Even as it decides to adopt a cautious ‘wait and watch’ position in terms of capex and investment, the Murugappa Group (Gross sales: Rs.22,466 crore in 2012-13) has asserted that the current fiscal could be a consolidation year for it.
Addressing a press conference here on Friday, Chairman A. Vellayan felt that the group could grow in excess of 20 per cent (assuming a gross domestic product (GDP) growth of 6 per cent) this year. His confidence stemmed from a host of positive factors. For one, he felt that last year’s acquisitions could be paying off this fiscal. For another, he was encouraged by the prospects of a normal monsoon. Also, the sugar decontrol came as a huge positive for the group.
Fielding a range of questions, he admitted that the external factors had thrown a spanner in the group’s performance. Some of the bigger entities under the group such as Coromandel International, EID Parry, Tube Investments and Carborundum Universal had reported decline in gross sales and EBIDTA (earnings before interest, depreciation, tax and amortisation) during 2012-13. Financial services business comprising Cholamandalam Investment and Chola MS General Insurance, however, had consolidated their positions, and reported aggressive growth and profitability. Though 2012-13 was ‘a year of mixed performance’, he pointed out that the group had invested Rs.850 crore in acquisitions out of a total capex programme of Rs.1,750 crore for the year.
On a lighter note, he said that the group had indeed, though by default, grown three times the GDP, which had decelerated over the last three years. To a query, he said he was seeing a marked change on the agri-business front, and hoped for a positive growth in fertilizer and sugar. He was confident that the financial services business would grow well. He was, however, not optimistic on the engineering front what with the drop in two-wheeler sales, and no sign of pick up in exports.
Mr. Vellayan said the group had no option but to buy out Cargill in Silk Road Sugar Private Ltd. as the partner ran out of patience in the wake of non-availability of gas. In the changed context, he admitted that the pay-back period for the project would be stretched. The refinery would have the same elements as conceived earlier sans the co-gen component, he added. The project cost had since escalated to Rs.470 crore from Rs.320 crore, he said.
