"MRF Share Price Hits Six-Digit Figure, Raises Questions about Ownership and Corporate

Governance"

MRF HITS SIX BUT ARE THE INVESTORS IN FIX?

On June 13, 2023, a remarkable milestone was achieved not on the cricket field but in the stock
market, as the share price of a single MRF share with a face value of Rs10 soared to a six-digit figure.
This unprecedented feat overshadowed Page Industries Ltd, whose shares closed at around Rs40000
per Rs10 share. However, certain peculiarities surrounding MRF's market capitalization, shareholding
patterns, and corporate decisions have sparked questions and drawn attention to potential
governance issues.

MRF's promoters have maintained a steady 27.87% shareholding, with no significant changes
observed since the fiscal year 2014-2015, as per available data. This steadfastness in capital
structure, with a consistent face value, contrasts with contemporary practices of stock splitting or
issuing bonus shares, leaving some investors disconcerted.

Two significant public shareholders have refrained from trading their holdings for over a decade.
MOWI (P) Ltd has retained an 11.98% stake since 2011, while an entity initially known as MSWF (P)
Ltd underwent a name change to Ever time Charitable Educational Trust. The transformation from a
company to a trust raises questions about the legitimacy of such a process.

Since 2015, a notable 8.51% of MRF shares have been held by employee trusts, a concept
reminiscent of the early days of employee share remuneration. Furthermore, approximately 23.5%
of shares remain with non-promoter entities that have retained their holdings while witnessing the
share price surge from Rs6390 in October 2011 to its current six-digit value. Determining the true
beneficial owners of these entities necessitates further regulatory investigation.

The company's quarterly shareholding pattern filings disclose the significant 8.51% held by employee
trusts. However, the annual accounts, which should include entities holding more than 5% shares, do
not mention this substantial holding. The absence of clear permission from SEBI or the Central
Government for such arrangements raises concerns, as companies holding their own shares is
prohibited by law.

Recent attempts by the company to appoint family members as Managing Directors have faced
resistance from institutional shareholders. Postal ballots held in October 2021 and May 2022
garnered significant negative votes against continuing remuneration payments and appointing Mr.
Rahul Mammen Mappillai. Despite these concerns, the resolutions ultimately passed due to the
requisite majority support.

The extraordinary surge in MRF's share price prompts questions about ownership structures,
corporate governance practices, and the response to institutional shareholder concerns.

The resolution of these concerns and the potential implications for MRF's future may require the
intervention of regulatory authorities. A verdict from regulatory bodies could shed light on the
questions surrounding ownership structures and corporate governance practices within the
company. Only time will tell if such an intervention will take place and provide the clarity and
guidance needed to address these issues effectively.