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The Murugappa Group Achieves EBIDTA Growth of 22% PBT Grows by 29% to Rs. 1354 Crores

May 6, 2010

CHENNAI, India, May 6, 2010 /PRNewswire-FirstCall/ — The Murugappa Group
recorded significant growth in profits during 2009-10. EBIDTA grew by 22% at
Rs. 1879 Crores (LY Rs.1535 Crores) and PBT excluding extra-ordinary income
grew by 29% at Rs.1354 (LY Rs.1054 Crores). Group achieved turnover of Rs.
13617 Crores during 2009-10 (LY Rs. 15907 Crores). The drop in turnover was
attributed to sharp drop in key raw material prices for Coromandel
International Ltd. Excluding Coromandel International Ltd, the Group turnover
grew by 11%. The Group made a capital expenditure of Rs. 311 Crores during
FY2009-10, excluding acquisitions (LY Rs.850 Crores).

2009-10 Key Highlights

In the year 2009-10, the Murugappa Group was able to ride the wave of
economic rebound powered by enterprise wide efficiency drive. The year’s
performance was marked by strong profit growth in the Agri-businesses and a
decisive come back by the Engineering and Financial Services businesses.

    Summary of Gross Sales and Profitability (EBIDTA) is presented below:
    Rs. Crores

    Group Companies                            Gross Growth EBIDTA Growth
                                               Sales  over          over
                                                      Last          Last
                                                      Year          Year

    Coromandel International
     Ltd. (Coromandel)                          6431  -32%   846    -1%
    EID Parry (India) Ltd. (EID)                1195   53%   345    63%
    Tube Investments of India Ltd (TII)         2454   11%   265   132%
    Carborundum Universal Ltd (CUMI)            1329    6%   243    22%
    Cholamandalam DBS Finance Ltd. (CDFL)*       952  -16%    42   246%
    Chola MS General Insurance Company Ltd.
     (CMSGICL)                                   785   15%    19   -44%
    Coromandel Engineering Co Ltd (CEC)           89  -11%     5   -38%
    Other Businesses                             382   25%   114    18%
    Total                                      13617  -14%  1879    22%

*Will be renamed as “Cholamandalam Investment and Finance Co. Ltd”
subject to regulatory approvals

Inclusive Profitable Growth during the Recovery Phase

FY2009-10 began on a difficult note due to the lingering effect of the
financial crisis and the note of pessimism caused by rising inflation. Yet,
from the second quarter, the financial stimulus driven economy improved
smartly and recorded higher Industrial Production.

The Group’s businesses capitalised on the overall recovery to post
impressive growth in profits, supported by key strategic initiatives including

    - Continued focus on organic and inorganic growth

    - Concerted efficiency measures

The Group is well poised to achieve the milestone of US$ 7.2 billion by
2013-14.

During the year, the Engineering Businesses of the Group made a strong
comeback and posted a jump in profits on the back of recovery in the user
industries. The Sugar Business reported high earnings driven by higher
realization in sugar prices. The top line of the Fertilizer business declined
due to steep fall in the price of raw materials. However, the EBIDTA was
maintained due to better operational efficiencies and increased contribution.
The Financial Services companies of the Group weathered the storm and have
positioned themselves to move into a higher growth path. The diversified
businesses of the Murugappa Group delivered another year of solid performance
thereby contributing to the overall profit of the Group.

Sectoral Highlights – FY 2009-10

Key highlights in each sector are presented below:

Profitable Performance of Agri Businesses (Coromandel International, EID
and Parry Agro)

The Agri businesses – Coromandel International Limited (Coromandel), EID
Parry
(India) Limited and Parry Agro Industries Limited posted strong
profitability during the year.

Coromandel International Ltd

With a vision and global ambition to transform into a diversified
Agri-solutions provider, Coromandel has changed its name from Coromandel
Fertilizers Limited to Coromandel International Limited. The company repeated
its impressive profit performance in spite of the correction in the
international raw material prices thus impacting the turnover growth.
Improved operational performance across all businesses and increased
contribution from Specialty Nutrients Division and Plant Protection Chemicals
Division (Pesticides) enhanced the company’s profitability.

The Specialty Nutrients Division (SND) set up last year has entered into
a 50:50 Joint Venture(JV) with Chile based SQM with an intent to grow
three-fold in turnover within three years of its inception. This JV will help
scale up the capacity and product offerings in the ‘Water Soluble Fertilizer’
(WSF) segment. The Division is envisioning scaling up the volume of organic
manure (Municipal compost) to 2 million ton by 2014 and is making continuous
efforts for new contracts and procurement.

