The Hindu Business Line : Murugappa Group posts Rs 649-cr net for 2006-07

Mr A. Vellayan (left), Vice-Chairman & Director-Strategy, Murugappa Corporate Board; and Mr N. Srinivasan, Director Finance, at a press conference in Chennai on Tuesday. - Bijoy Ghosh

Chennai May 8 The Murugappa Group has clocked total turnover of Rs 8,446 crore and profit before tax of Rs 649 crore for 2006-07.

Speaking to newspersons, Mr A. Vellayan, Vice-Chairman, said: "I am not totally satisfied with the topline growth of 15 per cent. Ideally I would have liked to grow at twice that of GDP growth."

The Group has interests in fertilisers, sugar, tubes, abrasives and financial services.

The performance of the fertilisers and sugar businesses have suffered due to adverse policies of the Central and State Governments, he added.

"The Centre delays paying out fertiliser subsidy and also does not permit hike in retail price of fertilisers. Subsidy dues were been building up from November 2006 and were Rs 500-600 crore."

The subsidy system itself has to be revamped to ensure that farmers use balanced nutrient inputs, including micronutrients, instead of overusing urea, as is happening now, he said.

Sugar, too, has been affected by Government policies, he added.

Companies in Tamil Nadu were particularly affected because the State has not supported the industry.

Maharashtra, Karnataka and Andhra Pradesh have done away with purchase tax on sugarcane, announced sugarcane transport and sugar export subsidies, along with encouraging ethanol programme.

Tamil Nadu has not helped the ethanol programme take off and exercises a strong hold over the molasses business, he said.

EID Parry, the Group company operating the sugar mills, hopes to bring down sugar's contribution to the business by concentrating on by-products and focusing on value-added sugar products.

Sugar contributes to about 40 per cent of its turnover.

The plan is to bring this down to about 25 per cent in two years by growing in the areas of cogeneration, distillery and branding.

The sale of branded and packaged sugar, which gives the company an additional Re 1 per kg margin compared to commodity sales, would be increased.

According to Mr Vellayan, there is scope for acquisition and investment in bicycles and chains, its other areas of operations.

A corporate cell within the group continuously watches the trends independently to formulate strategies, he added.

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