Chennai auto comp firm forms JV with US player

CHENNAI: MRP AutoRub, a rubber based auto-component manufacturer at Ambattur in Chennai, has taken the joint venture route to handle the crisis in the auto sector.
The Rs.7.2 crore company has formed a 74:26 joint venture with US-based rubber and plastic moulded and extruded parts manufacturer Molded Dimensions (MDI).
The JV will set up a unit for producing molded products worth Rs.15 crore annually, at Kakalur in Tiruvallur district near Chennai. The facility will be created by transferring the molded products division of MRP at Ambattur. MRP will continue producing its other product - hoses, from its existing plant at Kakalur.
The products from the new facility will be sold to MRP’s traditional customers and MDI’s customers in India, and later abroad too. "Our target is to produce Rs.75 crore worth of goods annually in four years," said MRP MD R Ganesh.
The Rs 4 crore investment on the new facility would be funded through equity by the JV partners. Investment banker Worbus has handled the evaluation and the JV.
MDI, which has two manufacturing units in USA, supplies to 300 customers spread across sectors like telecom, energy, medical and aerospace, in US and European markets.
Of those, 30 have manufacturing units in India. "These customers contribute to 40% of our total revenues globally," said Molded Dimensions president Michael Katz. "The JV will make it easier for us to supply to their operations in India, and give us a cost advantage in supplying to our other markets."
MRP has taken a 40% hit in its revenues and sales since November, when its clients – commercial vehicle manufacturers like Ashok Leyland and Tata Motors – saw a drastic reduction in demand and cut production. ALL has so far contributed to 70% of MRP’s sales.
"Things have improved from February. But, it still made us realise that we can’t put all our eggs in one basket," Mr. Ganesh said. "This JV will help us in diversifying our product portfolio product as well as market."