The Hindu Business Line : Murugappa group plans to invest Rs 650 cr in capacity expansion

Among the larger investments proposed are the Rs 75-crore project by Carborundum Universal to manufacture coated abrasives at Sriperumbudur and a Rs 60-crore project by Parryware division of EID Parry to make sanitarywares near Erode.

At a press conference here, the Director-External Relations, Murugappa Group, Mr A. Vellayan, said that the group proposed to convert the three sugar units at Pudukottai, Pettavaithalia and Pugalur into fully integrated plants by putting up cogeneration and distillery units.

Also, the group will spend around Rs 50 crore on the acquisition of the sugar plant of New Horizon Mills, Pondicherry.

Mr Vellayan said that in 2004-05, the Murugappa Group's turnover crossed Rs 6,250 crore, or about $1.44 billion. The group's profit before tax was Rs 550 crore, 49 per cent more than the previous year. Total exports at Rs 450 crore represented 5 per cent of turnover. In 2003-04, exports amounted to Rs 250 crore.

He said that all the major businesses of the group had a good year. Fertiliser production crossed 2 million tonnes and the group sold 3 lakh tonnes of sugar, including import of 92,000 tonnes raw sugar for processing.

Cholamandalam Insurance earned a premium income of Rs 169 crore, compared with Rs 97 crore in the previous year and it expected to break even this year.

Answering a question, Mr Vellayan said that there was no plan to convert Cholamandalam Investments and Finance Company, the group's NBFC, into a bank. To the Murugappa Group, its fertiliser and sugar businesses, apart from sanitaryware, would be the core areas and it has decided that there would be "no more increase in business clutter," he said.

Fertiliser business contributed about 45 per cent of its turnover and 22 per cent of the profitability. The business assistance agreement with the South African fertiliser company, Foskor Ltd, has significantly strengthened its overseas presence. Its focus in the current year in fertiliser business would be on strengthening raw material linkages particularly phosphoric acid and ammonia.

Last financial year was a satisfactory one for its sugar mill operations, with EID Parry selling about 3 lakh tonnes of sugar. It contributed about 12 per cent to the group's turnover and accounted for 23 per cent of the profitability.

The company had focused on capacity creation and production of value-added products such as refined sugar for the retail markets and desulphonated sugar for soft drink manufacturers.

EID Parry can sell about four lakh tonnes sugar in 2005-06 and the addition of a 2,500 tonne a day mill, that of New Horizon Sugars in Pondicherry, close to its factory at Nellikuppam would add to its strength. The company plans to invest in a distillery at this facility.

The bioproducts and neutraceutical businesses have also turned positive, Mr Vellayan said. These are still in the `investment phase' with the company looking at these businesses as major areas of growth.

Its neem-based pesticide business is expected to grow with the company looking at bringing 5,000 acres of land under neem cultivation in Andhra Pradesh.

The neem-based pesticide has been registered in over 15 countries including in Europe, the US and South America and its needs to increase its volume, he said.

Its neutraceuticals business, production of organically cultured spirulina, is set to grow significantly over the next 3-4 years, he said.

Though the company will not involve in retail sales of spirulina, in the last few months, it has tied up with marketers in the US, New Zealand and Germany to whom it would supply organically cultured spirulina as a raw material.

The turnover of this business could grow to about Rs 70 crore from the present Rs 15 crore. The company is planning to double its production of organically cultured spirulina, Mr Vellayan said.

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