Consolidated Q1 financial performance
Consolidated net sales grew up by 32% to Rs.465 crores from Rs.352 crores. PBIT (excluding exceptional income) grew up by 73% from Rs.50 crores to Rs.87 crores. Growth was driven by the strong performance of both the Indian and Overseas operations. All business segments recorded growth rates in excess of 25%. Profitability of all business segments as well witnessed a good increase. Overseas subsidiaries recorded strong growth in sales, particularly the entities in Russia and South Africa.
Earnings before interest, depreciation and amortisation (EBITDA) recorded an increase of 65% (i.e. from Rs.60 crores to Rs.100 crores) without considering exceptional income of last year.
Profit before tax and exceptional income was Rs.80 crores – an increase of 86% over the previous year amount of Rs.43 crores. However, the profit after tax represents only an increase of 20% (i.e. Rs.52 crores compared to Rs.43 crores last year) because of the impact of the exceptional income of Rs.23 crores in the previous year.
Consolidated Operating Performance
CUMI’s abrasives sales on a consolidated basis registered an increase of 34%. Sales for the quarter was Rs.198 crores (Rs.148 crores for the corresponding period of last year). This growth was made possible by the continued strong off-take from user industries in India and Russia.
In India the order inflow for non-standard bonded abrasives, both from direct customers and from the trade channel was buoyant. Coated abrasive products also registered strong growth in sales compared to last year, primarily driven by the sheets and rolls segments. The manufacturing team performed creditably to support the surge in sales. The business was able to improve margins due to product mix and price increases. The operations in China, Middle East and Canada continued to be subdued though there were some improvements in the US operations. CUMI’s subsidiary and joint venture in Indian abrasive segment, registered growth rates in excess of 25% aided by the buoyancy in the manufacturing sector. Profit before interest and tax on a consolidated basis recorded an increase of 88% i.e. from Rs.17 crores to Rs.32 crores.
The second largest business segment viz. Electro Minerals continued to ride the growth wave with a robust increase of 33% in sales (Rs.176 crores vs. Rs.133 crores). The growth in sales was made possible by the robust performance of the Indian, Russian and South African operations. In Russia, sales growth was aided by higher price realisations. The Indian operations recorded good growth in both domestic and export sales. Captive sales also showed an improvement. All product segments registered good growth. The South African operations witnessed a revival in fortunes with profits showing a marked increase.
Strong growth in revenues and also good improvement in operating margins enabled the increase in profit before interest and tax of the electro minerals business on a consolidated basis by 72% i.e. from Rs.21 Crores to Rs.36 Crores.
The ceramics segment recorded a 27% increase in sales on a consolidated basis (Rs.101 Crores vs. Rs.79 Crores). The high alumina ceramics business continued to perform well. Sales of metallized cylinders and wear resistant tiles registered strong growth. The growth in sales was driven more by the domestic market. Off-take was strong from the cement, material handling and ceramic tiles customer segments. Order inflow was good from the North American and Australian markets. CUMI Australia recovered from the slowdown experienced last year with sales increasing by 32%..
The super refractories and anti corrosives business on a standalone basis recorded a significant increase of 36% in revenues. Order inflow was strong both for fired and monolithic products. Off-take from iron and steel industry and carbon black industry was extremely encouraging. The joint ventures in the refractories business registered a marginal growth on a combined basis.
Profit before interest and tax of the ceramics business segment on a consolidated basis increased by 44% i.e. from Rs.15 crores to Rs.22 crores. Operating margins also witnessed a good increase.
Order incoming is strong for all businesses. There are some indications of an impending slow down in India because of the spike in interest rates and certain other macro economic factors. Globally also there are signs of slowdown in pockets. Greater clarity will emerge as the year progresses. The Company will continue to take focused action in each business to get more volumes / market share through new products and new customers to sustain its growth trends.
The Board has approved a proposal to sub divide the equity shares of the Company from the current face value of Rs.2/- each to Re.1/- each. The proposal is subject to the approval of shareholders
About the Murugappa Group
Founded in 1900, the Rs. 17051 Crores (USD 3.8 billion) Murugappa Group is one of India’s leading business conglomerates. The Group has 29 businesses including eight listed Companies actively traded in NSE & BSE. Headquartered in Chennai, the major Companies of the Group include Carborundum Universal Ltd., Cholamandalam Investment and Finance Company Ltd., Cholamandalam MS General Insurance Company Ltd., Coromandel International Ltd., Coromandel Engineering Company Ltd., E.I.D. Parry (India) Ltd., Parry Agro Industries Ltd., Tube Investments of India Ltd., and Wendt (India) Ltd.
Market leaders in served segments including Abrasives, Auto Components, Cycles, Sugar, Farm Inputs, Fertilizers, Plantations, Construction, Bio-products and Nutraceuticals, the Group has forged strong joint venture alliances with leading international companies like Groupe Chimique Tunisien, Foskor, Cargill, Mitsui Sumitomo and Morgan Crucible. The Group has a wide geographical presence spanning 13 states in India and 5 continents. 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.
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