Kerala rubber growes form producer firm to make tyres

By: |
Kochi | Published: June 25, 2019 1:06:27 AM

Rubber growers in Kerala have got together to form a producer company ‘Integrated Rubber Farmer Producer Company’ (IRFPC) to manufacture tyres.

rubber, rubber industry, rubber farmingNatural Rubber (NR) prices dropped significantly after 2012 and soon hit levels below cost of production, making rubber farming uneconomical and not remunerative.

Rubber growers in Kerala have got together to form a producer company ‘Integrated Rubber Farmer Producer Company’ (IRFPC) to manufacture tyres.

Andreas Hermes Academe (AHA), an NGO based in Germany, will assist the producer company to formulate a strategy towards formation of a professional collective to produce value-added products under the ‘Farmer Producer Company’ (FPC) model, Ajith John, technical and financial expert of the group, said in a communication.

Natural Rubber (NR) prices dropped significantly after 2012 and soon hit levels below cost of production, making rubber farming uneconomical and not remunerative.

“The idea for this concept took root during this period when the realisation dawned that there is no salvation for the growers unless they move up the value chain. We have some successful examples of farmer-led cooperatives like AMUL, among others, which became big brands owned and managed by farmers. Recognising the various issues, the Union government had come up with the concept of FPC in 2002 and subsequently the amendments to the Act in 2013 gave further impetus. These companies, managed and run by farmers themselves, were conceived to be run like companies on the lines of the Companies Act with a professional management towards realising the objectives,” John added.

The communication said the FPC will start off with two and three-wheeler tyre production with an approximate initial investment of Rs 100 crore.

It was felt that unless the FPC is able to produce tyres of its own, it will not be able to deliver the right value to the growers for the produce bought from them or efforts put in by them, John said, adding that FPC decided on two and three-wheeler tyre as the initial step because the category forms 51% of all tyres produced and is seen growing at the rate of 12-13% while the industry is witnessing 5-6% growth.

IRFPC sources said the company has started mobilising capital for its tyre project from rubber growers across the country as shares. Face value of the share is Rs 10 and any rubber farmer who owns shares worth Rs 10,000, could be a member, but for becoming an active member with voting right he needs to possess shares for a value of `1,00,000. However, there is provision to form Farmer Interest Groups (FIG) by forming a group of farmers having 1,000 shares and nominating one of them to cast vote.

The company is now planning to procure a new fully equipped two and three wheeler tyre factory, at one of the industrial estates near Erode in Tamil Nadu, which is under auction.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

FinancialExpress_1x1_Imp_Desktop