Chennai, 5 June 2014 : The FY 2013-14 was a challenging year for the Indian industry plagued by high inflation, high interest rates, slowing economy and depressed demand resulting in lower GDP growth of 4.7%.

In this backdrop, the Murugappa Group recorded a growth of 8% with a turnover of 24,350 Crores during 2013-14 (last year 22,466 Crores). Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) was higher at 2,627 Crores (last year 2,507 Crores) and Profit Before Tax and Extra Ordinary Items (PBT excluding EOI) was 1,415 Crores (last year 1,489 Crores).

The Group’s focus in 2013-14 was to consolidate and integrate its acquired units and to maintain business performance. Very selective capital expenditure proposals were taken up. The following are the key corporate initiatives undertaken in FY 2013-14:

Coromandel International:

  1. Initiated & completed the merger of Liberty Phosphate Limited and Liberty Urvarak Limited with Coromandel
  2. Initiated the merger of Sabero Organics Gujarat Limited with Coromandel. Operations of Sabero have been fully turned around during the year
  3. Entered into a tripartite JV alliance with Yanmar & Co. of Japan and Mitsui & Co. of Japan for manufacturing and marketing a range of farm machinery used in paddy cultivation in India
  4. The Tunisia-based JV TIFERT commenced production in July 2013

EID Parry (India) Limited (EID Parry):

  1. Acquired 100% equity stake in Alimtec S.A. Chile (part of the Bayer Group) in April 2014, to backward integrate and increase its presence in the Nutraceuticals business
  2. Acquired the equity shares of the minority shareholders of Parry Phytoremedies Private Limited, making it a wholly owned subsidiary of EID Parry
  3. Sadashiva Sugars Ltd, which was a wholly owned subsidiary, was merged with EID Parry, effective 1st April 2013
  4. Its subsidiary Silkroad Sugars, a sugar refinery in Kakinada, is expected to start operations in June 2014

Tube Investment of India (TII)

  1. Formed a JV with 50% equity stake with Tsubamex of Japan for design of dies for its sheet metal business
  2. Large Diameter tube project is at advanced stage of completion and expected to commence production by July 2014

Cholamandalam MS General Insurance

  1. Infused Equity of 75 Crores to meet the business growth requirements
  2. The company recorded a PBT of 102 Crores, crossing 100 Crores mark for the first time since inception

A. Highlights FY 2013-14

  1. During the year, Coromandel International crossed 10,000 Crore mark in top-line for the first time. The fertiliser business had better offtake due to good monsoon leading to reduction in pipeline inventory.
  2. The Financial Services businesses Cholamandalam Investment and Finance Co (CIFCL) and Chola MS General Insurance continued their upward growth; registering an increase of 22% in top-line at 5,134 Crores and 25% growth in EBITDA at 741 Crores. CIFCL’s Assets Under Management (AUM) crossed the 25,000 Crores mark in March 2014.
  3. The Engineering Businesses namely Tube Investments & CUMI retained their leadership position in their served segments, despite a demand slowdown in user industries such as automotive, steel, power etc.
  4. The Group companies continue to invest in appropriate capital expenditure programmes to expand/ debottleneck/ modernise their facilities. The CAPEX programmes initiated during the year amounted to 166 crores.

B. Company-wise Performance:

The summary of Gross Sales and EBIDTA are presented below:

Group Companies

Gross Sales
( Crores)

% change over last year EBIDTA
( Crores)
% change over last year
Coromandel International Ltd. (Coromandel)

10,144

11%

866

3%

EID Parry (India) Ltd. (EID)

2,112

-12%

269

-20%

Tube Investments of India Ltd. (TII)

4,006

2%

403

10%

Carborundum Universal Ltd (CUMI)

2,206

8%

274

9%

Cholamandalam Investment & Finance Company Ltd. (CIFCL)

3,279

28%

579

22%

Cholamandalam MS General Insurance Company Ltd. (CMSGICL)

1,855

14%

162

34%

Other Businesses

749

-5%

74

-39%

Total

24,350

8%

2,627

5%

Sectoral highlights for 2013-14

Agri-businesses

Coromandel International Ltd

Coromandel International’s consolidated revenue crossed 10,000 Crores during the financial year 2013-14. Gross sales grew by 11% during 2013-14 and stood at 10,144 Crores compared to 9,103 Crores in 2012-13.

During the year, better monsoons helped to liquidate the pipeline inventory for complex fertiliser sector from 7.2 million tonnes to approximately 4 million tonnes. This shall help in better off take in 2014-15.

Coromandel is poised for growth with the competitive edge of having 3 distribution channels, namely Dealer network, Institutional & own retail centres. A concentrated marketing effort was taken up last year to create an umbrella brand under the GROMOR name. Going forward, all products from Coromandel will be branded and sold under the GROMOR brand, thereby achieving better farmer connect.

Coromandel redeemed the bonus debentures of 424.23 Crores and this payment has been done out of the internal accruals without resorting to additional borrowing.

