Market Capitalization grows by 71% to Rs 19194 Crores
Chennai, May 5, 2011: The Murugappa Group recorded 25% growth in turnover during 2010-11 with most of the key businesses reporting their best ever performance. The Group’s turnover for 2010-11 was Rs. 17051 Crores recording an increase of 25% from Rs.13617 Crores of 2009-10. EBITDA grew by 20% at Rs. 2247 Crores (LY Rs. 1879 Crores) and PBT went up by 20% to Rs.1657 Crores (Rs. 1382 Crores). The market capitalization of the Group, at the end of the year, stood at Rs. 19194 Crores, a growth of 71% (LY Rs. 11193 Crores). The Group incurred a capital expenditure of Rs. 410 Crores during FY2010-11, excluding acquisitions (LY Rs. 311 Crores). During the year the Group completed the acquisition of GMR Industries (since renamed Parrys Sugar Industries Ltd.) at an enterprise value of Rs. 560 Crore.
2010-11 Key Highlights
The summary of Gross Sales and Profitability is presented below:
|Group Companies||Gross Sales||
Growth over Last Year
|EBITDA||Growth over Last Year|
|Coromandel International Ltd. (Coromandel)||7585||18%||1135||34%|
|Tube Investments of India Ltd. (TII)||3308||35%||360||36%|
|Carborundum Universal Ltd (CUMI)||1676||26%||312||29%|
|EID Parry (India) Ltd. (E.I.D.)||1750||46%||145||-58%|
|Cholamandalam Investment & Finance Company Ltd. (CIFCL)||1222||28%||133||214%|
|Cholamandalam MS General Insurance Company Ltd. (CMSGICL)||968||23%||45||142%|
Strong Growth Across All Sectors
The Indian economy recorded a GDP growth of 8.5% in 2010-11, on the back of strong and rapid turnaround in the manufacturing sectors and the monsoon led revival of the agriculture sector which fueled the rural economy. Overall customer sentiment was upbeat leading to a robust growth in demand.
Over the previous two years, the Murugappa Group had undertaken various efficiency initiatives and capacity expansion. Combining these advantages with customer focused product innovation the Group was able to capitalize on the positive factors.
In 2010-11, the Group moved ahead with its growth plans leveraging synergies, adjacent business areas and competitive advantages – both organic and inorganic. In 2010-11, the three large recent acquisitions namely, Sadashiva Sugars, SEDIS and GMR Industries (since renamed Parrys Sugar Industries Ltd.) have contributed Rs. 463 Crores to the turnover.
During the year, the Fertilizer business took advantage of the far reaching Nutrient Based Subsidy (NBS) policy and its core strength of farmer connect in bringing the right products to market through efficient product mix.
The Engineering Businesses of the Group strengthened their position in the industry riding the upbeat auto market growth. The Sugar Business focused on reaching new geographies through acquisitions and consolidated its leadership position in South India.
The Financial Services Companies of the Group became stronger with Cholamandalam Investment posting a remarkable turnaround.
The Near Term Outlook
For FY 2011-12 the Group has committed long term Capex to the tune of Rs.1500 crores to further consolidate its position in dominant sectors with a focus on organic growth. The Group continues to look for opportunities in the Merger & Acquisitions space to drive synergistic inorganic growth.
The Group is well geared and positioned to achieve the vision of US $ 7.2 billion in turnover by 2013-14.
Sectoral Highlights – FY 2010-11
Key highlights in each sector are presented below:
Strong Growth in Agri Businesses (Coromandel International, E.I.D. Parry and Parry Agro)
The Agri businesses – Coromandel International Ltd. (Coromandel), E.I.D. Parry (India) Ltd. and Parry Agro Industries Ltd., posted strong growth during the year. The Companies will continue to grow with focus on enhancing presence in the agri-business chain.
Coromandel International Ltd.
Coromandel is favorably positioned to take advantage of the new Nutrient Based Subsidy Policy introduced by the Government w.e.f April 1, 2010. The new policy is expected to have far reaching positive impact on Coromandel. The Company continued to record impressive profit performance despite increasing trend in raw material prices. The increase in market penetration and improvement in operational performance has added to the overall profitability of the Company. The Company’s Profit after Tax increased by 48% during the year.
In order to meet the market requirements of new and specialized fertilizer products, the Company entered into a technology tie up with Shell Research to manufacture and launch Sulphur enhanced fertilizers. Coromandel’s de-risking strategy of venturing into non-subsidy business such as Specialty Nutrients has paid rich dividends.
The Company has embarked on scaling up fertilizer capacity to 4 million tons (Current capacity 3 million tons) by 2012-13.
