The diversified Chennai-based Murugappa Group of Industries, which crossed Rs15,500 crore in turnover last fiscal, is planning to invest Rs586 crore in 2009-10 through its group companies. Speaking to reporters on Wednesday, group vice-chairman A Vellayan, said that the company had invested Rs850 crore in 2008-09 and was planning raise this to Rs586 crore in 2009-10.

The proposed investments include Rs146 crore in Tube Investments of India (TII), which in turn will invest in setting up a metal forming manufacturing unit at Uttarakhand with an investment of Rs90 crore.

Similarly the group would invest Rs115 crore in its company EID Parry (India), Rs180 crore in Coromandel Fertilisers Ltd, Rs 80 crore in Carborundum Universal and Rs65 crore in other group companies.

N Srinivasan, finance director for the group, said that the proposed investment will be funded through debt and equity. Speaking about the new metal forming plant in Uttarakhand, which will be set up by TI Metal Forming, Srinivasan said it would cater for railway wagon segment.

The plant would commence operation after an year, and the company is expecting Rs200 crore to Rs300 crore revenue from it in the first year of operation.

The group reported a profit of Rs1,058 crore in the last fiscal. Commenting about the results, Vellayan said company's net profit increased to Rs1,482 crore in 2008-09 as compared to Rs585 crore a year ago. He noted that the 2008-09 profits include Rs750 crore obtained from selling the group's 47 per cent stake in Parryware Roca Pvt Ltd last year.

The Group's turnover increased by 63.3 per cent to Rs15,646 crore as compared to Rs9,582 crore a year ago.

Vellayan added that in 2009-10 the company would look to strengthen its agri-business by acquiring new tea estates in the northeast and would also increase its sugar business. The global meltdown had affected the group only to a certain extent as it had diversified its operations into several sectors, he said.

The group's bluechip company, EID Parry reported sales of Rs782 crore against Rs212 crore in the previous year, he said, adding this was due to good market prices for sugar. The company's mega sugar plant with a capacity of 600,000 tonnes at Kakinada in Andhra Pradesh would be commissioned next month and most of the production would be for exports.

The plant is located in the special export promotion zone developed by the group on a 250 acre site. After allocating 50 acres for the plant, the group would allot land for the food processing industry in the zone, he added.

The year saw commodities prices reaching their peak and most of the group's businesses were dependent on inputs such as steel, phosphoric acid and alumina grains which were impacted. But the impact could be minimised with the diversified nature of businesses within the group and well thought-out geographical spread.

The group maintained its pace of investment with a capital expenditure of Rs. 850 crore during 2008-09 against Rs. 580 crore in the previous year. The original investment plan of Rs. 1,300 crore was pruned due to slowdown in the global economy.

Its agri businesses, the major contributors being Coromandel Fertilizers (CFL) and EID Parry (India) and Parry Agro Industries, were not impacted by the economic slowdown, Mr. Vellayan said. CFL, which contributed Rs. 9,422 crore and Rs. 85 crore to sales and profitability of the group, operated under the new subsidy policy announced last year, marked by wide fluctuations in input costs. But judiciously crafted strategy of backward integration has paid off well with efficient sourcing of raw materials.

Among the group's other companies, TI Cycles has entered the super premium bicycles category by partnering international brands Bianchi and Cannondale, while Chola MS Insurance is firming up Bancassurance tie-ups and has entered into a five-year agreement with IndusInd Bank.