The Plant Protection Chemicals Division (Pesticides) registered a sales
growth of 13% during the financial year. A Technology Development Centre has
been established in Ankleshwar to expand its product base. The business
presence in Brazil helped to capture maximum business from Argentina.
Further, the Company is exploring suitable acquisition targets to expand and
grow in key global markets.

To further integrate backward for key raw materials, the Company is on
the look out for reliable source of Ammonia and Rock phosphate.

Continuing the success story of the retail initiative Mana Gromor, with
423 centers under operation in Andhra Pradesh, Coromandel plans to extend the
centers to Karnataka through a Franchisee model. During the year, the Company
increased penetration of Life Style Products (LSP) to 212 centers. The LSP
centers were recently rebranded as Mitra to bring a unique Brand Identity. By
introducing new products and services, Coromandel is confident of creating
value to the farmer community.

EID Parry (I) Ltd

EID Parry registered a strong performance by growing 53% in top line and
63% in EBIDTA on the back of higher sugar price realization.

The Sugar Division acquired 76% equity stake in Karnataka based Sadashiva
Sugars that helped EID to gain a strong footing in the second largest
sugarcane producing state. During the year, the new distillery (45klpd) at
Nellikuppam is put into operations. The co-generation at Pettavathalai
started exporting power from Jan 2010. Sivaganga distillery stabilized its
operations and reached full production capacity at 60 klpd.

Namadhu Parry Mayyam (NPM), service centers for cane farmers grew to 54
Operational NPMs in every Divisional area of 5 sugar units in Tamilnadu. The
success can be gauged from the total transactions of Rs. 3.3 Crore covering
22000 acres in 2009-10. On this successful note, the Company is planning to
open 24 more new NPMs in the coming year.

Silk Road Refinery, a JV with Cargill, at Kakinada will be functional
soon and is expected to be a significant growth driver for business with an
estimated refining capacity of 600,000 tons. The Gas allocation has been
approved by EGoM (Empowered Group of Ministers) and the plant is expected to
be commissioned this month.

Parry Nutraceuticals Division successfully enhanced its production of
Spirulina, a health supplement, and also increased the sales by 36% over last
year. The Company commenced Omega 3 trials and its Life Sciences Division
initiated projects like Bio Catalyst Transformation, Anti Inflammatory
Formulation, etc. Valensa International registered a growth 73% over last
year. Going forward, the Division plans to develop new formulations and
businesses.

Bio Product Division registered a steep hike in sales of ‘AbdA’ by nearly
three times over the last year. Overall, the Division faced a slight
reduction in sales due to sluggishness in export market. The Company has
obtained license to manufacture 3 new products under Bio Products category
that will be introduced shortly.

Parry Agro Industries Limited posted a 31% growth in sales buoyed by the
demand-supply gap and less carry over stocks resulted in higher tea price
realization. Continuing its expansion through inorganic growth, the Company
acquired Martycherra estate in the North East and RPS factory in Sirajuli. To
avoid the vulnerability of commodity business, the Company focused on Value
Added Products like Parrys Supreme, K-Chai and Vijay.

Strong rebound in performance from the Engineering Businesses (Tube
Investments of India Ltd and Carborundum Universal Ltd)

Tube Investments of India Limited

Tube Investments of India Ltd (TII) registered an overwhelming
performance by growing 132% in EBIDTA and 11% in turnover.

With breakthrough thinking, efficiency improvements and commitment to the
environment, TII continues to be a leader in every segment they operate in.
Going forward, improvement of operational efficiencies and emphasis on the
growth segment will be major focus areas for the Company

TI Cycles (TICI) launched the ‘Schwinn’ range of leisure and recreation
bicycles aimed at establishing cycling as a fitness, sport and recreation
solution. The Division sells over 100 ‘performance bikes’ (Bianchi/
Cannondale/Schwinn) per month on an average through its niche retail format
‘Track & Trail’. Besides focusing on the adventure segment, the Division also
launched ‘Powerassist’ – range of electric bicycles, catering to the utility
segment.

As part of its core strategy of ‘selling cycling and not just cycles’, TI
Cycles organized over 3000 events pan-India to promote cycling as a ‘Faster,
Fitter and Greener’ mode of transport. To enhance the buying experience of
the customer, the company operates 482 retail outlets, of which 134 are
exclusive outlets.

BSA Motors launched two new models this year- ‘Roamer Able’ – the
country’s first E-Scooter specially designed for the differently abled and
‘Edge’ – powered by 1250 watts, the highest in the category.

