The Murugappa Group Achieves EBIDTA Growth of 22% PBT Grows by 29% to Rs. 1354 Crores
By Murugappa Group, PRNEWednesday, May 5, 2010
CHENNAI, India, May 6, 2010 - 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
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
For further information, please contact: Ms D Vijayalakshmi, General Manager - Group Corporate Communications, Murugappa Group, Email: vijayalakshmid at corp.murugappa.com, Mobile: +91-9500029527
Tags: Chennai, India, May 6, Murugappa Group
