Fertilizer, engineering businesses can be key growth areas

The Murugappa Group has set itself a turnover of target of over $7 billion to be hit by 2013-14. At present, the group has a turnover of $3.03 billion.

Addressing a press conference here on Thursday, A. Vellayan, Executive Chairman of the group, said each business unit of the group had worked out a strategy to grow at 24 per cent annually. With the country's GDP (gross domestic product) projected to grow at 8 per cent, Mr. Vellayan felt that the sales target was achievable. He said all the business units were looking to grow three times the GDP.

The group's turnover for 2009-10 dropped by 14 per cent from Rs. 15,907 crore to Rs. 13,617 crore, mainly due to a sharp drop in the prices of key inputs for Coromandel International Ltd., the Executive Chairman said. Coromandel reported a 32 per cent decline in its turnover at Rs. 6,431 crore, the biggest sales drop among the group companies.

Notwithstanding the setback on the turnover front, the Murugappa Group reported a 22 per cent jump in EBIDTA (earnings before interest, depreciation, tax and amortisation) at Rs. 1,879 crore against Rs. 1,535 crore. The profit before tax (excluding extraordinary income) of the group grew by 29 per cent to Rs. 1,354 crore from Rs. 1,054 crore.

Mr. Vellayan said that the group was able to ride the wave of economic rebound powered by enterprise-wide efficiency. EID Parry, he said, had increased its daily cane crushing capacity to 32,500 tonnes (along with 150 MW co-generation power and 230 kl alcohol) by acquiring Sadashiva Sugars in Karnataka and GMR Industries, which have plants in Andhra Pradesh and Karnataka. The sugar refinery at Kakinada was expected to start operations this month, he added.

Besides sugar, Mr. Vellayan indicated that fertilizers and engineering could be key growth areas for the group in the coming years. “With favourable growth outlook for auto and commercial vehicles sector, we see a growth potential of 20 per cent,” said N. Srinivasan, Director (Finance), Murugappa Group.

Mr. Vellayan admitted that the group's foray into China was not a good experience. While the group closed its tube operations, it pulled out of the abrasive joint venture in China.

On the challenges being faced on the HR front in the wake of entry of MNCs and big industrial houses from across the country into Tamil Nadu, he said “We have seven home grown CEOs heading the group companies. The management development centre conducts leadership and business development programmes.”

Keywords: Murugappa Group

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