TI Metal Forming (TIMF), the market leader in car door frames, commenced
supplies to Tata Motors for ‘Nano’ from its plant in Sanand. As part of its
diversification strategy, the Division began operations in Uttarakhand to
cater to the growing Railway Wagon Segment. This segment contributed around
35% of TIMF’s total revenue in 2009-10. Well poised to capitalize on the
growth in the Railway Wagon Segment, TIMF is expected to grow two-fold in the
near future.

TIDC India Ltd (TIDC) acquired a controlling stake in Sedis, France,
aimed at tapping the huge potential in Industrial and Engineering Class Chain
segment. This acquisition will help the Division enter into new technologies,
strengthen existing technologies and emerge as a leading global player in
this segment. The automotive chain manufacturing facility in Uttarakhand, set
up the previous year, currently caters completely to the demand of local
customers.

Tube Products of India (TPI), a supplier of precision tubes for the auto
industry, continued to grow in the Tubular components segment in line with
their strategy to lock-in key customers. TPI witnessed a major increase in
profitability in spite of the export market being sluggish.

Carborundum Universal Limited

Carborundum Universal Ltd (CUMI) ended the year on a positive note with a
revenue growth of 6% with EBIDTA growth of 22% aided by the strong
performance of the Indian operations. Despite competition from global
players, CUMI with its diversified product portfolio and focus on niche
product segment continues to be the market leader in the highly competitive
domestic abrasive market.

CUMI’s China operations became a 100% subsidiary of CUMI in 2009-10. This
will help address the abrasive requirements in the fastest growing market and
also complement CUMI’s other abrasive businesses. CUMI China’s focus in 2010
will be towards consolidating the existing investments.

Industrial Ceramic Division’s consistent strategy of increasing the
customer base and expanding the export market has helped counter the
slowdown. The state of art metalized cylinders plant, set up in 2008-09,
reached its full capacity during the year. The Division will continue to
focus on increasing the capacity and customer base for exponential growth
going forward. Steady industry demand and resumption of postponed project
orders is expected to help the growth of CUMI’s Super Refractories Division.

Electro Minerals Division is expanding the Micro Abrasives capacity in
order to take advantage of the opportunities in the Photovoltaic industry,
especially in the export market. The new facility will be commissioned in
three phases starting April 2010. The focus in 2010-11 will be towards market
development and establishment of customer base.

Volzky Abrasive Works (VAW), a subsidiary of CUMI and the world’s second
largest producer of Silicon carbide, continued its good performance with the
profit growth of 31% over last year. CUMI is planning an increase in capacity
in order to leverage its market leadership position. CUMI’s investment in
Foskor Zirconia (Proprietary) Limited, South Africa, is expected to yield
desired results with the revival in growth of world refractory.

Financial Services (CDFL & CMSGICL)

Cholamandalam DBS Finance Ltd

Cholamandalam DBS Finance Ltd., increased disbursements by 93% over last
year in the overall asset finance business, with the surge in commercial
vehicle sales. The aggregate disbursement of Rs 3866 Crores during 2009-10
was the highest ever done in the vehicle finance and home equity verticals.
The asset finance book (managed assets) grew by 41% to Rs.5948 Crores (LY
Rs.4208 Crores). The net credit losses of the asset finance business as a
percentage to average assets declined from 1.49% to 1.02%. During the year
2009-10, the number of branches was increased to 180 from 155 last year.

Loan losses in the personal loan segment were offset by the soft interest
regime, rationalization of costs and increased profits on higher volume of
business from the Asset Financing Verticals. Concerted efforts reduced the
loan receivables outstanding (net of provisions) to Rs 234 Crores as on
31-3-2010 and is expected to bring it down to nil during the current
financial year. In line with the strategic direction to focus on core
activities of asset financing, the company exited from Personal Loan business
and sold off the Mutual fund business to L & T Finance during the year. In
March 2010, the Group acquired the 37.48% stake held by DBS Bank, Singapore,
in Cholamandalam taking the Group’s total holding to 74.96%. Tier II capital
aggregating to Rs.250 Cr was infused in to the company and the capital
adequacy ratio (CAR) as on March 31, 2010 stood at 14.69%.