The Specialty Nutrients Division (SND) recorded a sales growth of 15% during the year. Increasing demand for food security and stagnating agriculture productivity is expected to drive SND growth in the future. The Division is already a market leader in selling branded organic manure which is expected to grow exponentially in the years to come. Deep penetration in served markets and better product offerings will be the key differentiators for this business.
The Plant Protection Chemicals Division (Pesticides) sales grew by 24% during the current year. With the view to meet the market demand in North India, the Company acquired M/s. Pasura Biotech Private Ltd. The acquired formulation plant was fully integrated and started yielding results during the year. The Division is focusing on further strengthening its R&D team in order to diversify the product portfolio.
The Company’s 423 own retail centers (Mana Gromor Centers – MGC) continued to improve its performance by being a total solution provider to the farming community. The Company plans to open 200 more stores in Karnataka and Andhra Pradesh.
E.I.D. Parry (I) Ltd
E.I.D. Parry registered a 46% growth in turnover.
The Sugar Division acquired 65% equity stake in GMR Industries (since renamed Parrys Sugar Industries Ltd. – PSIL) that helped E.I.D. to strengthen its position in Karnataka and gain entry to Andhra Pradesh. The unit of Sadashiva Sugars Ltd. (SSL) acquired in 2009-10, improved performance in 2010-11 and capacity expansion plans are on the anvil. With these acquisitions of SSL and PSIL, EID Parry has emerged as a large integrated sugar producer, with sugarcane crushing capacity of 32,500 tonnes per day (tpd), co-generation capacity of 146 megawatts (MW), and distillery capacity of 230 kilolitres per day (klpd). The profitability of this business was impacted due to depressed sugar prices.
Silk Road Refinery, a JV with Cargill, at Kakinada has commenced commercial production. However, the plant is running at lower capacity on account of partial gas allocation.
Bio Products Division registered an impressive growth in sales of 62% in the Domestic market over the previous year, despite monsoon failure in some markets. Exports sales also grew by 57% over 2009-2010. Overall, the Division registered a growth of 59% in revenue over the previous year. The use of Bio products in the Home & Garden segment in the US is increasing with sale of Aza products in this segment registering a 43% growth. Going forward, the Company plans to expand sales both in the domestic and export markets by entering into new geographies and also by increasing the number of products in its portfolio.
Parry Nutraceuticals Division increased the sale of Organic Spirulina & Lycopene health supplements by 17% & 46% respectively over 2009-10. The Company also launched two new OTC products – ‘Pro9’ a protein supplement and ‘Pro9 D’ a Diabetic variant during the year. The Company has successfully obtained the GRAS status for its Algal Omega3 oil. The US based marketing arm, Valensa International, registered a growth of 15% over the previous year. Going forward, the Division plans to launch a number of products in the OTC segment while consolidating its presence in the ingredients and formulations businesses.
Parry Agro Industries Limited posted a 14% growth in tea sales volume. However, the lower sales realization from South India restricted the turnover growth to 5% over 2009-10. The Company focused its efforts in scaling up the value added products. Its prominent Mayura Mark won the Top Mark award in Kochi Auction Center for the year 2010.
Stellar performance from the Engineering Businesses
The Engineering businesses of the Group recorded all round growth and improved their presence in served sectors. (Tube Investments of India Ltd. and Carborundum Universal Ltd.)
Tube Investments of India Ltd.
Tube Investments of India Ltd. (TII) registered a superior performance by growing 36% in EBITDA and 35% in turnover over the previous year.
TI Cycles (TICI) achieved two milestones this year; one in terms of having crossed the 4 million mark in volume and another in having crossed the Rs. 1000 Crores mark in turnover.
A combination of initiatives including increased focus on special, premium and performance bike segments and promotion of ‘Cycling’ enabled this segment to achieve this performance. The Company launched, in the premium segment, GT and Mongoose range of bikes. The launch of the country’s first indigenously designed and produced carbon frame bike under the ‘Montra’ brand, a testimony to its R & D capabilities.
On the customer front, the Company continues to offer a unique and enjoyable purchase experience through its retail format. As of date, there are 647 outlets under various formats. The Company continues to maintain a premium position in the industry through its strong quality and brand image. As part of its core strategy of ‘selling cycling and not just cycles’, TI Cycles organized around 5000 events pan-India to promote cycling as a ‘Faster, Fitter and Greener’ mode of transport.
BSA Motors: The electric scooters market in India saw a few players, regional as well as importers, exiting the market due to their inability to provide quality products/services. This dampened the consumer’s confidence and resulted in the organized market volume dropping to 40,000 numbers from an estimated 60,000 numbers last year. The announcement of subsidies by the Government coupled with a focused approach in areas of quality and after sales service should help the division to perform better in the years to come.
