Murugappa Group turnover grows by 15 per cent and PBT by 10 per cent

Chennai, 8th May 2007: The Murugappa group ended the year 2006-07 with a group turnover of Rs. 8446 crore, and profit before tax of Rs. 649 crore (Overall PBT including extraordinary items Rs.874 crore). Sales grew by 15 per cent and the PBT by 10 per cent. The group maintained its pace of investment with a capital expenditure spend at Rs. 480 crore during the year. The group has committed to a number of growth initiatives which will see capital expenditure more than double in the current fiscal.

2006-07 Key highlights
Murugappa Group companies witnessed robust growth by gaining from, and contributing to, the stellar performance of the Indian economy. Notable performers include the financial services, abrasives, ceramics, insurance, fertilisers and sanitaryware businesses that have significantly improved sales and profitability during the year. However, changes in policy and adverse business conditions affected the sugar business during the year.

Summary of sales and net income is presented below

In Rs. crore

Company	06-07 Gross Sales	Y-o-Y Growth per cent	06-07 PBT#	Y-o-Y Growth per cent
Godavari Fertilisers	1800	19 per cent	67	79 per cent
Coromandel Fertilisers	2108	12 per cent	135	44 per cent
Carborundum Universal*	844	28 per cent	146	28 per cent
Parryware ROCA	300	19 per cent	30	22 per cent
Cholamandalam DBS	434	79 per cent	45	18 per cent
Tube Investments	1762	11 per cent	118	(8 per cent)
EID Parry	583	(22 per cent)	52	(45 per cent)
Others	615	33 per cent	56	(5 per cent)
Total	8446	15 per cent	649	10 per cent

# excludes extra-ordinary items; *includes subsidiaries

Sustaining the growth momentum
The Group continued its focus on business alignment and putting in place well defined long-term strategic initiatives towards sustaining the growth impetus.

• A series of business alignments were made during the year to unlock value and better service customer requirements. The joint venture between Parryware and ROCA was made fully operational during the year. ROCA is the world leader in sanitaryware and Parryware ROCA is world number 10. The Nutraceuticals business was amalgamated with EID Parry, to accelerate growth in this sunrise segment. The securities and distribution services operations of DBS Cholamandalam were integrated under the wealth management services umbrella to provide comprehensive investment solutions for customers. Coromandel Fertilisers (CFL) further consolidated its position by increasing its stake in Godavari Fertilisers and Chemicals by acquiring IFFCO's shareholding.
• Group companies made acquisitions to gain access to manufacturing/ markets and to expand the range of product offerings to customers. Carborundum Universal Ltd. (CUMI) entered a joint venture agreement with China Engineering and Exploration Bureau (CEEB - a State owned Enterprise) and acquired a 49 per cent stake in M/S Sanhe Yanjiao Jingri Industrial Diamond Company (Jingri), China. This would help CUMI strengthen its abrasives range and develop a strong manufacturing base in China to service its global customers. Its acquisition of 2 refractory cement companies in Madhya Pradesh will enable CUMI to offer a comprehensive range of super refractories in the Monolithics segment and to cater to the cement industry. Acquisitions initiated by CFL and EID Parry during the previous year, viz. FICOM Organics, Gujarat and New Horizon Mills, Puducherry, have been successfully completed with acquired entities seamlessly integrated within the mainstream operations
• Greenfield and brownfield expansions are underway in all manufacturing companies of the group, with emphasis on world-class technology and scale. CUMI commissioned its new coated abrasives plant, thus doubling capacity and gaining the competence to produce next-generation coated products. The commissioning of Parryware ROCA's new sanitaryware plant at Perundurai has catapulted it to being among the top 10 leading sanitaryware manufacturers in the world. EID's sugar business has commissioned a 22 MW cogeneration plant at its Pugalur plant and a fuel ethanol plant during the year, and is implementing expansion projects to convert its factories into integrated complexes. Group companies are establishing manufacturing facilities in Uttarkhand to better service customers in the region and leverage the favourable investment climate offered by the state. Between CUMI and TII's tubes and chains divisions, the group is investing Rs. 150 crore in Uttarkhand. Parryware ROCA's allied product partner Espiem plastics has commenced supply from its recently established plant in the state.
• Group companies continue to invest in developing new products and technologies to meet customers present and next generation requirements. CUMI has established a high precision micro-grit manufacturing facility to cater to requirement of solar wafer cell manufacturers. It is also expanding capacity to manufacture high-end ceramic products. The Nutraceuticals business has commenced trials for Omega 3 algae products.

