Murugappa Group posts 11% growth in FY 2014-15
PBT grows by 26%

Chennai, 11 June 2015 : Murugappa Group recorded a growth of 11%, clocking a turnover of 26,926 Crore during 2014-15 (last year 24,350 Crore). Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) posted a growth of 11%, at 2,921 Crore (last year 2,627 Crore) and Profit Before Tax and Extra Ordinary Items (PBT excluding EOI) was 1,780 Crore (last year 1,415 Crore) registering a growth of 26%.

The Group’s focus in 2014-15 was to improve its position in the respective markets and prepare for the next phase of growth.

The following were the key corporate initiatives undertaken in FY 2014-15 :

Coromandel International Limited:

1. Merger of Sabero Organics Gujarat Limited and Liberty Phosphate Limited with Coromandel International Limited.
2. Yanmar Coromandel AgriSolutions Private Limited (a Joint Venture among Coromandel International Limited, Yanmar & Co. of Japan and Mitsui & Co. of Japan) for manufacturing and marketing a wide range of farm machinery used in paddy cultivation in India has introduced products in the market.

EID Parry (India) Limited:

1. Capacity expansion in Alimtec S.A., Chile initiated to increase the availability of raw material for formulation business of Nutraceuticals.
2. Acquired the balance 3.4% shares from erstwhile shareholders of Parry Phytoremedies Private Limited and the company has now become a 100% subsidiary of EID Parry.

Tube Investments of India Limited

1. Commercial production in Large Diameter tube project has started in October 2014, and it is in the process of stabilising operations.

Cholamandalam Investment and Finance Company Limited

1. Infused equity capital of 500 Crore by way of QIP to meet business growth requirements

Company-wise Highlights FY 2014-15

1. During the year Coromandel International achieved a growth of 13% in revenues despite a deficient monsoon scenario affecting the agriculture industry.
2. EID Parry achieved a growth of 26% during the year on account of better volumes in sugar and by-products and better realisation in power.
3. Cholamandalam Investment and Finance Company registered a growth of 13% supported by Vehicle Finance and Home Equity. EBITDA also grew by 20% during the year.
4. Cholamandalam MS General Insurance registered a growth of 2%, while EBITDA grew by an impressive 26%.
5. Tube Investments of India (TII) witnessed 8% growth in revenues.
6. Profitability of all the business divisions of Carborundum Universal (CUMI) improved compared to the previous year.
7. Aggregate capital expenditure programmes to expand/ debottleneck/ modernise facilities was 229 crore.

Company-wise Performance:

Summary of Gross Sales and EBIDTA are presented below :

Sectoral highlights for 2014-15

Agri-businesses

Coromandel International Ltd

Net sales of Coromandel International’s grew by 13% during 2014-15 and stood at 11,416 crore.

The year 2014-15 was a very challenging one for Agriculture due to poor monsoon compared to 2013-14 both in terms of the quantum of rain as well as spatial distribution. There were some areas where the deficit was as high as 40% especially in areas where Coromandel operates (Southern and western parts of India).

During the year, all India DAP & complex sales increased by 12% over the previous year to reach 15.7 million tonnes. In addition, urea of 10.2 Lakh MT was traded during the year.

Coromandel Fertiliser division’s capacity utilisation improved from 65% in 2013-14 to 70% in 2014-15. Production was higher by 7% and reached 2.42 million tonnes. Coromandel’s market share in DAP & Complex increased marginally to 16.2% from 16% last year.

With regard to Crop protection business, Coromandel saw little growth in the domestic formulation business due to monsoon conditions. The export business of erstwhile Sabero performed well during the year. Exports during the year were close to $100 million. In order to focus on new product introduction, a R&D centre has been established in Hyderabad.

Retail business was impacted by adverse monsoon situation especially in Telangana in Rabi season. This division added 143 stores during FY 2014-15. There are now 778 stores, 596 in Andhra Pradesh and Telengana together, and 182 stores in Karnataka.

EID Parry (India) Limited

Sugar Division

During the year, the division crushed sugarcane of 55 Lakh MT (Last Year 52 Lakh MT) in 2014-15 across its 9 units. The company witnessed an increase in cane crushed across its units in Karnataka while the TN & Pondy units witnessed a decline due to poor monsoon which also impacted the recovery in the region.

