Interview with Z. Altan, Executive Director, Monnis Construction Equipment LLCIn terms of turnover, Monnis Group is one of prime suppliers of vehicle spare parts and tyres. With which companies do you have distributorship agreements?

In accordance with business principles, as the Group activities expand, we form new daughter companies. As of today, Monnis Construction Equipment LLC is delivering equipment, components, spare parts and tyres from world renown companies, such as the Nissan, Liebherr, Goodyear, Scania, Duratray, Esco, Kawasaki, Bomag, Allison Transmission, Terex, etc. Equipment and machinery produced by above companies are considered to be champions in mining, construction, agriculture, removal of soil and transportation sectors.

The company you lead supplies tyres, as well. What percentage of the domestic market can you claim you supply?

There are two types of tyres in the world, they say, Goodyear and others. Lead by Goodyear, three companies share 80% of Mongolian market of tyres. However, the competition is getting stronger with each year. In addition to companies from China and Russia, even individuals are getting engaged to compete in this business. Besides providing excellent supply terms, it is essential to stock sufficient quantity of these products, if one wishes to succeed in business.

I heard there is shortage in supply of tyres for 220 ton machinery, dimension of which equals to a base of an average size ger. Is that true?

The tyre you are referring to is called size 63. Three companies including Goodyear manufacture this type of wheels. In order to obtain such a tyre, a company should allot 100% of the price at the manufacturer account on order, five years prior to production??? Goodyear manufactures not more than thousand pieces of this tyre, in a given year.

Would it be possible to buy such a tyre not directly from the factory, but from black market in China or Russia, for instance?

More and more mining companies become reluctant to buy tyres that have no warranty. Yet, when choosing a tyre, they categorize it to suitable for use in Gobi desert or Khangai mountainous areas. Experts consider many characteristics, such as rigidity, softness and/or patterns, before they supply the tyres to mining companies.

How much does a large size tyre cost?

A size 57 tyre would cost some 130,000 USD on a black market. For one vehicke a customer will need six of these tyres, which cost him more than 700,000 USD. As a responsible, official distributor, we do not have the right nor intention to sell those at $130,000 a piece. Goodyear will make frequent visits to monitor the sales of their products. We sell these tyres at $70,000 each. The mere meaning of being a distributor is in providing the similar products at a price lower than that of offered on markets.

It should be challenging to load or transport 3.5-4 ton tyres, is that an issue for you?

Recently, mining companies have started to pay due attention to the quality and performance of their equipment and machinery. They tend to utilize equipment, advanced technology in lieu of using manpower. In addition, there are special-purpose tools, equipment for handling these tyres.

What is the lifetime for the six tyres that cost $700,000 at black market?

When you add the weight of the dump truck to the 220 ton load you will get more than 300 tons weight vehicle. If you buy poor quality Chinese tyres, you will need to replace them 2-3 times a year. In addition to the cost of tyres, there is one even more important issue, that’s safety. It won’t be easy to predict the extent of damage that may be caused by explosion of a tyre of a 300 ton weight machine. On the other hand, replacement of tyres will require a full working day, which means the equipment will be idle. With Goodyear or similar quality tyres the owner can lay back and be confident, as the guarantee is for more than a one-year period.

There are rumors that tyres are sold in excess quantities to mining companies. What do you have to say to that?

You can barely manage to do that to mining companies which conduct their businesses in a responsible manner. Normally, this type of business is managed through open bidding with high criteria set for quality. Goodyear does not provide its tyres to all who has allotted 100% payments, they supply only after they are notified of the sales price and the name of the companies to which one intends to sell those. Afterwards, the company will conduct 5-6 check/inspection visits.

Who do they inspect?

Goodyear experts would visit the sales company 5 to 6 times a year. They would examine the price and the company to whom Monnis Construction Equipment LLC has sold their tyres. We can face a threat of cancelling the distributorship agreement, if discrepancies or faults revealed. This is the way a world leader cherishes and protects its credibility and the brand name. Each tyre, like a person, has its own name and a code, can you imagine that? The experts would inspect the quality and wear of their tyres, provide guidance and leave.

How much do you gain from supply of these huge tyres?

We claim 5-7% profit. There is no such thing as multi fold business here. In addition to fixed prices, all transactions are dealt with through banks, so we pay interest rates, too.

An Erdenes MGL very responsible official has publicly proclaimed that Monnis Group has sold poor quality tyres worth 3.6 bln MNT. What was the reason for making this announcement?

A tender on supply of tyres for Erdenes-TT was announced in 2011. In total, 9 companies bid for this 3-package tender. In our case, we have offered world’s best quality Goodyear tyres. We have lost this tender with our proposed tender price of 3.7 bln MNT, for all three packages.

Why did you loose?

We failed although offered good high products and costs. For reasons unknown, your paper referred to this faulty announcement. The tender was awarded to a company named USS Trade. If the statement about supply of poor quality tyres to Erdenes-Tavan Tolgoi company is true, then you should seek the answers from the company that was awarded the tender.

Has the management of Erdenes MGL ever apologized?

A responsible official should be held responsible for his statements. We do not deal with Erdenes MGL only, our partners are large mining companies, Oyu Tolgoi, Erdenet, Energy Resource, etc. Monnis is a large group companies that employs more than 1,800 workers. It’s a pity that the Erdenes MGL responsible official interviewed by you, gave you a false information. One irresponsible announcement made by an official can destroy the good name built upon by years of hard work. In my opinion, it is important that each party involved acts responsively.