Murugappa Group turnover grows 25% to Rs. 17051 Crores
EBITDA grows 20% to Rs. 2247 Crores; PBT by 20% to Rs. 1657
Market Capitalization grows by 71% to Rs 19194 Crores
Chennai, May 5, 2011: The Murugappa Group recorded 25% growth
in turnover during 2010-11 with most of the key businesses reporting their best
ever performance. The Group’s turnover for 2010-11 was Rs. 17051 Crores
recording an increase of 25% from Rs.13617 Crores of 2009-10. EBITDA grew by 20%
at Rs. 2247 Crores (LY Rs. 1879 Crores) and PBT went up by 20% to Rs.1657 Crores
(Rs. 1382 Crores). The market capitalization of the Group, at the end of the
year, stood at Rs. 19194 Crores, a growth of 71% (LY Rs. 11193 Crores). The
Group incurred a capital expenditure of Rs. 410 Crores during FY2010-11,
excluding acquisitions (LY Rs. 311 Crores). During the year the Group completed
the acquisition of GMR Industries (since renamed Parrys Sugar Industries Ltd.)
at an enterprise value of Rs. 560 Crore.
2010-11 Key Highlights
The summary of Gross Sales and Profitability is presented
Growth over Last Year
Growth over Last Year
Coromandel International Ltd. (Coromandel)
Tube Investments of India Ltd. (TII)
Carborundum Universal Ltd (CUMI)
EID Parry (India) Ltd. (E.I.D.)
Cholamandalam Investment & Finance Company Ltd. (CIFCL)
Cholamandalam MS General Insurance Company Ltd. (CMSGICL)
Strong Growth Across All Sectors
The Indian economy recorded a GDP growth of 8.5% in 2010-11,
on the back of strong and rapid turnaround in the manufacturing sectors and the
monsoon led revival of the agriculture sector which fueled the rural economy.
Overall customer sentiment was upbeat leading to a robust growth in demand.
Over the previous two years, the Murugappa Group had
undertaken various efficiency initiatives and capacity expansion. Combining
these advantages with customer focused product innovation the Group was able to
capitalize on the positive factors.
In 2010-11, the Group moved ahead with its growth plans
leveraging synergies, adjacent business areas and competitive advantages –
both organic and inorganic. In 2010-11, the three large recent acquisitions
namely, Sadashiva Sugars, SEDIS and GMR Industries (since renamed Parrys Sugar
Industries Ltd.) have contributed Rs. 463 Crores to the turnover.
During the year, the Fertilizer business took advantage of
the far reaching Nutrient Based Subsidy (NBS) policy and its core strength of
farmer connect in bringing the right products to market through efficient
The Engineering Businesses of the Group strengthened their
position in the industry riding the upbeat auto market growth. The Sugar
Business focused on reaching new geographies through acquisitions and
consolidated its leadership position in South India.
The Financial Services Companies of the Group became stronger
with Cholamandalam Investment posting a remarkable turnaround.
The Near Term Outlook
For FY 2011-12 the Group has committed long term Capex to the
tune of Rs.1500 crores to further consolidate its position in dominant sectors
with a focus on organic growth. The Group continues to look for opportunities in
the Merger & Acquisitions space to drive synergistic inorganic growth.
The Group is well geared and positioned to achieve the vision
of US $
7.2 billion in turnover by 2013-14.
Sectoral Highlights - FY 2010-11
Key highlights in each sector are presented below:
Strong Growth in Agri Businesses (Coromandel International, E.I.D. Parry and
The Agri businesses - Coromandel International Ltd. (Coromandel),
E.I.D. Parry (India) Ltd. and Parry Agro Industries Ltd., posted strong growth
during the year. The Companies will continue to grow with focus on enhancing
presence in the agri-business chain.
Coromandel International Ltd.
Coromandel is favorably positioned to take advantage of the
new Nutrient Based Subsidy Policy introduced by the Government w.e.f April 1,
2010. The new policy is expected to have far reaching positive impact on
Coromandel. The Company continued to record impressive profit performance
despite increasing trend in raw material prices. The increase in market
penetration and improvement in operational performance has added to the overall
profitability of the Company. The Company’s Profit after Tax increased by 48%
during the year.