Silkroad Sugars, a standalone refinery at Kakinada (AP), stabilised operations using coal fired boiler in June 2014. Plant is expected to process 4 lakh MT in FY 2015-16.

Bio Products Division (Comprising Bio-Pesticides and Nutraceuticals)

Bio-products Division registered a revenue of 334 Crore, an increase of 15% compared to previous year largely contributed by the Nutraceuticals division.

Engineering Businesses

Tube Investments of India Limited

Tube Products of India

This division is a leading supplier of precision tubes for the auto industry and achieved a turnover of 1,725 Crore, an increase of 6%. The state-of-art large diameter tube manufacturing facility at Thiruttani (near Chennai), built at a capital expenditure of 250 crore, will serve the needs of the construction equipment and off-road vehicles. The plant has a capacity of 36,000 MT of CDW (Cold Drawn Welded – Large dia Tube) per annum.

TI Diamond Chains

Automotive chains segment registered a revenue growth of 11%. Sale of Industrial Chains and Fine Blanked Components recorded a volume growth of 3% and 17% respectively over the previous year.

TI Cycles

TI Cycles division registered a volume growth of 6% during the year. Revenue for the year was higher by 11%, driven by higher volume of both Performance and Standard bicycles.

TI Metal Forming (TIMF)

Aided by 31% volume growth in motor casings segment, revenue registered a growth of 9% during the year. The doorframe segment volume was lower by 15% compared to the previous year due to decline in the sale of select models of major car manufacturers.

Shanthi Gears Limited

Shanthi Gears registered a revenue of 165 crore during 2014-15. The net profit for the year was 9 crore against 18 Crore in the previous year. The profit for the year was impacted by adverse market conditions, and certain strategic initiatives to build a more robust future.

Carborundum Universal Limited

Gross sales of Carborundum Universal (CUMI) were impacted by adverse currency fluctuation of its Russian operations. However, the company improved its EBITDA by 6% due to its cost saving initiatives and better performance of Indian operations.

Abrasives

Growth was muted in Abrasive segment and revenue was at 859 crore mainly due to adverse currency movement in VAW Russia. However, Indian operations – Wendt, Sterling Abrasives and CUMI Abrasives delivered healthy growth in revenue.

Ceramics

Ceramics segment recorded a 2% increase in revenue to 482 crore from 471 crore, contributed by higher off-take in Metz cylinders and wear ceramics due to increased project orders especially from power sector. Though the revenues of Joint Venture companies MMTCL and Ciria grew at a healthy pace, this was offset by lower growth in refractory segment.

Electro minerals

Revenues of the Electro minerals division declined by 11% to 727 crore from 810 crore last year. The drop was primarily due to shrinking of South African operations and depreciation of the Rouble. As a part of restructuring operations, the business is winding down the fusion business in Thukela and the bubble production in Foskor, both in South Africa. However, the plants are to be re-sited in India, by integrating them with Indian Electro Minerals operations.

Awards and recognitions:

CUMI’s Sriperumbudur and Maraimalai Nagar plants won TPM Excellence award by Japanese Institute of Plant Maintenance (JIPM) at Japan in March 2015. In March 2015, Wendt India Limited was awarded the India Green Manufacturing Challenge Award by the International Research Institute for Manufacturing in India. In addition to this, Electro Minerals Division was honored for Innovation Excellence by Kerala Management Association as a part of their Annual Management Excellence Awards.

Financial Services Businesses

Cholamandalam Investment and Finance Company Limited

CIFCL’s Assets under Management (AUM) registered a growth of 9% to 25,453 crore during FY2014-15. CIFCL followed a cautious approach towards disbursements, given the prolonged economic slowdown and sluggish vehicle sales. Overall disbursements in FY2014-15 were 12,808 crore, a decline of 2% YoY. Vehicle finance disbursements declined by 8% YoY while Home Equity disbursements grew by 8% YoY.

CIFCL has accelerated NPA recognition at 5 months overdue and increased standard asset provisioning @ 0.30%, a year ahead of the RBI mandate. Post accelerated provisioning, PAT registered a growth of 20% YoY to 435 crore.

Capital adequacy Ratio was comfortable at 21.24% against regulatory requirement of 15%.

Cholamandalam MS General Insurance Company Limited

Profit before tax crossed Rs 200 crore for the first time since inception. Gross Written Premium witnessed a growth of 2% during FY2014-15 at 1890 crore. Chola MS’ growth moderated during the year due to sluggish sales of Motor Vehicles and the slow offtake of commercial projects.

