a student, forty eight year old chairman of Carborundum
Universal was a sprint champion. Venkatachari Jagannathan
relates how MM Murugappan is still a champion
Lawrence School, Lovedale, Ooty he was a sprint champion.
He used to fly out like an arrow from a bow to finish
ahead of others, recalls one of his schoolmates.
sprinter boy MM Murugappan is the forty eight year old
chairman of the Rs314 crore turnover Carborundum Universal
Limited. And it goes without saying that the company -
also known as Cumi- is far ahead of the others in the
race for leadership in the Rs650 crore domestic abrasive
Indian abrasive industry has only two big players
Carborundum Universal, Grindwell Norton Limited (turnover
Rs254.5 crore). Smaller players service nearly thirty
per cent of the market and imports account for around
these years we have been quietly successful and have consolidated
our operations. Today the business is poised in an interesting
fashion. And now it is time to expand beyond our shores,"
Universal is in three business segments viz abrasives,
bonded and coated; ceramics, industrial and super refractories
and electrominerals, raw materials for the abrasives.
users of abrasives range from simple painters using sand
paper to industries like automobiles, white goods, construction
using grinding wheels, scrubber pads etc. The user industries
for industrial ceramics are coal washeries, ceramic tiles,
power distribution equipments and organisations like the
Indian Space Research Organisation.
to Murugappan, the expansion would come organically or
even from acquisitions. Undoubtedly acquisitions would
be more exciting for the company that is celebrating its
managing director Ramesh Agarwal, "After 1978 every
two years the company is in the news either for setting
up new plants or entering into joint ventures or acquiring
the company's existence into two phases, the backward
integration phase from 1954 to 1979 and technology absorption/strategic
partnerships and business consolidation phase from 1979-2004,
Agarwal says the company is planning to do investments
in technology and accelerated growth.
is apt to do that as the domestic market is growing and
the global market is also looking at Asian countries as
their sourcing point.
the abrasives industry is in a consolidation phase but
that is not happening here, except for the acquisition
of Cutfast Abrasives Tools Limited, Chennai and Sterling
Abrasives Limited, Ahmedabad by Carborundum Universal
in India in 1996.
company has chalked out a competitive strategy for all
its business units - abrasives, ceramics and electrominerals
which includes acquisitions both overseas and domestic.
"We are looking for takeovers in Europe," says
addition Carborundum Universal is also planning to expand
its marketing set up in Europe, Asia and the Middle East.
Setting up a manufacturing unit in Dubai and China is
also under consideration.
Murugappan, "We are the only Indian company making
inroads in the global abrasives and ceramics market through
a strong foothold in Australia (through CUMI Australia)
and the United States (CUMI America)."
company earns around Rs30 crore from exports and the target
is to increase this to 20 per cent of the turnover.
plans apart, the other strategies are: investment in new
product development in ceramics and abrasives; going up
in the product value chain; unlocking capacity by debottlenecking
the plants and right/down sizing work force.
of the plans have been implemented. For instance in the
case of electrominerals division, Carborundum Universal
has exited some of the low value products. The division
also right sized its work force. Helping the division
is the increase in price of imported brown fused aluminium
oxide thereby strengthening the domestic position. During
the first quarter of this fiscal, the eletrominerals division
registered an impressive growth of 26 per cent.
the abrasives division apart from product rationalisation,
manufacturing was also consolidated. For instance manufacturing
of all the polymer-based products shifted to Chennai.
Similarly the manufacturing of all thin wheel products
was consolidated at another city plant.
the case of investments, Agarwal says that the plan is
to put in Rs25 crore in the plants this year and a similar
sum the next year. "The funds will be generated from
internal accruals." A sizeable chunk of the investment,
around 8-10 crore, will go into the company's Hosur plant
that manufacturers abrasives and ceramics.
at the market place the competition is tough, a series
of measures initiated by the company last fiscal like
matching the competition's price, enhancing the product
offerings and customer loyalty programmes, like the introduction
of insurance scheme has helped the company.
market demand from industries like automobile, auto components
and construction have helped Carborundum Universal close
the first quarter of this fiscal with impressive numbers.
The abrasives and ceramics divisions logged 28 per cent
and 14 per cent sales growth.
company posted an after tax profit of Rs7.3 crore on a
turnover of Rs76 crore. Deft management of finances has
reduced the interest payout considerably to Rs61 lakh.
Last fiscal the interest payout was Rs4.31 crore.
to Muruguppan, Carborundum Universal apart from selling
products also services the clients of its partners in
other parts of the world.
that as it may, what is clear is that the sprinter has
changed his pace in running the business. For him it is
now a marathon with the track spanning over different