The Murugappa Group turnover crosses Rs.
Turnover grows by 63.3%; EBIDTA grows by 36.4%;
PBT including extra-ordinary income shoots up by 167.8% to Rs.2082
PBT excluding EOI grows by 48.9% to Rs.1058 crore
Chennai, 5 May 2009: The
Murugappa Group ended the year FY2008-2009 with a Group turnover
of Rs.15,646 crore (LY Rs.9582 crore) and EBIDTA of Rs.1,467 crore
(LY Rs.1075 crore). Over the previous year, the turnover grew by
63.3% and the EBIDTA grew by 36.4%. Profit before tax (PBT) excluding
extra-ordinary income grew by 48.9% over the previous year to Rs.1058
crore (LY Rs.711 crore). The Group maintained its pace of investment
with a capital expenditure of Rs.850 crore during FY2008-2009. (LY
2008-2009 key Highlights
In the year 2008-2009 the Murugappa Group has bucked the trend of
an overall slowdown in the economy with majority of its businesses
registering strong growth in turnover and profitability. The year
saw commodity prices reaching its peak and trough and most of our
businesses being significantly dependent on input commodities like
steel, phosphoric acid, alumina grains etc. got impacted to some extent
on that front. However, businesses have shown significant resilience
in coming out of these difficult times and are well poised to take
up the challenges ahead.
Summary of gross sales and profitability (EBIDTA) is presented below:
Growth over last year
Growth over last year
Chola MS General
Insurance Company Ltd. (CMSGICL)
Chola DBS Finance
Universal Ltd (CUMI)
EID Parry (India)
of India Ltd (TII)
Represents only 9 months performance
Sustainable Profitable Growth Amidst
The year FY2008-2009 was one of the most difficult
and challenging times witnessed across the globe. The impact of the
global slowdown was felt even in India with sudden and unprecedented
change in GDP, unanticipated liquidity crisis, sharp volatility in
currency and a near collapse of the stock markets.
While the businesses across the Group were not spared of the onslaught,
the impact could be minimized due to:
Diversified nature of businesses within
Key strategic shifts undertaken and
Well thought out geographical spread
Aggressive pursuit of these well thought out strategies
have paid off, keeping our heads above water in difficult times.
Sectoral Highlights - FY 2008-2009
The diversified businesses of Murugappa Group
had a good year of performance with a few exceptions. Some of the
businesses performed very well while some showed improvements over
last year. A few businesses faced significant challenges owing to
the unprecedented turbulence in the overall economy. Key highlights
in each of the sectors are enumerated below.
Robust Performance of Agri Businesses (CFL,
EID and Parry Agro)
The agri businesses viz Coromandel Fertilizers Ltd
(CFL), EID Parry (India) Ltd and Parry Agro Industries Ltd. posted
strong profitability and growth during the year and were not impacted
by the economic slowdown.
CFL operated under the new subsidy policy announced
last year, a year which was marked by violent fluctuations in input
costs. However, our well crafted strategy of backward integration
has paid off well resulting in efficient sourcing of raw materials
and improved profitability.
The company embarked on an ambitious journey of aggressive
growth by setting up a separate division "Specialty Nutrients
Division" (SND). This division manufactures and markets specialty
nutrients like micro nutrients, water soluble fertilizers and organic
composts and intends to grow three-fold in turnover within three
years from the current level. This strategic intervention plans
to capture value addition and provide a direction for sustained
CFL has kick started its retail operations by opening
nearly 400 "Mana Gromor" centers across the mandal headquarters
of Andhra Pradesh which caters to the needs of the farming community
through farm inputs and farm productivity improvement services and
few outlets also include lifestyle products. With rural economy
having robust growth and demand indications, this venture is expected
to create substantial value enhancement for the company from being
a fertilizer manufacturer to "Complete Farm Solution provider".
The company strengthened its tie-ups for raw materials
and also fostered technical and R&D initiatives. The company
along with its Mauritius based wholly owned subsidiary increased
its equity stake in Foskor Limited from 2.5% to 14%. This would
enable CFL an assured supply of key raw material and also reap the
benefits in the form of share of profits.
