Carborundum Universal Ltd announces Q1 financial results
Sales grew by 16 per cent
Profit before exceptional items by 56 per cent

Chennai, July 23, 2005: The Board of Directors met today and approved the unaudited financial results for the quarter ended 30th June 2005.

Q 1 Financials
Sales grew to Rs.88 crore, a growth of 16 per cent over the first quarter of last year. Exports registered strong growth of 32 per cent, from Rs.7.5 crore to Rs.10 crore. The improved sales coupled with control on costs helped gross operating margins to increase from 11 per cent to 15 per cent. Profit before exceptional items increased by 56per cent, from Rs.8.5 crore to Rs.13.3 crore. Profit before tax grew from Rs.10 crore to Rs.13.3 crore, a growth of 32 per cent. After tax profit registered a growth of 22 per cent, from Rs.7.3 crore to Rs.8.9 crore.

The allotment of the 1:1 bonus shares which announced recently has been completed in the last week of June 2005 and the equity capital of the Company stands accordingly increased to Rs 18.67 crore.

Operations
Major customer industries - Auto, Auto Ancillaries, Bearing, steel, Fabrication and Construction had good growth in Q1. Our order inflow and sales of non-standard products had a good growth.

Exports had strong growth over Q1 of 04-05 mainly due to efforts put in the last one year to establish products acceptance with various customers.

In the dealer market, sales for the quarter was dampened by VAT related uncertainties and rationalisation of prices by withdrawal of special discounts and schemes. Major dealers used up their stock to meet market demand and reduced their buying in Q1. As a result revenues of the Abrasives segment, registered a modest growth of 6 per cent, from Rs.58.9 crore to Rs.62.2 crore.

Ceramics and Electro minerals registered very strong performances. Ceramics sales grew to Rs.18 crore from Rs.13 crore last year, an increase of 37 per cent. The demand from key user industry segments of ceramics, sponge iron, cement, glass, power generation and power industry segments continue to be good. Profit before interest and tax of this division more than doubled.

In the Electro minerals division, sales recorded an increase of 32 per cent, from Rs.12 crore last year to Rs.15.8 crore. All product lines showed a positive trend. Profit before interest and tax increased by 61per cent. Maniyar hydel power plant had an excellent quarter with good pre monsoon showers helping to achieve better than plan generation. The generation for the quarter was at 102 lakh Units (92 lakh units last year).

Outlook
The buoyant trend in the economy is continuing. The order book for non-standards in abrasives, in ceramics and electro minerals is good. In the dealer market, we expect stronger off-take as major dealers used up their stock in the first quarter to meet market demand. Given the above, the strong performance of the first quarter is expected to continue.

The unaudited financial result is enclosed

About Us
Carborundum Universal Ltd is part of the US $ 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. Group has a strong presence in Abrasives, Engineering and Cycles, Bio-Products, Sanitaryware, Plantations, Sugar, Farm Inputs, Finance, General Insurance, and Nutraceuticals.

Contact
N Srinivas
Chief Financial Officer
Carborundum Universal Ltd
Tel: 044 - 52216132

K.S. Susindar
Murugappa Group
Manager - Group Corporate Communications
Tel: 040 - 25346535
Email: SusindarKS@corp.murugappa.com