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[January 2008]
CUMI Third Quarter Results
Murugappa Group company CUMI in India has announced figures for the third quarter of the year.
Net sales grew to Rs.139 crores from Rs.120 crores for the corresponding quarter of the previous year, a growth of 16%. All product lines performed well.
Depreciation for the quarter was higher by Rs. 1.8 crores and interest expense by Rs. 2.8 crores as a result of the large capital expenditure that is being incurred.
EBITDA (without exceptional items and costs associated with the closure of the Pallikaranai operations) increased by 6%. This was despite the increase in input costs, increase in staff cost and depreciation in the US dollar which impacted export earnings.
A strategic decision was taken in 2005 to relocate manufacturing facilities and use the cash flow generated from the sale of prime land to build manufacturing capabilities of international standards. As a first step the company had commissioned a state-of-the art coated abrasives plant in Sriperambudur in 2006. This was followed by the phased scaling down of operations at the Pallikaranai coated abrasives plant and its ultimate closure in 2007. Following this the land, which is located in an emerging residential area, was sold for a sum of Rs.58 crores and the resultant cash flow used to part finance the Russian acquisition.
The exceptional income resulting from this sale was Rs. 55 crores as a result of which profit before tax for the quarter was Rs.68 crores (previous year Rs.20 crores). The profit after tax for the quarter was Rs. 48 crores (previous year Rs. 13 crores).
In abrasives (which is the largest business), off-take from major user industries such as steel, forgings, foundry, fabrication and construction was good. There was however a visible drop in the off-take from the automobile sector. Despite this, sales grew by 10%. PBIT (without exceptional items) recorded an increase of 7%. Increases in the price of key raw materials and staff costs, which is a key input for this business, affected margins. To give a thrust to nascent business segments, the division has gone in for a strategic increase in staff strength leading to higher manpower costs.
The ceramics business continued its robust performance both in the domestic market and exports, recording a growth of 24%. Demand continued to be strong from power generation, ceramic tiles, steel industries, power transmission, HT insulators, cement, carbon black and glass industries. The division registered a 8% increase in PBIT despite an increase in the cost of inputs and also appreciation of the Indian Rupee versus the US dollar.
In electrominerals sales grew by 17%. The fortunes of the brown aluminium oxide business have brightened with steadily eroding of competitiveness of Chinese products. Sales of white fused alumina were robust. The PBIT of the division decreased because of a steep increase in the cost of raw bauxite.
All businesses are implementing price increases in a phased manner to counter the cost escalation in key inputs.
http://cumi.murugappa.com
ENDS