In furtherance of the company's objective of securing
its back-end, an investment of USD29 million in a phosphoric acid
plant in Tunisia with M/s Groupe Chimique Tunisien (GCT) has been
made and the financial closure for the same was successfully completed
last year and supplies would commence from second half of 2010.
The pesticides division of CFL also performed well
with turnover and Ebidta growth of 23% and 25% respectively. In
order to tap the huge opportunity in agro chemicals available in
the Latin American market, CFL has opened a wholly owned subsidiary
in Brazil that will engage in the sale of its own manufactured products
as well as traded products.
In the sugar business of EID, with the cane crushing capacity of
19000 TCD in 2008-2009, it is progressing fast in its de-risking
strategy by integrating the co-product facilities with 84.5 MW cogen
capacity and 135 KLPD of distillery capacity.
Silk Road Refinery, a JV with Cargill, at Kakinada
with a capacity of 600,000 tons is all set to go on stream and is
expected to be a significant growth driver for business. With global
sugar markets looking robust, the refinery is slated for timely
Parry Nutraceuticals division is investing in the field of Life
sciences and is in the process of setting up an R&D facility
in IIT Madras Technology Park, Chennai. Further, it has acquired
a strategic stake in Valensa International, a Florida based Nutraceuticals
Company. This acquisition would leverage the strength of the company
in marketing and distributing Parry Nutraceuticals products worldwide.
Parry America, a subsidiary of EID, is into marketing
of neem based biopesticides, which have received good acceptance
in the developed countries and is now a profitable business. It
has launched 'AZAMAX' for the indoor garden segment and the product
will be available in all the 50 states in the USA in 16 and 32 oz.
squeeze and measure bottles. This is Parry Americas first foray
into the retail segment.
Parry Agro Industries Ltd is well poised to take advantage of the
global demand supply scenario and declining stocks. The company
is focusing on value added products with the launch of Parry's Supreme
and K-Chai. Significant investments are also planned to acquire
new estates in the north eastern region that would support the growth
Engineering Businesses (CUMI and TII):
Managing the ups and downs
The performance of these businesses during the
first half of FY 2008-2009 was exceptional. However, during the
second half, the growth momentum could not be sustained due to the
slowdown in economy, particularly in the auto sector.
CUMI continues to be the market leader in the domestic abrasive
market, on the back of its diversified product portfolio, focus
on niche product segment and development of customer specific products.
The non-abrasive business lines, particularly electro minerals and
refractories, continued on a strong growth trajectory. As a move
towards vertical integration, CUMI forayed into power tools to provide
complete solution to customers. This unit has spread its wings and
is now present with 15 models in 10 states. CUMI has consolidated
its position as complete solution provider for entire value chain
The state of the art metallised cylinders plant, with a capacity
to manufacture 500,000 cylinders per annum, was commissioned in
September 2008 and bulk supplies to certain major Indian/overseas
customers have commenced. New facility for manufacture of super
refractories and anticorrosive products in Vellore district will
enhance CUMI's capability further. The company doubled its capacity
for manufacture of micro abrasives for the photovoltaic industry
in December 2008. CUMI is also proposing to invest in further increasing
the capacity for this product in 2009-2010 to address the rapidly
growing requirements of this sector. The company continued in 2008-2009,
its exercise of divesting non-strategic assets to fund construction
of strategic assets.
The abrasives facility at Uttarakhand, the wear
resistant tiles plant at Hosur and the engineered ceramics unit
at Aurangabad, which were the major investments last year, are stabilizing
and scaling up production levels. Uttarakhand plant has kept adding
newer products to its line of activity. Today it has the capability
and efficiency of producing many varieties of DC and RFC wheels
in bonded apart from coated.
In 2007-08, CUMI through its overseas investment
subsidiary, had completed a major overseas acquisition in Russia
- Volzky Abrasive works (VAW) - the world's second largest producer
of silicon carbide, providing it the access to raw material and
technology. VAW has registered a growth of 70% in PAT this year.
