MRF: A Truly Make-In-India Story Turning 75

Tiruvottriyur, a coastal neighbourhood on the shores of Bay of Bengal in then North Madras, Tamil Nadu, was part of the auto belt when the industry developed during the early post-World War II years. One of the heavily populated localities in what is now Chennai, it is home to big companies and numerous small-scale enterprises. The other primary source of income for people is fishing. It was here that tyre major MRF Ltd. was born in 1949 when KM Mammen Mappillai opened a small toy balloon making unit in a shed.

Today, MRF is a dominant tyremaker in the domestic market. As it is inching towards its 75^th year, the company has created a history of sorts when its share (with a face value of Rs 10 a piece) breached the Rs 1 lakh-mark on June 13, becoming the first Indian company to cross the milestone.

Originally known as Madras Rubber Factory, it was set up by the youngest of nine children (eight sons and one daughter) of the Kandathil family (owners of the Malayala Manorama publication). Mammen Mappillai and his wife started by preparing toy balloons and selling them in then Madras. By 1949, the company was making latex cast toys, gloves and contraceptives. It established its first office at 334, Thambu Chetty Street. In 1952, it began to manufacture tread rubber, a product that could extend the life of used tyres. Steady growth turned the firm into a market leader in just five years. MRF ransformed into a public limited company in 1961 and sewed up a technical collaboration with Mansfield Tire & Rubber Company based in the U.S. The then Chief Minister of Tamil Nadu, the late K Kamaraj, released the first tyre from its new pilot plant at Tiruvottiyur.

It was a daring move, especially coming as it did when big multinationals such as Dunlop and Firestone were dominant in India. The collaboration with the Mansfield perhaps helped MRF to compete with them on an even footing. The North Chennai factory played host to independent India’s first Prime Minister when Pandit Nehru laid the foundation stone for the Rubber Research Centre on June 12, 1963, commemorating the inauguration of the Tiruvottiyur factory. The year 1964 was a path-breaking one for MRF. For, it went international by setting up an office in Beirut. The MRF Muscleman had truly arrived.

Since then, it has been an upward journey for this Indian tyremaker. In 1967, it became the first Indian company to export tyres to the very birthplace of tyre technology, the United States. By 1970, MRF had its second plant (Kottayam). Today, MRF has around nine plants, spread across South India.

The promoters held 27.87% at the end of December 2022, with no significant change in the promoter holding since 2014-15. In a blog post, V Ranganathan, former director of E&Y, wrote that two large shareholders—MOWI (P) Ltd. (11.98%) and MSWF (P) Ltd. (2.99%)—listed under the public category “haven’t bought or sold anything in the last over dozen years for which the data was seen”. MSWF (P) has since changed its name to Every Time Charitable Education Trust. About 8.51% is held by the employees' trust, and this too has remained static for a long time. Around 23.5% is held by non-promoter entities.

The shareholding offers an insight into the management of the company.

Mammen Mappillai founded and nurtured MRF at a time when the environment wasn't quite conducive for business. He was all for the government extending a helping hand to Indian companies. If western countries and Japan could do that, why not India? That was his refrain those days. Addressing the 37th AGM of shareholders sometime in March 1998, he said, "Competition must be encouraged by all means. But I daresay that the Indian national companies that are proven to be competent and playing their roles rightfully, of which there are many thankfully in this country, must be given an elevated playing field to take on the global giants. If other developed countries in the west can do this and continue to do this, why should India feel shy to stand for its own."

He was also a strong advocate of economic nationalism. No doubt, MRF had tied up with Michelin of France. But when the mutual trust evaporated steadily in the face of Michelin's breach of co-operative faith, MRF went all out to stop the multi-national on its track. Michelin initially came in as a technical collaborator. When MRF wanted to get into aircraft tyre production, it sought 51% stake in the venture. MRF was not willing. But, it accommodated Michelin in MRF with a single digit stake. As time went by, Michelin reportedly became ambitious. That soured the relationship between the two. MRF had to escalate the issue to New Delhi. Finally, Michelin had to give in. It quit MRF by selling its shares back.

MRF remains, perhaps, the lone player in the domestic market to compete without an outside collaborator. That is indeed a huge achievement for a Tiruvottiyur-born company.

Today, the management of the company is handled by the two sons of Mammen Mappillai—KM Vinoo Mammen and Arun Mammen. Rahul Mammen and Varun Mammen, sons of K.M Mammen, too, have become a part of the management. The original balloon firm from Tiruvottiyur has now become a nearly $3-billion tyre company with multiple facilities across South India.

Such achievements prompt management to talk nineteen to a dozen. But the MRF people remain reticent. Their strength probably lies in shutting talk and staying close. Ask any of its current or former employees. They will vouch for this. According to a former executive, it was rare for anybody to be sacked in MRF.

But what drives MRF? "Their decision-making was quick," said another former executive who declined to be identified. "All decisions are taken by them (the controlling family)," he said. Indeed, they made the right ones at the right time, helping the company expand and grow. But that has posed a growth challenge of sorts for qualified professionals. 

The cash-rich MRF also stayed away from diversifying into unrelated fields in both the control and liberal eras. It remained focused on its core business: tyre. And it overcame many challenges such as takeover threat from Michelin, intense competition in the domestic market  and the untimely demise of Ravi Mammen, the second son of the founder. Founded at the dawn of independent India, MRF has survived the test of time. 

It is truly a make-in-India story. 

KT Jagannathan is a senior financial journalist based in Chennai. He has been in business journalism for over three decades, covering corporate developments and critical industry verticals. He is the co-founder of www.carnaticdarbar.com, a news website for Carnatic music, a niche art form. He is also learning the wind instrument flute.

The views expressed here are those of the author and do not necessarily represent the views of BQ Prime or its editorial team.