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[May 2006]
Sales Up Strongly at Carborundum Universal
Carborundum Universal Ltd (CUMI) recorded sales growth of 19% for the year ended 31 March 2006. There was improved off-take from both domestic and export markets. All the business segments - i.e. abrasives, ceramics and electro minerals - reported higher revenues.
The company cashed in on the buoyancy in the Indian economy and grew domestic sales by 17% (against a growth of 13% achieved last year). Abrasives grew by 12%, ceramics by 38% and electrominerals by 35%.
Demand from major user industries such as auto OE, auto ancillaries, fabrication, construction, wood working, ceramics, sponge iron, carbon black industries and the power sector continued to remain strong. Exports registered a growth of 38%, from Rs. 340 million to Rs. 470 million. Strong growth was witnessed in all three business segments.
The company completed its first international acquisition during the year by acquiring the business of a Canadian coated abrasives distributor in February 2006. This has helped it to gain a long-term presence in the North American coated abrasives market.
While the marketing team ably capitalised on the opportunities thrown up in the market place, it was also supported by an efficient manufacturing team which ensured product availability and met the tight delivery schedules imposed by the surge in demand. Productivity was improved in several plants across divisions.
The modernisation and new product initiatives which were undertaken last year have started yielding results in the form of improved supply capability as well as quality and wider product range.
A new state-of-the art coated abrasives facility is being set up in Sriperambudur near Chennai and is nearing completion. The new plant once commissioned would give the company an edge in the international arena by turning out world-class coated abrasive products.
Modernisation in the bonded abrasives facilities at Tiruvottiyur and Hosur continues in a phased manner with installation of upgraded production lines. In the electrominerals division, new production lines for manufacture of select premium products have been installed. In the ceramics division, a facility for production of refractory grade bauxite has been set up at Okha. These investments have helped in widening CUMI's product offering and enhance product quality.
The company's performance on a consolidated basis (i.e. including the operations of the subsidiaries, joint ventures and associate) improved over the last year. Consolidated gross sales were Rs. 5.87 billion in 2005-06, an increase of 30% over the previous year. Consolidated profit after tax (including share of profit in associates and net of minority interest) increased to Rs. 860 million from Rs 480 million.
The Board recommended a final dividend of 60% (i.e. Rs 1.20 per equity share of Rs 2/- each) for 2005-06. A special interim dividend of 120% has already been paid for the year. The dividend is on the equity expanded by a 1:1 bonus issue which was completed in July 2005. A dividend of 100% was declared last year.
Carborundum Universal Ltd is part of the $1.5 billion conglomerate Murugappa Group. The group is one of India's largest family promoted, professionally managed corporates with over 28,000 employees. A pioneer and market leader in several fields with over 40 manufacturing operations across 12 states in India, the group has a strong presence in abrasives, engineering and cycles, bio-products, sanitaryware, plantations, sugar, farm inputs, finance, general insurance and nutraceuticals.
ENDS