An MOU with Volgograd Administration to set up a 100,000 ton SiC
plant in Russia was signed in 2008-09. CUMI through its overseas
investment subsidiary, acquired a 51% equity stake in Foskor Zirconia
(Proprietary) Limited, South Africa, (FZL). With a 4200 tons per
annum installed capacity for Zirconia, FZL is the 3rd largest producer
of Zirconia in the world. This investment will further strengthen
CUMI's position in the growing minerals business.
In Tube Investments of India Ltd., TI Cycles has taken a big leap
and entered the super premium 'performance' bicycles category by
partnering with international brands Bianchi and Cannondale. These
brands of mountain, road and hybrid bicycles will be retailed through
TI Cycles' niche retail format - 'Track and Trail'. These outlets
would further enhance TI Cycles' positioning of 'Fun, Freedom and
Fitness.' This business unit has adopted a strategic shift from
'selling cycles' to 'selling cycling' and towards attainment of
this strategy, a host of initiatives like Cyclathon Concerts, association
with large scale events like Chennai Open, Himachal MTB, service
revenue through rentals and mobile servicing etc are underway.
The business unit has established a separate division,
BSA Motors, for manufacturing and marketing the environment friendly
electric bikes (E-Bikes/E-Scooters). The division has launched five
models of battery operated E-Scooters.
TI Metal Forming, the market leader in door frame,
has now enhanced its capability to cater to the growing railway wagon
segment. It has made an investment in Uttarakhand to avail the fiscal
incentives and create entry barriers by being an early mover in this
segment. This is a significant diversification strategy considering
that more than 30% of sales for this division is estimated to come
from the railways vertical in 2009-10. This unit is also coming up
with a plant in Sanand to supply doorframes and other components for
To tap the huge potential in industrial and engineering class chain
segment, TIDC India has invested in technology and resources which
would provide opportunities for growth of its products in the global
arena. The unit has set up an automotive chain manufacturing facility
in Uttarakhand to service its key customers in the region.
TPI, which is a supplier of precision tubes for the auto industry,
is pursuing to lock-in key customers through value added centers and
Tubular Components Division. With increased competitiveness in this
segment, business perceives this strategy to be a positive step towards
long term sustainability.
Financial Services (CMSGICL and CDFL)
Chola MS Insurance, which registered the second
highest growth amongst private players in the industry, is firming
up with bancassurance tie-ups and has entered into a 5 year agreement
with IndusInd Bank. This would provide better sourcing opportunities
for the business. The company has also made significant headway in
Rural sector through Government RSBY scheme (health cover for "below
poverty line" segment) in the states of Gujarat and Jharkhand.
It initiated aggressive branding campaigns during the year and expanded
the branch network from 97 to 113, also strengthening its presence
in east, west and south.
The company enhanced its capital base by infusing Rs.75 crore in April
2009 through a rights issue. With the industry growth largely coming
from motor and health segments, this infusion is necessary to support
the company's growth plans in these two growing segments.
Cholamandalam DBS profits declined primarily
due to higher delinquencies in the personal loan portfolio and lesser
disbursement due to slowdown in auto segment. The company had raised
Rs.135 crore in September 2008 by way of conversion of warrants
into equity shares. To further improve the capital adequacy and
to meet the operating requirements, the Murugappa Group and DBS
Bank Limited have infused a capital of Rs.300 crore in the form
of fully convertible cumulative preference shares. The company has
since been focusing on asset based lending.
Coromandel Engineering Company Ltd. (CEC) is the
property development and civil construction business of the group
which is set to grow in size and scale in coming years. Foreseeing
that the slow down in the real estate space would continue for
some more time, the company has sought to diversify into related
segments like infrastructure, construction of commercial buildings
and also treading the path to grab big size projects in civil
At Laserwords, the acquisition and merger of Four
Lakes Colorgraphics, Inc., Wisconsin and Pine Tree Composition,
Inc., Maine in the last two years has helped business to grow
its top line as well as bottom line considerably despite recession
in the US economy. The addition of Four Lakes to Laserwords' fold
got business one step closer to becoming the leading provider
of global pre-press services.