Investment income during the year was 257 crore; Investment book size as of end of March 2015 (incl pool funds) was 3164 crore.

The company took an industry-first technology initiative of launching ‘Motor on the Go’ Mobile application for customers. This app offers a range of benefits like policy details, document wallet, renewal reminder and offers convenient access to a network of preferred garages offering cashless repair facility.

Other Businesses

Parry Agro Industries Limited registered a decline in sales of 19% in 2014-15 due to adverse weather conditions in South India. Martycherra tea estate in Assam was sold during FY15. New Ambadi Estates Private Limited (a Company engaged in rubber plantations) doubled revenue in FY15 and turned profitable during the year, despite depressed rubber prices.

Coromandel Engineering Company Limited (CECL), the Property Development and Civil Construction arm of the group, registered a turnover of 230 Crore, an increase of 16% over FY14. Profitability improved in FY15 backed by cost optimization and higher sales in the Property development division.

Parry Enterprises India Limited (PEIL) revenue remained at FY14 levels and operating profit improved by 6% over FY14. The company launched the online travel portal (www.parryyatra.com). Further, the General Marketing Division (GMD) of the Company has tied up with one of the reputed ingredient company as an authorized dealer during FY15.

Ambadi Enterprises Limited reported marginal growth in revenues of 6% over FY14 levels. The company has been able to increase its presence in key export markets resulting in sales growth. However, rupee appreciation against pound and euro, weakness in textiles division has resulted in the decline in operating profits.

HR Update

People continue to be an important source of competitive advantage for the businesses of the Murugappa Group. The Group embarked on a long-term project in association with Aon Hewitt to enhance employee engagement across all levels. The Group also continued its commitment towards Leadership Development, in the form of Development Centres for individual leaders, following it up with many training programmes and developmental experience opportunities. The Group is focusing its efforts on a range of initiatives to retain and reenergize the home grown talent, while continuing to attract fresh, high quality resources at all levels. At the shop-floor level too, there is added emphasis on skill development initiatives especially in the engineering businesses.

Corporate Social Responsibility

1. As part of the ongoing corporate social responsibility initiatives, the Group continued its contribution to various projects under the AMM Foundation (AMMF) and Shri AMM Murugappa Chettiar Research Centre (MCRC).
   • In this the second year of the AMM Murugappa Chettiar Centenary Scholarships (full fee), the Foundation has supported 40 Murugappa scholars, who will be supported for the entire course fees and hostel fees. These scholars are pursuing their professional degree (33 in Engineering and 7 in Medical) from Government Colleges or Government-aided colleges. 31 of these students are first generation graduates; 25 are from rural background. These students also go through a series of workshop and training programmes to hone their soft skills.
   • The Foundation has supported the education of 210 most deserving economically backward students through the AMM Murugappa Chettiar Centenary Scholarship.
   • The Hospitals run by the AMM Foundation have reached out to over 8 lakh people through its out-patient services and 13,000 patients through the in-patient facilities.
   • Medical services were also provided through the Mobile Health Van to over 19000 people from twelve villages around the EID Parry sugar plant at Haliyal (North Karnataka).
   • The educational institutions (schools and the polytechnic) run by AMM Foundation have catered to the educational needs of around 10,000 students of which 7000 belong to the marginalized group.
2. In addition to the activities of AMM Foundation, the Group companies have continued the development initiatives primarily catering to the communities around the plant locations, in the area of Education and Health. They have also contributed towards improvement of civic facilities (sanitation, drinking water, improvement of local roads etc.) during the year.

Safe Harbor

Some of the statements in this news release that are not historical facts are forward looking statements. These forward looking statements include financial and growth projections as well as statements concerning our plans, strategies, intentions and beliefs concerning our businesses and the markets in which we operate. These statements are based on information currently available to us, and we assume no obligation to update these statements as circumstances change. There are risks and uncertainties that could cause actual events to differ materially from these forward looking statements. These risks include, but are not limited to, the level of the market demand for the products, the highly competitive market for the types of the products that we offer, market condition that would cause customers to reduce their spending for the products, our ability to create, acquire and build new businesses and to grow existing businesses, our ability to attract and retain qualified personnel, currency fluctuations and market conditions in India and elsewhere around the world, and otherwise not specifically mentioned herein but those that are common to industry.