In order to meet the market requirements of new and
specialized fertilizer products, the Company entered into a technology tie up
with Shell Research to manufacture and launch Sulphur enhanced fertilizers.
Coromandel’s de-risking strategy of venturing into non-subsidy business such
as Specialty Nutrients has paid rich dividends.
The Company has embarked on scaling up fertilizer capacity to
4 million tons (Current capacity 3 million tons) by 2012-13.
The Specialty Nutrients Division (SND) recorded a
sales growth of 15% during the year. Increasing demand for food security and
stagnating agriculture productivity is expected to drive SND growth in the
future. The Division is already a market leader in selling branded organic
manure which is expected to grow exponentially in the years to come. Deep
penetration in served markets and better product offerings will be the key
differentiators for this business.
The Plant Protection Chemicals Division (Pesticides)
sales grew by 24% during the current year. With the view to meet the market
demand in North India, the Company acquired M/s. Pasura Biotech Private Ltd. The
acquired formulation plant was fully integrated and started yielding results
during the year. The Division is focusing on further strengthening its R&D
team in order to diversify the product portfolio.
The Company’s 423 own retail centers (Mana Gromor
Centers – MGC) continued to improve its performance by being a total
solution provider to the farming community. The Company plans to open 200 more
stores in Karnataka and Andhra Pradesh.
E.I.D. Parry (I) Ltd
E.I.D. Parry registered a 46% growth in turnover.
The Sugar Division acquired 65% equity stake in GMR
Industries (since renamed Parrys Sugar Industries Ltd. - PSIL) that
helped E.I.D. to strengthen its position in Karnataka and gain entry to Andhra
Pradesh. The unit of Sadashiva Sugars Ltd. (SSL) acquired in 2009-10, improved
performance in 2010-11 and capacity expansion plans are on the anvil. With
these acquisitions of SSL and PSIL, EID Parry has emerged as a large integrated
sugar producer, with sugarcane crushing capacity of 32,500 tonnes per day (tpd),
co-generation capacity of 146 megawatts (MW), and distillery capacity of 230
kilolitres per day (klpd). The profitability of this business was impacted due
to depressed sugar prices.
Silk Road Refinery, a JV with Cargill, at Kakinada has
commenced commercial production. However, the plant is running at lower capacity
on account of partial gas allocation.
Bio Products Division registered an impressive growth in
sales of 62% in the Domestic market over the previous year, despite monsoon
failure in some markets. Exports sales also grew by 57% over 2009-2010. Overall,
the Division registered a growth of 59% in revenue over the previous year. The
use of Bio products in the Home & Garden segment in the US is increasing
with sale of Aza products in this segment registering a 43% growth. Going
forward, the Company plans to expand sales both in the domestic and export
markets by entering into new geographies and also by increasing the number of
products in its portfolio.
Parry Nutraceuticals Division increased the sale of
Organic Spirulina & Lycopene health supplements by 17% & 46%
respectively over 2009-10. The Company also launched two new OTC products
– ‘Pro9’ a protein supplement and ‘Pro9 D’ a Diabetic variant during
the year. The Company has successfully obtained the GRAS status for its Algal
Omega3 oil. The US based marketing arm, Valensa International, registered a
growth of 15% over the previous year. Going forward, the Division plans to
launch a number of products in the OTC segment while consolidating its presence
in the ingredients and formulations businesses.
Parry Agro Industries Limited posted a 14% growth in tea
sales volume. However, the lower sales realization from South India restricted
the turnover growth to 5% over 2009-10. The Company focused its efforts in
scaling up the value added products. Its prominent Mayura Mark won the Top Mark
award in Kochi Auction Center for the year 2010.
Stellar performance from the Engineering Businesses
The Engineering businesses of the Group recorded all round
growth and improved their presence in served sectors. (Tube Investments of India
Ltd. and Carborundum Universal Ltd.)
Tube Investments of India Ltd.
