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The Murugappa Group, a leading business house in South India, has reported a modest growth in the topline for FY20 after sustaining double-digit growth in the previous two years, while its bottomline saw a marginal increase.
The group reported a turnover of ₹38,105 crore for FY20, up 3.3 per cent from ₹36,890 crore in FY19.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 3.8 per cent at ₹5,347 crore (₹5,152 crore).
Profit after tax (PAT) stood at ₹2,946 crore (₹2,866 crore), an increase of 2.8 per cent. PAT excluding a special provision of Cholamandalam Investment & Finance Co Ltd and Chola MS General Insurance Co Ltd grew 20.4 per cent at ₹3,489 crore.
The group’s engineering business faced challenges as Carborundum Universal Ltd and Tube Investments of India Ltd reported a sales decline of 3.2 per cent (at ₹2,569 crore) and 17.2 per cent (at ₹4,530 crore), respectively.
NBFC revenue up
In the financial services businesses, NBFC Cholamandalam Investment & Finance Co Ltd registered an about 23 per cent increase in revenue at ₹8,713 crore, while its insurance arm Cholamandalam MS General Insurance reported a marginal decline (0.7 per cent) at ₹4,398 crore.
In the agriculture business, Coromandel’s revenue fell marginally (0.5 per cent) at ₹13.091 crore, while EID Parry’s topline grew about 21 per cent, at ₹3,967 crore.
“Some of our companies and SBUs have managed to buck the industry trends to achieve higher sales and profitability, while some recorded higher profitability even on a flat or lower sales and a few businesses were impacted on both top-line and profitability. There was a strong focus on improving cash flows and reducing debt. We have also been prudent in making suitable provisions arising out of economic conditions and the impact of the pandemic,” said MM Murugappan, Group Executive Chairman.
The group’s manufacturing entities generated a free cash flow of ₹1,903 crore (previous year, negative ₹30 crore), which stood at 119 per cent of PAT, according to a group statement.
Group manufacturing entities showed an improvement in total debt-equity from 0.74 times as on March 31, 2019 to 0.47 times as on March 31, 2020.
In FY21, EID Parry has sold a 2 per cent stake in its subsidiary, Coromandel International Ltd, to a value of ₹368 crore, which will be utilised towards a reduction of debt.
Capex plan
As against the planned capex of ₹2,000 crore for FY19, the group spent about ₹1,610 crore with ₹1,009 crore invested during FY20.
Market capitalisation of the listed companies of the group was at ₹46,683 crore as of March 31, 2020, down from ₹66,000 crore as of March 31, 2019 and ₹67,117 crore as of March 31, 2018.
“With the economy locked down for almost the entire first quarter of FY21, most of the businesses in the group are gearing up to face much tougher challenges in the months ahead. Cash conservation, cost management, technology, digital capability and agility are the key areas that we are focussing on to drive performance,” said Murugappan.
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