Crop protection business along with Sabero business grew at a healthy pace of about 25%. The consolidated turnover of crop protection business crossed 1,300 Crores during the year. Growth in 2014-15 will be driven through product innovation, application engineering and exploiting product registration in overseas market.

Speciality nutrient division continued to grow during the year with major growth coming from Water Soluble Fertilisers. Organic Fertilisers marginally de-grew during the year.

At the end of the financial year, Retail business (Mana Gromor Centres – MGC in Andhra Pradesh and Namma Gromor Centres – NGC in Karnataka) expanded its presence to 663 stores. With this, the retail division has achieved the scale and capability through better reach and wider product offerings. Expansion into new geographies shall drive the growth in the coming year.

Industry demand for SSP products declined during 2013-14 leading to a drop in capacity utilisation in Liberty Phosphates. Going forward, Coromandel is well placed to penetrate into the northern market & effectively leverage its existing distribution network for SSP product sales.

Coromandel International was chosen as one of the 5 companies in India for the “India’s Best Boards 2013” Award instituted by Economic Times Corporate Dossier and Hay Group. The company was also awarded the ‘Best Management Award-2013’ by the Labour department of the Government of Andhra Pradesh.

EID Parry (India) Ltd

Sugar Division

Sugar division registered sales of 1,448 Crores, a decline of 17% compared to previous year. During the year, the division crushed sugarcane of 52.47 LMT (LY 77.16 LMT) across its 9 sugar factories (including subsidiaries). The decline was mainly in TN & Pondy factories while in Karnataka cane crushed was nearly flat compared to the previous year.

Bio-products

Bio products business grew by an impressive 32% during the year. Domestic sales were driven by better monsoon in the addressable markets while exports were driven by higher Neemazal sales.

Nutraceuticals

Parry Nutraceuticals grew 18% during the year and continued to retain its market leadership position in organic Spirulina. During the year, the company successfully stabilized its Astaxanthin production from its facility in Oonaiyur. The company’s subsidiary US Nutraceuticals which makes formulation products from biomass sourced from Oonaiyur grew 44% during the year.

Engineering Businesses

Tube Investments of India

Tube Investments of India Ltd. (TII) registered a turnover of 3,526 Crores on standalone basis for the year as against 3,566 Crores in 2012-13. Businesses witnessed pressure on margins due to slowdown in user industries mainly automobiles and increase in raw material costs. The overall profit before interest and tax for TII was 264 Crores as against 255 Crores in the previous year.

Tube Products of India (TPI), a leading supplier of precision tubes for the auto industry, achieved revenue of 1,622 Crores for the year as against 1,582 Crores in the previous year. EBITDA as % of net sales has improved by 1% from last year. The improvement in margin was achieved through focus on value added products, better internal efficiencies and cost reduction.

TIDC India (TIDC) grew by 19% in the automotive chains segment. The sale of Industrial Chains and Fine Blanked Components recorded a volume growth of 13% and 15% respectively over the previous year. The sales of chain kits to the replacement market registered a growth of 31%. Several value added programs in the Fine Blanking business were approved by well-known car makers and the business is expected to register a higher growth going forward.

TI Cycles (TICI) registered a drop of 7% in volumes during the year compared with the previous year. The margins were under pressure due to increase in input costs and competitive environment. During 2013-14, the company launched several new products targeting various customer segments, from young tweens to adults.

TI Metal Forming (TIMF) witnessed a drop in demand mainly due to de-growth in the passenger car segment. The doorframe segment volume was lower by 14% compared with the previous year due to decline in the sale of select models of major car manufacturers.

Shanthi Gears Ltd., a subsidiary company of TII operating in the Gears Business, registered a revenue growth of 6% for the year and PBT grew by 18% from the last year.

Carborundum Universal

Carborundum Universal Ltd (CUMI) achieved a consolidated net sales of 2094 Crores in 2013-14, from 1,942 Crores, a growth of 8% over 2012-13. The company managed its working capital well and repaid loans to improve standalone debt equity of 0.16 times, compared to 0.19 times in FY 2012-13.

Abrasives

Despite the lower economic activity, Abrasives sales was higher at 860 Crores in 2013-14 against 809 Crores in 2012-13. However, Profit before interest and tax on a consolidated basis dropped to 60 Crores from 83 Crores in 2012-13 due to increase in material and energy costs and adverse currency movements.

Electro Minerals

At a consolidated level, the net sales reached 810 Crores versus 669 Crores in 2012-13, representing a growth of 21%. Consolidated Profit before interest and tax has jumped to 81 Cr from 24 Crores in 2012-13.

Ceramics

The ceramics segment witnessed a 6% drop in sales on a consolidated basis at 471 Crores. Lower sales of Refractories business was due to delayed project orders from user industries. Alumina Ceramics business from India, faced challenges due to project postponements. Australian JV entity also registered lower sale due to lower mining activity.