During the year, ICRA changed the AA (-) ‘negative outlook’ rating to AA
(-) ‘”stable’ and also re-affirmed A1+ rating to the short term debt and
working capital limits. However, ICRA has put the aforementioned ratings
under watch, in view of the change in the Joint venture status of the company

DBS Cholamandalam Securities Limited (DCSec) and DBS Cholamandalam
Distribution Ltd (DCDL), the subsidiaries of Chola DBS, have performed well.
Several steps taken to rationalize the operations of the Securities business
and the Distribution / Wealth management business led to a complete
turnaround in the operations of the businesses. The companies posted a Profit
before tax of Rs.3.48 Crores and Rs.6.89 Crores respectively as against the
losses of Rs.9.01 Crores and Rs 18.25 Crores recorded during the previous year

Cholamandalam MS General Insurance Co. Ltd

Chola MS General Insurance Co Ltd registered a growth of 15% in Gross
Written Premium over 2008-09, higher than the industry average of 13%.
However, profit was impacted by intense competition, higher discounts in
Premium, highly adverse claims in the group health portfolio and drop in
Reinsurance commission rates. During the second part of the year, the Company
judiciously rationalized its exposure in various business lines including
some loss making lines. The Company enhanced its capital base by infusing Rs.
125 Crores during 2009-10.

In order to enhance customer reach through new distribution tie-ups,
Chola MS tied up with Central Bank of India and South Indian Bank during
2009-10. The Company also made significant progress in rural sector and
Government RSBY scheme and was awarded four large districts in West Bengal
and five districts in Maharashtra and three districts in Bihar.

Continuing its product innovation strategy to gain leadership in
identified segments, the Company introduced Chola Protect 360 – a value added
insurance policy that offers complete car protection. In six months, the
Company sold 12000 policies of ‘Chola Protect 360′ indicative of the consumer
need for such innovations. Chola MS recently launched ‘ClickEasy Insurance’
enabling customers to buy and renew Chola Motor policies online. Soon, the
Company plans to market its other products online and also launch mobile
commerce which would allow customers to buy and renew policies through mobile
phones.

    Other Businesses

    - Coromandel Engineering Company Ltd. (CEC), the Property
      Development and Civil Construction business of the group, performed
      well in second half of the year as the construction segment showed
      signs of increased activity in the light of customer confidence back
      on the track. In a vision to grow aggressively, the business is
      focusing on contracts involving commercial complexes, shopping malls
      and entering into large infrastructure projects through turnkey
      contractors. In order to stimulate their growth plan, the Company has
      been listed on the Bombay Stock Exchange. With the better performance
      of the core sector coupled with increased capital investments, the
      company is expected to be benefited in the coming years.

    - Parry Enterprise India Ltd (PEIL) witnessed growth across
      all its Divisions. The Polynet Division is making a sustainable growth
      and the Division is developing new products and application for its
      polymer products to achieve exponential growth. The General Marketing
      Division is expanding its product portfolio in high value food
      ingredient to drive growth. The Packaged Water Division is making
      sustained effort with major institutions to increase the market share.
      The Travel Division is focusing on offering total travel solutions to
      customers. The Green Field project for flexible packaging laminates in
      Baroda is in the phase of stabilization. The breakthrough orders are
      expected to materialize in the forthcoming year from the major FMCG
      companies which would help the business to achieve the desired return
      on invested capital. The Flexi division obtained ISO 22000
      certification which gives the initial advantage over competitors.

    - Ambadi Enterprises Ltd and its subsidiary Parry Murray, the
      high end furnishing and floor covering business of the group which
      majorly exports to European and American market, performed fairly good
      in 2009-10 considering the slump in overseas markets. Two units of
      Ambadi in Kannur, during the year, obtained GOTS (Global Organic
      Textile Standard) certificate which would help the company to be more
      resourceful producer with all round capability, as organic products are
      being requested from all customers.

    - Laserwords, the publishing services company of the group,
      underwent a difficult phase in 2009-10 due to the sluggishness in US
      market which impacted the publishing business severely. In order to
      broaden the horizon and to de-risk its dependence on the US market for
      publishing services, business is foraying new products and services to
      its existing as well as potential new customers. In 2009-10, business
      established SEZ unit to focus on ODC contracts (Offshore development
      contract) from major publishers.

    - Parry Infrastructure Company Pvt Limited (Parry Infra), a
      100% subsidiary company of EID Parry (India) Limited, is pursuing in
      creating value for the surplus properties of the group by either
      outright sale or property development. Currently, Parry Infra has plans
      to develop residential apartments in 2 locations in Chennai at
      Kotturpuram and ABM Avenue.