Tube Investments of India Ltd. (TII) registered a
superior performance by growing 36% in EBITDA and 35% in turnover over the
TI Cycles (TICI) achieved two milestones this year; one
in terms of having crossed the 4 million mark in volume and another in having
crossed the Rs. 1000 Crores mark in turnover.
A combination of initiatives including increased focus on
special, premium and performance bike segments and promotion of ‘Cycling’
enabled this segment to achieve this performance. The Company launched, in the
premium segment, GT and Mongoose range of bikes. The launch of the country’s
first indigenously designed and produced carbon frame bike under the ‘Montra’
brand, a testimony to its R & D capabilities.
On the customer front, the Company continues to offer a
unique and enjoyable purchase experience through its retail format. As of date,
there are 647 outlets under various formats. The Company continues to maintain a
premium position in the industry through its strong quality and brand image. As
part of its core strategy of ‘selling cycling and not just cycles’, TI
Cycles organized around 5000 events pan-India to promote cycling as a ‘Faster,
Fitter and Greener’ mode of transport.
BSA Motors: The electric scooters market in India saw a
few players, regional as well as importers, exiting the market due to their
inability to provide quality products/services. This dampened the consumer’s
confidence and resulted in the organized market volume dropping to 40,000
numbers from an estimated 60,000 numbers last year. The announcement of
subsidies by the Government coupled with a focused approach in areas of quality
and after sales service should help the division to perform better in the years
Tube Products of India (TPI), a supplier of precision
tubes for the auto industry, also achieved a milestone in having crossed the Rs.
1000 Crores turnover mark. Backed by the booming domestic auto industry, TPI
witnessed a 40% volume growth in value added tubular components, which is
helping the business to lock-in key customers. TPI witnessed a 32% increase in
TI Metal Forming (TIMF), the market leader in car door
frames, recorded a volume growth of 17% over the last year touching the 1
million mark. As part of its diversification strategy, the plant set up in
Uttarakhand for railways segment became fully operational and the revenues from
this segment grew by 42% over the last year.
TIDC India (TIDC), a leading chain manufacturer,
witnessed a volume growth of 30% in automotive chain, higher than the 26% growth
in the two wheeler industry. The business also saw a significant growth in the
exports market at 60% over previous year. The Company is focused on providing
superior quality and technology products to become a leading global player in
Industrial and Engineering Class Chain segment by leveraging from the SEDIS
Carborundum Universal Limited
Carborundum Universal Ltd (CUMI) registered a
consolidated sales growth of 26% during the year. All business segments
registered growth rates in excess of 20%. EBITDA grew by 29% during the year.
Abrasives Division recorded a sales growth of 27% during
the current year. This growth was made possible by the continuing buoyancy in
the Indian and Russian markets and the revival in the US and Canadian markets.
The product mix was oriented towards generating sales from more profitable
segments of the market. Efforts are on to increase the market share in new
customer and market segments by launching new products through technology tie
ups. Profitability increased despite tough competition and increasing inputs
costs due to better price realisation, better product mix and improvement in
The Ceramics business recorded a 22% increase in
sales, from Rs.286 Crores to Rs.348 Crores. Both the high alumina ceramics
business and the super refractories businesses performed well during the year.
Sales of metalized cylinders and wear resistant liners continued to grow at a
brisk pace with important new customers being added. The business continued to
maintain its leading position servicing customers with superior quality and an
in-depth understanding of customer needs. Sales of Super Refractories
increased by 31% compared to last year, driven by the strong off take for fired
and monolithic super refractories in major user industries like carbon black,
cement and steel industries.
Electro Minerals Division (EMD) recorded a sales
growth of 34% during the current year. All three major product groups viz.
silicon carbide, brown fused alumina, white fused alumina did well recording
higher sales. The market for fused minerals continues to be positive with all
user industries doing well. Input cost increases led to pressure on margins. EMD
continues to ensure sustainable growth by focusing more on specialties and value
Volzhsky Abrasive Works - Russia, the world’s 2nd
largest producer of silicon carbide, recorded a jump of 21% in sales of silicon
carbide. Foskor Zirconia Limited, South Africa, made a comeback, with
strong revival in the global steel and minerals markets. The Company’s efforts
to diversify its product range and also its customer base started yielding
benefits in both the subsidiaries.
