labels: eid parry, coromandel fertilisers, industry - general, tube investments, murugappa group, parryware, carborundum universal
Murugappa Group to invest Rs880 crore news
08 May 2006

Chennai: The city-based $1.6-billion turnover Murugappa group has drawn up plans to invest Rs880 crore this year. This is nearly double of what the group units invested last year, (Rs430 crore) though lower than what was actually announced. Interestingly during FY 2004 the group invested Rs260 crore in expanding its units.

The bulk of the fresh investments will be by two constituents of the group viz Tube Investments of India Limited and EID Parry (India) Limited. Both companies will invest around Rs300 crore each.

The other companies that would pump in money are: Rs130 crore by Carborundum Universal Limited (CUMI), Rs40 crore by Coromandel Fertilisers Limited, Rs30 crore by Godavari Fertilisers, Rs25 crore by Parryware Glamourooms Private Limited, while other companies would pump in Rs55 crore.

A major portion of the proposed investment will be made from the accumulated reserves of each company and the balance through debt. Three companies - CUMI, EID Parry and Coromandel Fertilisers are planning to take the external commercial borrowing (ECB) route.

The abrasives major CUMI initially toyed with the idea of a foreign currency convertible bond (FCCB) but later settled in favour of a $20 million ECB.

The group has chalked out ambitious plans and funds are required for which it requires funding. For instance EID Parry has promoted two joint ventures - Parryware Glamourooms and Parrys Sugars Refineries Pvt Ltd - and the company itself is implementing huge expansion programme at an outlay of Rs850 crore.

A VellayanAccording to external relations director, A Vellayan, the steel tubes business of Tube Investments will be expanded by 75 per cent and the abrasives capacity of CUMI by 65 per cent. "Tube Investments is putting up a cold drawn welded tube plant in China at an outlay of Rs28 crore. The plant capacity will be 12,000 tonne per annum (tpa)."

The company proposes to set up a manufacturing facility near Pune for supplying doorframes to a new passenger vehicle to be launched. As an initiative towards enhancing its metal forming capabilities, a state-of-the-art hydro-forming facility has been commissioned near Chennai to cater to the auto components requirements involving intricate designs.

In fact, the company has started development works for new cars for Tata Motors, Maruti Udyog and Hyundai.

"Upstream integration will continue to be a major focus in the fertiliser and abrasives businesses, while building integrated complexes (sugar, refinery, ethanol and power co-generation) will be the future in the sugar business."

It is learnt the group's fertiliser units are planning more international partnerships-in Africa and Middle East, mainly to tie up sources for ammonia.

FY 2006 a satisfactory one
The year 2005-06 ended on a satisfactory note for the Murugappa Group. The group turnover increased by 17 per cent to Rs7,340 crore ($1.6 billion). The net profit before tax went up by 45 per cent to Rs800 crore. The combined market capitalisation of the group's listed companies rose by 136 per cent to $2 billion.

However in the case of individual units, except for Tube Investments and Chola DBS Finance Limited that registered 1 per cent and 2 per cent top line growth respectively, the other businesses logged a growth rate ranging from 19 per cent to 28 per cent. (See table, The group in a nutshell)

Speaking on the performance of Tube Investments, Vellayan says, "The bicycle market went down. Now the focus is on different product segments and retailing." The company is also going slow on its steel project in Orissa. "We want clarity on the mining rights."

The bicycle division earned Rs465.86 crore during FY 2006 as against Rs482.40 crore the previous year. The engineering and metal-formed product division contributed Rs759.36 crore and Rs269.18 crore last fiscal as against Rs754.35 crore and Rs253.69 crore the previous year.

The business team is implementing a realignment and consolidation of production facilities, which, apart from reducing operating cost, would improve operational flexibility.

For Chola DBS, the spread in auto financing business has come down. The company has now entered the personal finance segment." (See )

Table: The group in a nutshell
Rs.in crore
Company FY2006 Gross Sales Growth in percentage FY 2006 PAT Growth in percentage Capex for FY2006
EID Parry
978
28
116
11
300
Tube Investments
1584
1
183
86
300
Cumi
424
19
77
99
130
Coromandel Fertilisers
1878
21
84
21
40
Godavari Fertilisers
1518
27
26
53
30
Chola DBS
220
2
35
3
-
Others
740
22
94
60
80
Total
7340
17
615
46
880

 

also see : Murugappa Group's global ambition
Investment sale increases Chola DBS top and bottom lines for FY 2006

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Murugappa Group to invest Rs880 crore