2 May, 2005: Murugappa group is open to bringing in a strategic partner for its proposed foray into steel business. The group, late last month, signed an MoU with the Orissa government for setting up a three million tonne greenfield steel plant.

Speaking to reporters in Chennai, A Vellayan, director external relations said that the MoU was the first step. Detailed project report is under preparation and discussions are on with the technology partners on the way to move forwards. The need for a strategic partner will be considered in the due course of time, headded. The plant is likely to become operational in about three to four years time.

Justifying the diversification into steel making, Mr Vellayan said that India's per capita steel consumption at 32 kg was just 10% of China's demand. That left a huge scope for improvement. Also the group itself consumed close to 3 lakh tonne of steel every year.

Meanwhile, Murugappa group-a conglomerate with interest in fertilisers, sugar, abrasives, cycles, steel products, non-banking finance, insurance and other business - has grown its topline by 20% to touch Rs 6,250 crore ( $1.44 billion) during the fiscal 2004-05. Its profit grew much higher. The profit before tax stood at Rs 550 crore - a jump of 49%. Exports accounted for 5% of the total turnover at Rs 450 crore. The market capitalisation of the listed companies in the group increased by 143% to Rs 4,100 crore.

Last fiscal also saw the group making its first international investment when the group through Coromandel Fertilisers Ltd, signed a business assistance agreement with South African fertiliser major Foskor and acquired a 2.5% stake in its equity. The agreement envisages a 16.5% equity and the balance will be acquired through sweatequity.

Releasing the group-wide numbers, Mr Vellan said that "it was overall a satisfying year and has given us the confidence to build on it both in the domestic as well as international markets.

Bouyed by the strong performance the group has earmarked Rs 650 crore towards capital expenditure for the current fiscal, Mr Vellayan said that major portion of the capex will be in Tube Investments, EID Parry, CUMI and Coromandel Fertilisers overseas operations. Parryware is setting up a new 12,000 tonne plant at Perundurai in Tamil Nadu to cater to the South Tamil Nadu and Kerala markets. CUMI is planning a Rs 75 crore coated abrasives facility in Sriperumbudurand EID Parry has bid for a 2,500 TC sugar mill in Pondicherry. A good chunk of the investment will be in its South African business.