Declaring that it is “well-geared and positioned” to scale a turnover Rs.35,000 crore in 2013-14, the Murugappa group, on Thursday, announced that it would be making a capital expenditure of Rs.1,000 crore in the current financial year.
The total spend this year by the group would also include the Rs.368 crore that it could not use up in 2011-12 due to assorted reasons. The group had planned a Rs.1,000-crore capex programme last fiscal.
Addressing presspersons here, Executive Chairman of the group A. Vellayan said a part of the capital expenditure would be towards completion of projects initiated in the previous year. N. Srinivasan, Director (Finance) of the group, said that the entire capex programme would be met through internal resources. “If a need arises, the group will prefer external commercial borrowings as it does not expect the domestic rates to come down,” he added. Mr. Srinivasan said the group's debt-equity ratio was at 0.24, offering scope for a considerable leverage.
Giving details of the performance of the group in 2011-12, Mr. Vellayan said the turnover of Rs.22,314 crore was all-time high, a growth of 31 per cent. The profit after tax was Rs.1,304 crore (Rs.1,182 crore).
Mr. Vellayan said he expected 2012-13 to be a “very challenging year” with policy initiatives expected to slow down in the run up to the 2014 general elections.
Noting that the group would be approaching the year confidently but with a great deal of caution, he said the impact of the cost push as a result of an increase in the prices of raw materials, power, finance and transportation costs would be mainly felt by the engineering companies.
Mr. Vellayan said “our portfolio mirrors the economy.” Hence, any slowdown in the GDP would have an impact on the group's business. Nevertheless, he was confident that the group's turnover would grow three times that of the GDP (gross domestic product).
Silk Road Refinery
On the joint venture with Cargill for the Silk Road Refinery in Kakinada, Mr. Srinivasan said that it had been shut for the last 6-7 months as it did not get the gas. Though the Empowered Group of Ministers had cleared the gas allocation, the project, envisaged with an investment of Rs.500 crore, could not move forward.
The promoters had now decided to shift to coal, which would involve an additional investment of Rs.60-70 crore So far, the project had seen investment of around Rs.200 crore. The original plan to have a power plant as part of the project.
Keywords: Murugappa group annual results