Financial Services (CIFCL & CMSGICL)
The Financial Services Companies are set on a faster growth
curve (Cholamandalam Investment & Finance Company Ltd. and Cholamandalam MS
General Insurance Co. Ltd.). Cholamandalam unveiled the new brand identity
during the year.
Cholamandalam Investment & Finance Company Ltd. (CIFCL),
has turned in a superior performance and all the Divisions established new
records. During the year, the Company focused on aggressively growing its Asset
Financing business lines, liquidating/collecting its unsecured personal loan
portfolio (which had been a drag on profitability), improving the profitability
and significantly reducing non-performing assets. The efforts have paid off.
Disbursements for the year grew by 48% from Rs.3866 Crores to
Rs.5731 Crores, the highest for the Company since inception. All the existing
business verticals recorded their highest growth / profits since inception. PBT
recorded for the year by the Asset Financing businesses amounted to Rs.347.63
Crores while the losses in the Personal Loan portfolio continued. The Company
has brought down the Personal Loan portfolio to Rs.47 Crores, a mere 1% of the
overall Portfolio as on March 31, 2011, thereby eliminating any further losses
on this account in the year ahead. The non performing assets (NPA) as a % of the
portfolio has been significantly brought down. The Company has expanded its
presence with 226 branches as on March 31, 2011 from 171 branches last year,
most of these branches are in Tier II and Tier III locations across India.
The Securities business (CSEC) posted a profit before tax of
Rs.0.49 Crores as against a profit of Rs.3.48 Crores in the previous year, while
the Distribution / Wealth Management business (CDSL) posted a profit before tax
of Rs.6.90 Crores as against a profit of Rs.6.89 Crores in the previous year.
Cholamandalam Factoring Limited, made a loss before tax of Rs.8.16 Crores as
against a loss of Rs.8.62 Crores in the previous year. The Wealth Management
business is set on a higher growth path and a senior management team with
industry experience has been put in place to explore the cross sell business.
The consolidated PAT for the year was Rs.84.58 Crores as
against a PAT of Rs.52.77 Crores in the previous year.
Cholamandalam MS General Insurance Co. Ltd.
Cholamandalam MS General Insurance Co Ltd. registered a
growth of 23% in Gross Written Premium over 2009-10, in line with the industry
growth of 22%. The year 2010-11 was a watershed year for Chola MS as it was
poised to record its highest operating profit through prudent top line growth
and careful business selection. However, profit before tax was impacted by the
full absorption of motor pool losses as mandated.
In order to enhance the customer reach, the Company focused
on leveraging the tie-up with the channel partners to augment the volumes and
increase penetration. Currently, the firm is serving 1.5 mn customers as
compared to 1.2 mn during previous year.
The Company is also planning to enhance its rural health
insurance business and will be leveraging the presence of other Murugappa Group
Companies in the rural and agricultural sectors. In order to support its
expansion plan, the Company is gearing up to launch six health products in the
coming few quarters. The Company is also planning to launch one home product.
With the launch of the new Chola identity, Chola MS unveiled
a new brand identity which symbolizes dynamism, solidity, scale and stability
and stands for Trust, Transparency and Technology.