Tube Products of India (TPI), a supplier of precision tubes for the auto industry, also achieved a milestone in having crossed the Rs. 1000 Crores turnover mark. Backed by the booming domestic auto industry, TPI witnessed a 40% volume growth in value added tubular components, which is helping the business to lock-in key customers. TPI witnessed a 32% increase in profitability.
TI Metal Forming (TIMF), the market leader in car door frames, recorded a volume growth of 17% over the last year touching the 1 million mark. As part of its diversification strategy, the plant set up in Uttarakhand for railways segment became fully operational and the revenues from this segment grew by 42% over the last year.
TIDC India (TIDC), a leading chain manufacturer, witnessed a volume growth of 30% in automotive chain, higher than the 26% growth in the two wheeler industry. The business also saw a significant growth in the exports market at 60% over previous year. The Company is focused on providing superior quality and technology products to become a leading global player in Industrial and Engineering Class Chain segment by leveraging from the SEDIS acquisition.
Carborundum Universal Limited
Carborundum Universal Ltd (CUMI) registered a consolidated sales growth of 26% during the year. All business segments registered growth rates in excess of 20%. EBITDA grew by 29% during the year.
Abrasives Division recorded a sales growth of 27% during the current year. This growth was made possible by the continuing buoyancy in the Indian and Russian markets and the revival in the US and Canadian markets. The product mix was oriented towards generating sales from more profitable segments of the market. Efforts are on to increase the market share in new customer and market segments by launching new products through technology tie ups. Profitability increased despite tough competition and increasing inputs costs due to better price realisation, better product mix and improvement in efficiencies.
The Ceramics business recorded a 22% increase in sales, from Rs.286 Crores to Rs.348 Crores. Both the high alumina ceramics business and the super refractories businesses performed well during the year. Sales of metalized cylinders and wear resistant liners continued to grow at a brisk pace with important new customers being added. The business continued to maintain its leading position servicing customers with superior quality and an in-depth understanding of customer needs. Sales of Super Refractories increased by 31% compared to last year, driven by the strong off take for fired and monolithic super refractories in major user industries like carbon black, cement and steel industries.
Electro Minerals Division (EMD) recorded a sales growth of 34% during the current year. All three major product groups viz. silicon carbide, brown fused alumina, white fused alumina did well recording higher sales. The market for fused minerals continues to be positive with all user industries doing well. Input cost increases led to pressure on margins. EMD continues to ensure sustainable growth by focusing more on specialties and value added products.
Volzhsky Abrasive Works – Russia, the world’s 2nd largest producer of silicon carbide, recorded a jump of 21% in sales of silicon carbide. Foskor Zirconia Limited, South Africa, made a comeback, with strong revival in the global steel and minerals markets. The Company’s efforts to diversify its product range and also its customer base started yielding benefits in both the subsidiaries.
Financial Services (CIFCL & CMSGICL)
The Financial Services Companies are set on a faster growth curve (Cholamandalam Investment & Finance Company Ltd. and Cholamandalam MS General Insurance Co. Ltd.). Cholamandalam unveiled the new brand identity during the year.
Cholamandalam Investment & Finance Company Ltd. (CIFCL), has turned in a superior performance and all the Divisions established new records. During the year, the Company focused on aggressively growing its Asset Financing business lines, liquidating/collecting its unsecured personal loan portfolio (which had been a drag on profitability), improving the profitability and significantly reducing non-performing assets. The efforts have paid off.
Disbursements for the year grew by 48% from Rs.3866 Crores to Rs.5731 Crores, the highest for the Company since inception. All the existing business verticals recorded their highest growth / profits since inception. PBT recorded for the year by the Asset Financing businesses amounted to Rs.347.63 Crores while the losses in the Personal Loan portfolio continued. The Company has brought down the Personal Loan portfolio to Rs.47 Crores, a mere 1% of the overall Portfolio as on March 31, 2011, thereby eliminating any further losses on this account in the year ahead. The non performing assets (NPA) as a % of the portfolio has been significantly brought down. The Company has expanded its presence with 226 branches as on March 31, 2011 from 171 branches last year, most of these branches are in Tier II and Tier III locations across India.
The Securities business (CSEC) posted a profit before tax of Rs.0.49 Crores as against a profit of Rs.3.48 Crores in the previous year, while the Distribution / Wealth Management business (CDSL) posted a profit before tax of Rs.6.90 Crores as against a profit of Rs.6.89 Crores in the previous year. Cholamandalam Factoring Limited, made a loss before tax of Rs.8.16 Crores as against a loss of Rs.8.62 Crores in the previous year. The Wealth Management business is set on a higher growth path and a senior management team with industry experience has been put in place to explore the cross sell business.