    Key developments in April 2010
    Coromandel International Ltd

The new ‘Nutrient Based Subsidy policy’, with effect from April 1, 2010,
will bring better prospects to the company due to its leadership position in
complex fertilizers. Also, the company will utilize its R&D capabilities to
introduce innovative products to take advantage of the altered business
environment.

EID Parry (I) Ltd

Continuing its expansion through inorganic growth, EID Parry, recently
acquired a majority equity stake in GMR Industries Ltd. The acquisition of
GMR Industries will add 11,000 TCD crushing capacity, 46 MW cogen and 95 KLPD
distillery to EID’s present capacity. The deal will mark EID Parry’s entry
into Andhra Pradesh and also consolidate its position as a leading sugar
manufacturer in cane rich areas of north Karnataka. It will increase the
number of integrated complexes and provide EID Parry a platform to tap the
sugar markets other than Southern India. With these acquisitions, the
capacity has raised to 32500 TCD, 146 MW cogen and 230 KLPD distilleries.

Cholamandalam DBS Finance Ltd

In April 2010, the private financing arm of the World Bank, International
Finance `Corporation, has proposed to pick up 9.92% of stake in Cholamandalam
DBS. IFC’s investment augurs well for the company as it would help to get a
long term strategic institutional investor apart from helping the company in
raising long term debt and entering infrastructure financing.

People Paradigm

The Group continued its focus on leadership development in line with its
future plans. The Murugappa group also partners with world-class universities
like Harvard, Wharton, INSEAD, LBS, IMD, IIM, and Stern School etc to hone
the business and leadership acumen of its employees through customized
courses.

    Corporate social responsibility

    - As part of the Group's ongoing corporate social
      responsibility initiatives, Rs.3.62 Crores was contributed last year to
      the AMM Foundation (AMMF) and Shri AMM Murugappa Chettiar Research
      Centre (MCRC).

    - The Hospitals run by the AMM foundation treated over 8 lakh
      as out-patients and over 13000 as in-patients in the last one year.

    - From among the various educational institutions under the
      umbrella of AMMF, the TI Matriculation HS School earned the distinction
      of being the first school in South India and among one of the few
      schools in the country to receive the National Accreditation Board for
      Education and Training (NABET) certification by the Quality Council of
      India (QCI).

About the Murugappa Group

Founded in 1900, the Rs. 13617 Crores (USD 3.03 billion) Murugappa Group
is one of India’s leading business conglomerates. The Group has 29 companies
under its umbrella, of which seven are listed and actively traded in NSE &
BSE. Headquartered in Chennai, the major companies of the Group include
Carborundum Universal, Cholamandalam DBS Finance Ltd, Cholamandalam MS
General Insurance Company Ltd, Coromandel International Ltd, Coromandel
Engineering Company Ltd, EID Parry (India) Ltd, Parry Agro Industries Ltd,
Tube Investments of India Ltd and Wendt (India) Ltd

Market leaders in served segments including Auto Components, Abrasives,
Cycles, Sugar, Farm Inputs, Fertilizers, Plantations, Construction,
Bio-products and Nutraceuticals, the Group has forged strong joint venture
alliances with leading international companies like Mitsui Sumitomo, Foskor,
Cargill and Groupe Chimique Tunisien.

Renowned brands like BSA, Hercules, Ballmaster, Ajax, Parry’s, Gromor and
Paramfos are from the Murugappa stable.

The organization fosters an environment of professionalism and has a
workforce of over 32,000 employees.

For the digital news release and more details, log on to
http://www.murugappa.com.

Safe Harbor

Some of the statements in this news release that are not historical facts
are forward looking statements. These forward looking statements include
financial and growth projections as well as statements concerning our plans,
strategies, intentions and beliefs concerning our businesses and the markets
in which we operate. These statements are based on information currently
available to us, and we assume no obligation to update these statements as
circumstances change. There are risks and uncertainties that could cause
actual events to differ materially from these forward looking statements.
These risks include, but are not limited to, the level of the market demand
for the products, the highly competitive market for the types of the products
that we offer, market condition that would cause customers to reduce their
spending for the products, our ability to create, acquire and build new
businesses and to grow existing businesses, our ability to attract and retain
qualified personnel, currency fluctuations and market conditions in India and
elsewhere around the world, and otherwise not specifically mentioned herein
but those that are common to industry.

    For further information, please contact:
    Ms D Vijayalakshmi
    General Manager - Group Corporate Communications, Murugappa Group
    Email: vijayalakshmid@corp.murugappa.com, Mobile: +91-9500029527

SOURCE Murugappa Group


Source: newswire



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