Parry Enterprise India Ltd (PEIL) successfully
commissioned its green field project for flexible packaging laminates
in Baroda. These laminates would be used as packaging material
for personal care products, food products etc. With the growth
of consumerism and retailing in India, this division throws up
Ambadi Enterprises Ltd and its subsidiary Parry
Murray, which are in the business of exporting high end furnishing
and floor covering mainly to Europe and America, had a reasonably
good year even under difficult circumstances.
Parry Infrastructure Pvt Ltd, a wholly owned subsidiary
of EID was formed during the year to explore opportunities in
property development, logistics, international expansions, mining
and infrastructure sectors.
The Murugappa Group, with over 32000 employees,
has been an employer of choice for decades now. The Group is also
a leader in adopting excellent HR practices and tools that enable
its people continue to learn and grow.
In 2008-09, the Group's HR practices won recognition
in India and abroad.
The Group's leadership development programs (Business
Leadership Program and Emerging Leaders Program or BLP and ELP)
won the 'Exemplary Practice Award' at the 10th Annual Awards for
Excellence and Innovation in learning, organized by Corporate
University Xchange, Pennsylvania
During the year, senior management of the group
had the benefit of an insightful interaction with the renowned
business advisor, speaker and author, Prof. Ram Charan on the
subject 'How to manage a large diversified group in turbulent
Coromandel Fertilizers Limited (CFL) was ranked
in the Top 20 Best Employers in the Business Today - Mercer -
TNS survey. CFL also bagged the award for 'Most Engaged Workforce'
from CNBC and the DMA - Erehwon National Award for 'Innovation
Carborundum Universal (CUMI), another group company,
was recognized at the Employer Branding Awards conducted by World
HRD Congress at the national level, for 'Managing Health at Workplace'
Meanwhile, the Group continues to focus on refining
and rejuvenating its HR practices.
As the portfolio of businesses and their geographical
spread expands, the Group relies on its values and beliefs to provide
the guiding principles of doing business. In 2008-2009, these values
were contemporized and the spirit of the Murugappa Group was re-launched
as 'The Five Lights', aimed at making its relevance more immediate
to a new generation of employees.
Corporate Social Responsibility
As part of the Group's ongoing corporate social
responsibility initiatives, Rs.286 lakh was contributed last year
to AMM Foundation and Murugappa Chettiar Research Centre (MCRC)
The AMM Foundation is a strong network of service
- oriented philanthropic institutions in the fields of school
and technical education, health care and research
AMM Foundation provides education to about 11,000
children and has set up four premier higher secondary schools
in the city. The Foundation also runs an autonomous premier polytechnic
institution that offers National Board accredited programmes
In the Healthcare domain, the Foundation has set
up four hospitals in Tamil Nadu, which treat close to 7.5 lakh
patients annually, and nearly 1 lakh underprivileged patients
receive free treatment in Pallathur, the hometown of the Murugappas.
Research being the building block of any growing economy,
Shri AMM Murugappa Chettiar Research Centre (MCRC), puts considerable
amount of effort and focus in conducting applied and useful research
on energy, environment, bioresources and biodiversity, microbial
and plant biotechnology, Sustainable aAgriculture and diverse fields
including algae technology, organic farming, eco-friendly projects,
bio-fuel technologies, etc. Sustaining the environment and depleting
energy resources are considered as key areas, when the Foundation
takes up research projects.
About the Murugappa Group
Headquartered in Chennai, the Rs. 15,646 crores
(USD 3 billion) Murugappa Group is one of India's leading business
conglomerates. Market leaders in diverse areas of business including
Engineering, Abrasives, Finance, General Insurance, Cycles, Sugar,
Farm Inputs, Fertilizers, Plantations, Bio-products and Nutraceuticals,
its 29 companies have manufacturing facilities spread across 13 states
in India. The organization fosters an environment of professionalism
and has a workforce of over 32,000 employees. The Group has forged
strong joint venture alliances with leading international companies
like DBS Bank, Mitsui Sumitomo, Cargill and Groupe Chimique Tunisien
has consolidated its status as one of the fastest growing diversified
business houses in India.
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