The consolidated PAT for the year was Rs.84.58 Crores as against a PAT of Rs.52.77 Crores in the previous year.
Cholamandalam MS General Insurance Co. Ltd.
Cholamandalam MS General Insurance Co Ltd.registered a growth of 23% in Gross Written Premium over 2009-10, in line with the industry growth of 22%. The year 2010-11 was a watershed year for Chola MS as it was poised to record its highest operating profit through prudent top line growth and careful business selection. However, profit before tax was impacted by the full absorption of motor pool losses as mandated.
In order to enhance the customer reach, the Company focused on leveraging the tie-up with the channel partners to augment the volumes and increase penetration. Currently, the firm is serving 1.5 mn customers as compared to 1.2 mn during previous year.
The Company is also planning to enhance its rural health insurance business and will be leveraging the presence of other Murugappa Group Companies in the rural and agricultural sectors. In order to support its expansion plan, the Company is gearing up to launch six health products in the coming few quarters. The Company is also planning to launch one home product.
With the launch of the new Chola identity, Chola MS unveiled a new brand identity which symbolizes dynamism, solidity, scale and stability and stands for Trust, Transparency and Technology.
During the year, the Company has made substantial efforts in enhancing technology to offer convenience to customers
Coromandel Engineering Company Ltd. (CEC),the Property Development and Civil Construction business of the Group, registered the top line growth of 26% over 2009-10. During the year, the Company expanded the base in Orissa for Civil construction and has plans to expand to Gujarat and Maharashtra in the coming years. In Property Development, the Company has three projects under development in Coimbatore and Chennai. Overall, the outlook for the Company is optimistic and is expected to grow aggressively in the coming years.
Parry Enterprise India Ltd. (PEIL) witnessed top line growth across all its Divisions. Its General Marketing Division forayed into trading of palm oil in Tamil Nadu and also established operations in Eastern region for trading food ingredients. It set up retail packaged water plant with a capacity of 24000 ltrs per month during the year. It has plans to expand the capacity in Packaged Water division in the coming years. The Polynet division is expanding its capacity in the knitted line to cater to the growing demand for Agro shading nets. The Travel division of the Company is focusing on enhancing the allied services to the customers. The Flexi Packaging division of the Company started focusing on Laminates and added major customers during the year.
Ambadi Enterprises Ltd. and its subsidiary Parry Murray, the high end furnishing and floor covering business of the Group which majorly exports to European and American markets, performed fairly well in 2010-11 considering the slow recovery in overseas markets. The Company is strengthening the design team to offer break-through products. It has plans to focus more on retail in the coming years.
Laserwords, the IT/ ITES Company of the Group , improved its PBT despite an impact on sales revenues by continued sluggishness in the US Market. The Company consolidated its position by restructuring the US business and a closer integration with Indian operations. There is a marked improvement in the operational efficiencies brought about by deploying better technology and effective cost management. Continued investments in software capabilities have enabled the company to launch innovative services and products for the existing and new clientele.
Parry Infrastructure Company Pvt Limited (Parry Infra), a 100% subsidiary company of E.I.D. Parry (India) LTD., is pursuing in creating value for the surplus properties of the Group by either outright Sale or Property Development. It has also developed a Food Processing SEZ at Kakinada, Andhra Pradesh. Currently, Parry Infra is developing a premium residential apartment ‘Centralis’ in Boat Club, Chennai, which is expected to be completed in 24 months.
The Group has embarked on a dynamic leadership and development journey in line with the Group’s vision for faster growth. Towards this, the Group will continue to focus on two key HR initiatives – building a robust talent & leadership pipeline and enhancing people productivity. The Murugappa group also partners with world-class universities such as Harvard, Wharton, INSEAD, LBS, IMD and IIM etc., to hone the business and leadership acumen of its employees through customized courses.
Corporate Social Responsibility
As part of the Group’s ongoing corporate social responsibility initiatives, Rs. 6.75 Crores was contributed last year to the AMM Foundation (AMMF) and Shri AMM Murugappa Chettiar Research Centre (MCRC).
The Hospitals run by the AMM foundation has reached out to over 8.5 lakh people through its out-patient services and 13,500 patients through its in-patient facilities.
Through the A.M.M Murugappa Chettiar Centenary Scholarship, the Foundation has given scholarship to 658 most deserving poor students to pursue their education, including 249 in professional colleges, in 2010-11.
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 seven 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 Mitsui Sumitomo, Foskor, Cargill, Groupe Chimique Tunisien, Winterthur Technology Group and Morgan Crucible. The Group has a wide geographical presence panning 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. For more details, visit www.murugappa.com.
Some of the statements in this news release that are not historical facts are 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.