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[May 2008]
Murugappa Group Turnover Grows By Over 15%
The Murugappa Group (Chennai, India) ended the year 2007-08 with a group turnover of Rs 9582 crores and EBIDTA of Rs 1075 crores. Over the previous year, sales grew by 15.5% and the EBIDTA grew by 17.4%. The group maintained its pace of investment with a capital expenditure to the tune of about Rs 580 crores during 2007-08. The investment phase will also continue in the year 2008-09 to support this growth momentum.
All the businesses in the Murugappa Group barring sugar and auto related engineering performed well. Notable performers included the financial services, abrasives and sanitaryware businesses that have significantly improved sales. The fertilisers business significantly improved profitability during the year. However, due to a sharp rise in steel prices in the second half of the financial year, which could not be passed on to the customers, Tube Investments could not fare as per plan during the year. Profit erosion was visible in EID as well due to a downturn in the sugar cycle. Smaller businesses reported impressive growth in sales by 44% and EBITDA by 91%.
2007-08 was a landmark year for the group as CUMI completed a major overseas acquisition in Russia – Volzhsky Abrasive works (VAW) – a significant producer of abrasives, refractories and silicon carbide. VAW is strategically located in proximity to assured availability of raw materials and markets and is the world’s second largest producer of silicon carbide with a capacity of 65,000 MT. This acquisition, entailing an outlay of US$40 million, has placed CUMI firmly in the global map of grain producers and is expected to significantly benefit the company in the long run.
During the year CUMI also commissioned its 3,000 MT abrasives plant in China, implemented through its joint venture with CEEB, a Chinese State Enterprise. The low cost products manufactured at this location will cater to the Chinese markets and also meet the demand in the Middle East and Africa. CUMI has already set up a trading arm – CUMI Middle East – to distribute the products across geographies.
On the sanitaryware front, as part of its restructuring exercise, EID Parry has sold the 47% equity stake in its 50:50 JV company – Parryware Roca Pvt Ltd – to Roca Group, Spain for a value of approximately €112 million. For EID Parry the stake sale will help realise good value which can be invested in its core businesses. For Roca, the deal will ensure its strategy to stay ahead of competition in the high growth Indian bathroom products market.
The total headcount for Murugappa for the FY 2008 is 32,906. Murugappa said that manpower as a resource had always been a key differentiator in the group and therefore given paramount importance. The management development centre offered various programmes aimed at developing future leaders. The ‘Emerging Leadership Program’ and ‘Business Leadership Program’ have also helped the group in identifying and promoting key leaders. Succession planning, to develop the second line of business leaders, is a continuous process in the group. It is because of these focuses that the group was able to quickly graduate the second line leaders to higher positions whenever and wherever applicable, it reported.
www.murugappa.com
ENDS