Geared for global growth
The group has furthered its global growth imperative through self-driven international forays as well as by partnering with international players

• The Tubes business is poised to commence manufacturing operations in Suzhou, China. This plant will manufacture CDW tubes to cater primarily to Chinese automotive customers
• The funds infused by CUMI in Jingri are being invested to establish a 3000 ton per annum greenfield plant in China to manufacture bonded abrasives. CUMI's technical expertise is being leveraged toward establishing this plant, which is expected to be operational in the third quarter of FY08
• CFL's pesticides division is sourcing speciality products from China to expand its range of offerings to farmers
• CFL has furthered its upstream strategy by investing in a joint venture company 'Tunisian Indian Fertilisers S.A' (TIFERT) with M/s. Groupe Chimique Tunisien (GCT), M/s. Compagnie des Phosphates de Gafsa (CPG) of Tunisia; and Gujarat State Fertilizers & Chemicals Ltd to set up a Phosphoric acid plant in Tunisia
• EID Parry and Cargill, Inc. have established a JV company to set-up and run an export oriented sugar refinery in India. The location for the refinery has been finalized in the port city of Kakinada, Andhra Pradesh and central government clearance for the SEZ is awaited prior to commencing project execution
• The group continues to pursue potential acquisition targets and seeks to partner with international players in the engineering and material sciences fields

Retail thrust
Group companies have made a focused approach toward expanding their presence in the retail segment during the year

• The Sanitaryware business launched the ROCA range of high-end bathroom products for the discerning Indian customer. These innovative designer products are being distributed in India's main cities through exclusive retail stores
• The cycles business launched a chain of 'BSA GO' outlets in major cities across the country. These are one-stop premium stores that offer customers a wide range of bicycling and fitness equipment within an international store ambience. TI Cycles will expand its store network and product range during 2007-08
• Cholamandalam DBS enhanced its product offerings with the successful launch of Personal loans and Home equity, and has invested in a network of retail finance outlets across the country. Cholamandalam MS General Insurance witnessed strong growth in the retail segment and launched 'e-claims'- a facility for motor claims settlement in India
• After tasting success with its Parry 'Pure' refined sugar, the Sugar business has launched 'White Label' plantation sugar in retail packs and commenced private labeling for leading retail chains. This initiative would ensure availability of high quality and un-adulterated packaged sugar for customers
• The group's farm inputs businesses CFL and GFCL have recently launched an agri-retail venture 'Mana Gromor'. These outlets service the requirements of the farming community, offering agri-inputs and financial credit. Services offered include providing training to farmers on good agri-practices and soil sample analysis. It is planned to increase the number of 'Mana Gromor' outlets as well as leverage them to offer products of other group businesses e.g. cycles, sanitaryware

People paradigm
The Group's total headcount for the FY 2007 is 28,667. Talent management has been accorded paramount importance in the group, and the Management Development Center has conducted the 'Emerging Leaders Program' toward developing a leadership pipeline to deliver future growth.

Corporate Social Responsibility
AMM Foundation, the philanthropic wing of Murugappa group, carries out the corporate social responsibilities on behalf of the Group by establishing and operating service-oriented philanthropic institutions in the fields of School Education, Technical Education, Medicare and Research. The Foundation runs four premier higher secondary schools in the city. About 10,000 children study in these schools and the success rate in the Public examination held in the last two years has been close to 100 per cent. The Foundation also runs an academically autonomous premier polytechnic institution that offers National Board accredited programmes. In the domain of Healthcare, the Foundation has set up 4 hospitals in Tamil Nadu where over 6 lakh patients benefit from the medical aid provided by the foundation, with nearly 1 lakh patients receiving free treatment at the foundation's hospital in Pallathur. The Foundation is also engaged in research in the diverse areas including Algae technology, Organic Farming, Eco-friendly projects, Bio-fuel technologies etc.

About the Murugappa Group
Headquartered in Chennai, the Rs.8446 crore Murugappa Group is India's leading business conglomerate, which fosters an environment of professionalism for its strong workforce of over 28,000 employees. Market leaders in diverse areas of business viz. engineering, abrasives, finance, general insurance, sanitaryware, cycles, sugar, farm inputs, fertilizers, plantations, bio products and nutraceuticals, its 29 registered companies have manufacturing facilities spread across 12 states in India.

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