Financial Services Businesses

Cholamandalam Investment and Finance Co

During the FY 2013-14, CIFCL’s Assets Under Management (AUM) increased by 24% to 25,000 Crores in March 2014. However, due to slowdown in sales of commercial vehicles, disbursement in Vehicle Finance remained flat while the disbursement under Home Equity division grew by 23% compared to last year. The vehicle finance division has diversified its portfolio with increased focus on tractors, used vehicles, cars & MUVs. The Capital Adequacy Ratio (CAR) remained at a comfortable level of 17.23% as compared to the regulatory requirement of 15%. The company increased its presence by adding 56 branches in FY 2013-14, taking the total number of branches to 574.

The company was conferred the “Award for Excellence in Financial Reporting” for the year 2012-2013 by the Institute of Chartered Accountants Of India (ICAI).

Cholamandalam MS General Insurance

Chola MS recorded a strong growth of 14% in topline. PBT crossed 100 Crore mark first time since inception. During the year, Chola MS focused on increasing its distribution reach & added 8 branches to reach a network of 105 branches at the end of the year. Promoters infused additional capital 75 crores during the year for growth & expansion plans.

The company was awarded the best insurance company across Asia for “Health Insurer Claims Team for the year 2013” at the Claims Asia Awards 2013. For 3 years in a row, the company has been receiving the Best Insurer award for “Overall Performance” in the Rashtriya Swasthya Bima Yojana (RSBY) scheme run by the Ministry of Labour & Employment, Government of India.

Other Businesses

Parry Agro Industries Limited, the Company registered a sales growth of 8% in 2013-14. The rubber plant at Tripura was commissioned during the year. Further, the Company exited the low margin blending business, and the focus is on leveraging brand equity and quality in auction market.

Coromandel Engineering Company Ltd. (CECL), the Property Development and Civil Construction business of the group, registered a turnover of 200 Crores, a decline of 8% over LY. Profitability was impacted by higher cost of materials, high interest rates and lower sales. Due to slow down across sectors, business witnessed lower orders and slow release of funds from clients. During the year, the company infused equity funds of 60 Crores by way of rights issue at a price of 20 per share.

Parry Enterprise India Ltd (PEIL) witnessed a top line growth of 9%, owing to higher volume from Polynet and consignment sales from General Marketing division. The company completed the sale of its flexi packaging unit to Amcor Flexibles India Private Limited and exited the said business.

Ambadi Enterprises Ltd maintained its total revenues at FY 12-13 levels. The slowdown continued in overseas markets and impacted the sales for the company. However, favorable exchange rate helped better profitability for the company.

People paradigm

People remain an important source of competitive advantage for the businesses of the Murugappa Group. As the economy emerges from a period of sluggish growth and uncertainty, the Group is focusing its efforts on a range of initiatives to ensure that the home grown talent is retained, while continuing to attract fresh, high quality resources at all levels. Key among these is an employee engagement initiative aimed at sustaining and re-energizing the factors that have made the Murugappa Group a great place for talented people to build their careers. Further, at the shop-floor level, there is added emphasis on skill development initiatives especially in the engineering businesses.

Corporate Social responsibility

  1. As part of the ongoing corporate social responsibility initiatives, the Group continued its annual contribution of 0.5% of the Profit after Taxes (PAT) in the FY 2013-14 to the AMM Foundation (AMMF) and Shri AMM Murugappa Chettiar Research Centre (MCRC)
  2. In addition to the above, during the year the Group companies also stepped up development initiatives primarily catering to the communities around the plant locations, in the area of education and health. Coromandel International worked on the areas of girl child education, sports, education, healthcare and providing support during natural calamities. Coromandel also donated 65 lakhs towards maintenance and new equipment for the Government General Hospital in Kakinada. EID Parry conducted several healthcare-oriented camps and educational activities at and around the towns where the sugar plants are located. CUMI conducted activities in the areas of health & hygiene, education, formation of Self-Help Groups and local community development. Chola MS took up the causes of education and aid to the needy. CIFCL also worked in the area of road safety education.
  3. The Hospitals run by the AMM foundation have reached out to over 7.8 lakh people through its out-patient services and 14,000 patients through its in-patient facilities.
  4. The educational institutions (schools and the polytechnic) run by AMM Foundation cater to the educational needs of 10,500 students of which 6000 belong to the marginalized group.
  5. Through the AMM Murugappa Chettiar Centenary Scholarship, the Foundation has given scholarships to 278 most deserving economically backward students to pursue their education, including 70 in professional colleges, in 2013-14. The scholarship has covered the geographical location of Tamil Nadu, Andhra Pradesh, Karnataka, Kerala, Maharashtra and Assam.
  6. AMM Foundation launched the AMM Murugappa Chettiar Centenary Scholarships (Full fee) in the year 2013-14. The students selected will be called ‘Murugappa Scholars’, and they will be funded the entire course fees and hostel fees subject to their maintaining good academic records. 20 students (15 engineering and 5 medical) were selected for the first year of the scholarship.
  7. The AMM Foundation reached out to 12,700 patients from twelve villages around the EID Parry sugar plant at Haliyal (Uttar Karnataka) through the Mobile Health Van which was launched in June 2013.

Safe Harbour

Some of the statements in this Press release that are not historical facts may be considered as 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.