Carborundum Universal Ltd financial results
Sales grew by 24 per cent; Operating profits up by 27 per cent

Chennai, 27 January, 2007: The Board of Directors met today and approved the unaudited financial results for the quarter ended 31st December 2006.

Q 3 Financials
Sales grew to Rs. 136 crore from Rs. 109 crore for the corresponding quarter of the previous year, a growth of 24 per cent. Exports registered a strong growth of 70 per cent, from Rs. 11.3 crore to Rs. 19.3 crore. CUMI's consolidated turnover in Q3 was Rs 189 crore.

Operating profits (i.e. profit before interest, exceptional income and tax) increased by 27 per cent i.e. from Rs.17.7 crore to Rs.22.4 crore. Profit before exceptional items increased to Rs. 20 crore (from Rs. 17 crore), a growth of 18 per cent. Profit before tax for the quarter of Rs.20 crore is lower than last year (Rs.49.5 crore) primarily because the last year's Q3 results included an exceptional item of income amounting to Rs.32.39 crore, representing profit on sale of shares. The profits after tax for the current quarter was Rs. 12.6 crore (previous year Rs. 43.4 crore). CUMI's consolidated profits after tax for Q3 was Rs 17.8 crore.

Operations
All business segments registered strong performances during the quarter.

Abrasives
In abrasives, major customer industries viz. auto, auto ancillaries, bearing, steel, fabrication and construction continued to do well. The order inflow for non-standard products was 44 per cent above that of the corresponding period of last year. In the export markets too, off-take has been strong. Sales of standard products and export sales were the highest ever recorded. As a result of the above, sales grew by 20 per cent over Q3 of last year. Operating profits grew by 17 per cent.

The new coated abrasives plant at Sriperumbudur, which started trial runs in September, commenced commercial production in December 2006. Construction of the new bonded abrasives facility in Uttranchal is progressing as per plan.

Ceramics
The ceramics division continued its robust growth trends. Sales registered a 32 per cent growth, from Rs.20 to Rs.26 crore. There was good off take from key user industries viz HT insulators, cement, carbon black, glass, coal washeries, power and steel. There is increasing acceptance of the Company's products in the international markets. Exports registered a growth of 59 per cent. Operating profits registered a growth of 57 per cent from Rs.3.6 crore to Rs.5.7 crore.

The acquisition of the new plants at Jabalpur was completed in December 2006. The new facility for manufacture of industrial ceramic tiles in Hosur is in its final stages and the plant is expected to be commissioned in Q4.

Electrominerals
In the electrominerals division, sales grew by 18 per cent. The division continued to pursue its strategy of shifting focus to value added products. Exports registered a growth of 90 per cent over corresponding period of last year.

Corporate events
Pursuant to the Joint Venture agreement entered into in June 2006 with China Engineering and Exploration Bureau, the Company invested a sum of Rs. 23 crore in M/s Sanhe Yanjiao Jingri Diamond Industrial Co. Ltd. ("Jingri") for acquiring a 49 per cent equity stake. Jingri is a state owned enterprise engaged in the manufacture of synthetic industrial diamonds and also has a 60 per cent stake in a subsidiary which manufactures diamond tools for the stone industry. The funds invested by CUMI would be used by Jingri to establish a 3000 tonne greenfield bonded abrasives plant in China. The plant is expected to be operational in Q3 of 2007-08.

Mr. M A Alagappan stepped down from the Board consequent to his assuming office as Chairman of the Murugappa Corporate Board. Mr. Partho S Datta, Director also stepped down consequent to his retirement as Director - Finance of the Murugappa Group. Mr. A Vellayan, Chairman of EID Parry (India) Limited and Coromandel Fertilisers Limited has been inducted into CUMI's Board.

Mr. N Srinivasan, who was Chief Financial Officer of the Company was elevated as Director - Finance of the Murugappa Group. Consequently Mr. V Ramesh has been appointed as Chief Financial Officer of CUMI. Mr. Ramesh is a graduate of the Institute of Cost and Works Accountants of India and holds a post graduate diploma in Management from IIM Bangalore. He has more than two and a half decades of experience. He was earlier with TVS Finance & Services Ltd as President and has also worked in Hindustan Lever Ltd and Mukand Iron & Steel Works Ltd.

Outlook
The Company expects to maintain the momentum in its performance during Q4 of 2006-07 and end the year on a robust note.

The unaudited financial results are enclosed.

About the Murugappa Group
Headquartered in Chennai, the $1.6 billion Murugappa Group is India's leading business conglomerate, which fosters an environment of professionalism for its strong workforce of 28,000 employees. The group has 29 registered companies, which are market leaders in diverse areas on business viz. engineering, abrasives, finance, general insurance, sanitaryware, cycles, sugar, farm inputs, fertilizers, plantations, bio products and nutraceuticals. The Group has manufacturing units in 12 states.

The Group has forged strong joint venture alliances with leading international companies like Roca of Spain, Cargill of Geneva, Cerdak of South Africa, DBS Bank of Singapore, Mitsui Sumitomo of Japan and Groupe Chimique Tunisien of Tunisia and has consolidated its status as one of the fastest growing diversified business house in India.