The Hindu Business Line : P.K. Ruia acquires Monotona Tyres

Promoted by the Monotona group of Mr Dipak Poddar, MTL has capacity to manufacture three lakh two- and three-wheeler tyres, and supplies Bajaj Auto, LML and Kinetic.

Though he did not disclose the price, Mr Ruia said that the acquisition cost ranges between Rs 50 crore and Rs 80 crore. Though the acquisition was made through a special purpose vehicle, the company will be merged with Falcon Tyres.

"We have acquired MTL and will initiate the merger process immediately, subject to approval of the board of directors and shareholders of Falcon Tyres," Mr Ruia told Business Line. As Falcon has already lined up a technology tie-up with Sumitomo, the merger will help MTL improve upon the product quality.

Capacity expansion

Falcon has already embarked on a Rs 80-crore capacity expansion project — from 5.5 lakh to 7.5 lakh tyres — to be completed in December 2006. The proposed merger (of Monotona) will take Falcon's capacity to nearly 12 lakh tyres by the end of this fiscal. Accordingly, Falcon's market share in the two- and three-wheeler tyre and tube market would increase to roughly 32 per cent.

"We are eyeing a market share of over 60 per cent in the two-three wheeler tyre and tube market," Mr Ruia said, adding that the capacity expansion of MTL's Thane facility would be taken up once the merger with Falcon is completed. A parallel capacity expansion project may be taken up at Falcon's Mysore facility.

MTL has approximately 800 workers on its payroll and another 900 on contract. The company owns brands like `Racer' and has registered a turnover of over Rs 150 crore and net profit of over Rs 5 crore during last fiscal. Apart from domestic sales, the company exports to South America, West Asia, Africa, Sri Lanka and Bangladesh.

Falcon Tyres closed at Rs 83.25 on the BSE on Thursday having opened at Rs 82. The day's high was Rs 83.40, its 52-week high being Rs 164.15 attained on September 30 last year.

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