Chennai: The abrasives major Carborundum Universal Limited (CUMI) will be remitting $4.9 million to China towards 49 per cent stake in Jingri Industrial Diamond Company this quarter. After the acquisition of the shares, the Chinese company will be renamed Jingri CUMI Super Hard Metal Company Limited. Jingri manufactures synthetic diamond and has an installed capacity of nearly 120 million carat of diamonds
According to CUMI's chief financial officer N Srinivasan, the investment amount will be used to set up a new 2,000 tonne per annum abrasive plant in China.
In India, CUMI hopes to achieve its capex target of Rs135 crore this fiscal. Already Rs23 crore has gone into various expansion projects. To finance the expansion projects the company has raised $20 million external commercial borrowing (ECB) during the first quarter of this fiscal.
For the first three months, the company has posted a turnover of Rs114 crore (after deducting the inter-segmental sales) and a net profit of Rs13 crore showing a growth of 29 per cent and 46 per cent respectively over the corresponding period of the previous year. The division wise turnover is as follows: abrasives Rs80.23 crore, ceramics Rs22.92 crore and electro minerals Rs19 crore.
Interestingly the increase in top line is not matched by corresponding hike under the expense head. "The fixed costs were contained by growing the top line," says Srinivasan. Further the process improvement resulted in lower energy and raw material cost.
A new range of thin wheels, high-end white crank wheels and SG Centreless wheels are some of the new offerings to the market. Exports too picked up this year after the company sorted out some marketing issues in the North American market.
The quarter under review also saw the electro the minerals division developing new markets. All these years the division largely sold its products to the company's two other divisions - abrasives and ceramics.
Part of the Murugappa group, CUMI hopes to maintain the first quarter growth trend through out the year.