During the year, the Company has made substantial efforts in
enhancing technology to offer convenience to customers
Engineering Company Ltd. (CEC), the
Property Development and Civil Construction business of the Group, registered
the top line growth of 26% over 2009-10. During the year, the Company expanded
the base in Orissa for Civil construction and has plans to expand to Gujarat and
Maharashtra in the coming years. In Property Development, the Company has three
projects under development in Coimbatore and Chennai. Overall, the outlook for
the Company is optimistic and is expected to grow aggressively in the coming
Parry Enterprise India Ltd. (PEIL) witnessed
top line growth across all its Divisions. Its General Marketing Division forayed
into trading of palm oil in Tamil Nadu and also established operations in
Eastern region for trading food ingredients. It set up retail packaged water
plant with a capacity of 24000 ltrs per month during the year. It has plans to
expand the capacity in Packaged Water division in the coming years. The Polynet
division is expanding its capacity in the knitted line to cater to the growing
demand for Agro shading nets. The Travel division of the Company is focusing on
enhancing the allied services to the customers. The Flexi Packaging division of
the Company started focusing on Laminates and added major customers during the
Ambadi Enterprises Ltd. and its subsidiary
Parry Murray, the high end furnishing and floor covering business of the Group
which majorly exports to European and American markets, performed fairly well in
2010-11 considering the slow recovery in overseas markets. The Company is
strengthening the design team to offer break-through products. It has plans to
focus more on retail in the coming years.
Laserwords, the IT/ ITES Company of the
Group , improved its PBT despite an impact on sales revenues by continued
sluggishness in the US Market. The Company consolidated its position by
restructuring the US business and a closer integration with Indian operations.
There is a marked improvement in the operational efficiencies brought about by
deploying better technology and effective cost management. Continued investments
in software capabilities have enabled the company to launch innovative services
and products for the existing and new clientele.
Infrastructure Company Pvt Limited (Parry Infra),
a 100% subsidiary company of E.I.D. Parry (India) LTD., is pursuing in creating
value for the surplus properties of the Group by either outright Sale or
Property Development. It has also developed a Food Processing SEZ at Kakinada,
Andhra Pradesh. Currently, Parry Infra is developing a premium residential
apartment ‘Centralis’ in Boat Club, Chennai, which is expected to be
completed in 24 months.
The Group has embarked on a dynamic leadership and
development journey in line with the Group’s vision for faster growth. Towards
this, the Group will continue to focus on two key HR initiatives - building a
robust talent & leadership pipeline and enhancing people productivity. The
Murugappa group also partners with world-class universities such as Harvard,
Wharton, INSEAD, LBS, IMD and IIM etc., to hone the business and leadership
acumen of its employees through customized courses.
Corporate Social Responsibility
As part of the Group’s ongoing corporate social
responsibility initiatives, Rs. 6.75 Crores was contributed last year to the
AMM Foundation (AMMF) and Shri AMM Murugappa Chettiar Research Centre (MCRC).
The Hospitals run by the AMM foundation has
reached out to over 8.5 lakh people through its out-patient services and
13,500 patients through its in-patient facilities.
Through the A.M.M Murugappa Chettiar Centenary
Scholarship, the Foundation has given scholarship to 658 most deserving poor
students to pursue their education, including 249 in professional colleges, in
About the Murugappa Group
Founded in 1900, the Rs. 17051 Crores (USD 3.8 billion)
Murugappa Group is one of India's leading business conglomerates. The Group has
29 businesses including seven listed Companies actively traded in NSE & BSE.
Headquartered in Chennai, the major Companies of the Group include Carborundum
Universal Ltd., Cholamandalam Investment and Finance Company Ltd., Cholamandalam
MS General Insurance Company Ltd., Coromandel International Ltd., Coromandel
Engineering Company Ltd., E.I.D. Parry (India) Ltd., Parry Agro Industries Ltd.,
Tube Investments of India Ltd., and Wendt (India) Ltd.
Market leaders in served segments including Abrasives, Auto
Components, Cycles, Sugar, Farm Inputs, Fertilizers, Plantations, Construction,
Bio-products and Nutraceuticals, the Group has forged strong joint venture
alliances with leading international companies like Mitsui Sumitomo, Foskor,
Cargill, Groupe Chimique Tunisien, Winterthur Technology Group and Morgan
Crucible. The Group has a wide geographical presence panning 13 states in India
and 5 continents.
Renowned brands like BSA, Hercules, Ballmaster, Ajax, Parry’s,
Gromor and Paramfos are from the Murugappa stable. The organization fosters an
environment of professionalism and has a workforce of over 32,000 employees. For
more details, visit www.murugappa.com.
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.