1357.18 1116.55 981.91 820.05 749.81 719.17

Net Worth 3645.14 2857.80 2297.77 1690.68 1361.42 1120.79 986.15 824.29 754.05 723.41

Fixed

AssetsGro. 5834.14 5477.16 4967.07 3865.62 3020.57 2866.24 2289.77 1955.99 1787.85 1534.47

Table –3.5


CHAPTER 4

DATA ANALYSIS AND INTERPRETATION


SWOT Analysis

The SWOT Analysis has revealed the strength, weakness, opportunities, and threats of the

company. It has been detailed below:

Strengths

Market leader in the industry.

Unique and high brand image.

Major raw material (natural rubber) locally available.

Strong channels of distribution (wide range of sales office for each zone)

Optimum capacity utilization of plants.

Strict quality measures.

Use of modern technologies and concepts.

Harmonious and cordial employer-employee relationship.

Great reserves and surpluses.

Good infrastructure.

Computerized system.

Environment certification (ISO 14001)


Quality product (ISO 9000 certification)

Highly evolved Research and Development wing

Training to all the employees.

Aggressive marketing Policies.

Experienced work force.

Wide spread recognition.

Quality control.

Strong financial support.

Weaknesses

High operational cost due to the use of modern and costly machinery for production.

Company is highly capital intensive.

High rate of absenteeism.

Strong trade union activities sometimes create problems among employees and also

disturb the smooth functioning of plant.

Lack of marketing department at the plants. It is at the corporate office.

Lack of speedy communication.

Lack of individual initiative.

Less interaction between manufacturing and marketing department.

Lack of commitment.

Opportunities

Growth in the economy, especially automobile industry.


Fast growing automobile sector provides good opportunities for MRF, as it is the

leading tyre manufacturer in the sub-continent.

Increased access to global source for raw material at competitive price as a result of

various trade agreements by the country.

The modernization of tubeless tyres.

World class products.

Joint ventures or tie-up with foreign automobile companies.

More opportunities for diversification.

Global standards and competition.

Improvement in market share both in India and outside.

Availability of latest technology

Threats

Continuous rise in price of natural rubber and other raw materials.

Steady competition from other leading tyre manufacturers.

Changing technology.

Threat of cheap import of tyres, especially from China.

Market Risks.

Rupee depreciation resulting in lower export realization

Entrance of new players.

Increasing transportation cost.


PORTER’S FIVE FORCE ANALYSIS

Porter’s five forces is the frame work for the industry analysis and business strategy

development developed by Michael. E. Porter of Harvard Business School in 1979. It draws

upon Industrial Organization economics to derive five forces that determine the competitive

intensity and therefore attractiveness of a market. Attractiveness in this context refers to the

overall industry profitability. An "unattractive" industry is one in which the combination of

these five forces acts to drive down overall profitability. Three of Porter's five forces refer to

competition from external sources. The remainders are internal threats.

Porter referred to these forces as the micro environment, to contrast it with the more general

term macro environment. They consist of those forces close to a company that affect its

ability to serve its customers and make a profit. A change in any of the forces normally,

requires a business unit to re-assess the marketplace given the overall change in industry


information. The overall industry attractiveness does not imply that every firm in the industry

will return the same profitability. Firms are able to apply their core competencies, business

model or network to achieve a profit above the industry average. Porter's five forces include -

three forces from 'horizontal' competition: threat of substitute products, the threat of

established rivals, and the threat of new entrants; and two forces from 'vertical' competition:

the bargaining power of suppliers and the bargaining power of customers. The following

figure gives the structure of Porter’s five force analysis.

Structure of Porter’s five force analysis


Potential entrants (Threat of mobility)

Suppliers (supplier power)

Buyers (buyer power)

Industry Rivalry

Substitutes (Threat of

substitutes)

Chart – 4.1

The five forces of Porter’s five forces are:

o The threat of the entry of new competitors

o The threat of substitute products or services

o The bargaining power of customers (buyers)

o The bargaining power of suppliers

o The intensity of competitive rivalry

PORTER’S FIVE FORCE ANLYSIS ON TYRE INDUSTRY

The threat of entry of new competitors

In tyre Industry the threat of entry of new competitors is very high. Potential entry for new

competitors is also the factor to intense the competition in the industry. A larger pool of new

entrants results in more changes of intense competition. Barriers to entry, however can restrict

the firms from entering the market, more number of entry barriers will make it difficult for the

new entrants to exploit the opportunity of new market. Government policy creates hurdles for

new entrants by heavy taxes and interest rates. New firms must get to know the Government

regulations and policies before making an entry decision into the country.

The intensity of competitive rivalry


In tyre Industry the intensity of competitive rivalry is high. The ongoing war between the

firms competes in the same industry for gaining customer share in order to increase their

revenues and profits. The tyre industries which engaged in the production of various types of

utensils and vessels compete each other to achieve more market share. The competition is

more intense if the firm pursues strategies that give it a competitive advantage over the

strategies pursued by its rivals. Developing new strategies is easier than retaining the

uniqueness of the strategies so as to gain a competitive edge over the rivals in the industry.

