Leading tyre manufacturer MRF said the industry is significantly dependent on natural gas and any shortage could affect production and the supply of key raw materials. The Chennai-based company, however, does not see any immediate impact on its operations.
“Industry uses natural gas in significant quantities as a source of energy especially in applications like steam generators in the manufacturing process,” Arun Mammen, Vice Chairman and MD, MRF told FE. He added that some raw materials would also be impacted due to the shortage of gas. “We don’t find an immediate threat as we have some inventory coverage which may last for a month,” Mammen said.
He further said that while some applications can be substituted with fossil fuels such as furnace oil, LSHS oil or to some extent coal, these fuels may have a higher carbon footprint than natural gas, which is a cleaner fuel.
Amid supply challenges due to the ongoing conflict in West Asia, the government has invoked emergency powers under the Essential Commodities Act to divert gas to “priority sectors”, placing household cooking gas and transport fuel at the top of the allocation. The Government of India has ordered manufacturing industries to limit their use of Piped Natural Gas (PNG) and Liquefied Petroleum Gas (LPG).
Energy Volatility
Mammen said if the situation continues beyond the next month, the company will have to reassess its production plans. He also highlighted potential human resources-related challenges. “Even food in plant canteens may become a concern,” he pointed out. MRF employs 26,217 workers and 6,899 employees as of March 2025.
The company manufactures tyres, tubes and flaps for passenger cars, commercial vehicles and two-wheelers. According to CareEdge, the company had an installed tyre manufacturing capacity of 95.85 million units and tube capacity of 47.90 million units as of March 2025, spread across nine plants including Tiruvottiyur near Chennai, as well as facilities in Kerala, Goa and Puducherry. The company last week signed a non-binding agreement with the Tamil Nadu government to set up a ₹5,300 crore greenfield manufacturing facility in Tamil Nadu’s Sivaganga district.
The gas shortage also adds to the industry’s cost pressure due to surge in crude oil prices. “Being highly dependent on petroleum derivatives like synthetic rubber, carbon black, nylon cord and rubber chemicals, the industry is already facing a cost push,” Mammen said.
Double Whammy
Brent oil prices have risen sharply over the last few weeks, crossing $92 a barrel from around $70 per barrel before the Iran-US war began. A depreciating rupee is further adding to cost pressures as a significant portion of tyre inputs are imported. “As of date, we have absorbed the initial cost push, sooner or later we may need to re-assess the overall impact,” Mammen said.