Changes in strategy by one firm may be met with retaliatory countermoves, such as lowering

the prices, enhancing quality, adding features, providing services, extending warranties and

increasing advertising.

The threat of substitute product or services

Firms mostly monitoring the trends within the industry to track the strategies but competition

not only arise within the similar industry but also in different industry. Companies in other

industry offer products with similar features and functionality or even better act as substitute

for the products. MRF tyre face heavy competition with other tyre manufacturing alternatives

such as Ceat, Appoloinrespect of price, models distribution channel etc...

Bargaining power of customers

Consumers are the final users of the product; performance of the companies totally depends

upon the consumers. Bargaining power of consumers is more especially when they are huge

in number and consumers purchase in large quantity. Rival firms offer discounts, warranty

and services to switch the consumer from one brand to another in the same industry. As the

satisfaction level of consumer goes up more the intensity level of competition increases.


Bargaining power of suppliers

Supplier and producer relation always matters especially in manufacturing industries.

Suppliers play an important role in the production of goods and services, making the raw

material better and till the final product are made. Bargaining power of suppliers affect the

intensity of competition especially if there are huge number of suppliers, less availability of

raw material and the cost of switching between suppliers or raw material is high. These

attributes in the industry give power to the supplier to enforce terms and conditions on

manufacturers and charge high cost on raw materials.

This chapter gives the clear picture of strengths, weaknesses, threats and opportunities of

MRF. Ltd through SWOT analysis, and Porter’s five force analysis is the framework for the

industry analysis and business strategy development.


CHAPTER

FINDINGS, RECOMMENDATIONS AND CONCLUSIONS


Findings

MRF ltd. Is the no. 1 largest tyre manufacturer in the country and the 12th largest in the

world.

MRF exports its products to more than 75 countries worldwide.

MRF is the first Indian company to export tyre to the US.

The company is providing good working environment.

MRF is the first company in India that manufacture and market Nylon tyres, passenger

tyres commercially.

Profit is comparatively low because of the rapid variations in the cost of the raw

materials.


Suggestions

Technology is changing so the company should update new technologies in the market

to maximize quality production.

The company can utilize the railways to transport its materials to reduce the overall

logistics cost

More attractive advertisements should be given through the Medias.

Introduce new brand ambassadors.

Monthly entertainment programs for employees must be arranged to avoid absenteeism.

Locally available raw materials can be used for production so that the cost of production

can be substantially reduced.

The management must take sufficient step to install a grievance settlement machinery

with sufficient participation of workers

Improve employer-employee relation.

Open a show room at factory itself.

More investment has to be made in Research and Development.


Conclusions

Madras Rubber Factory mobilized itself as the market leader. The strong performance of

MRF is because of combined efforts of management and employees. MRF provides high

quality and technologically superior products to its customers. The company has the provision

to find out which tyre is manufactured by which worker. The effective management along

with successful workers is very dedicated and is aware of new developments taking place in

the industry. There is “no compromise on the quality policy” makes them King of Kings in

tyre industry. If they implement the suggestion put forward, will help them to improve profit

and helpful for the workers. So the company can attain global standard through continuous

improvement in the quality products and service in order to maintain market leadership and

can be the king in tyre industry for many years.

MRF Kottayam unit is one of the 6 production units of MRF India.

Its location is ideal as the major raw material -natural rubber- is locally available.

The factory has different specialized plants for the production of various products.

Work is done 24 hours a day.

Work runs smoothly with non interference from outsiders.


Each department in the company plays a crucial role in the smooth running of the

factory and they all work together to achieve the common goal of maintaining market

leadership and making products that meet global standards.

The unit offers vast employment opportunities to skilled workers of the area.

The HR department takes excellent care of its workers through various welfare

schemes.

The company meets all the statutory requirements and runs non-statutory works also.

Rights are fulfilled and demands are met.


Bibliography

Books

Human Resource Management – by Gary Dessler&BijuVarkey, Publisher – Dorling

Kindersley (India) Pvt. Ltd, licensees of Pearson Education in South Asia. 12 th Edition, year

of publishing 2012

Organizational Behavior - by Stephen P. Robbins &Thimothi A. Judge, Publisher -

Dorling Kindersley (India) Pvt. Ltd, licensees of Pearson Education in South Asia. 14th

Edition, year of publishing 2012

Principles of Management – by T.N Chhabra, Publisher – DhanpatRai& co. 9 th

Edition, year of publishing 2012

Marketing Management – PHILIP KOTLER, 12th edition, year of publication

MRF Records - MRF Ltd.,

MRF Magazines - MRF Ltd.,

MRFJournals - MRF Ltd.,

MRF Manuals - MRF Ltd.,

MRF Annual Reports - MRF Ltd., MRF accounts department.


Websites

http://www.mrftyres.com

http://www.moneycontrol.com

http://www.fadaweb.com/indiantyresindustry.htm


http://www.fadaweb.com/indiantyresindustry.htm

http://www.moneycontrol.com/

a report on organization study at mrf

Documents

organization study report

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