BackMurugappa Group profit jumps 32% in FY15 to Rs1,283 crore
General insurance and non-banking finance were the major contributors to profits, say group officials
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Murugappa Group on Thursday said revenue in 2014-15 rose 11% to ₹ 26,926 crore from a year ago, while net profit rose 32% to ₹ 1,283 crore from ₹ 971 crore a year ago.
The Chennai-based Murugappa Group includes 29 companies, operating in areas ranging from abrasives to tea. General insurance and non-banking finance were the major contributors to the group’s profits, followed by the sugar business, group officials said at a press conference.
Some of the prominent companies of the Murugappa Group include Carborundum Universal Ltd, Coromandel International Ltd, Tube Investments of India Ltd and EID Parry India Ltd.
The group said it plans to enter two new businesses, but did not mention the sectors. It also announced that it would look for opportunities related to its existing businesses in agriculture, engineering and financial services.
“The Murugappa Group has consolidated its position in its core business—fertilizers and engineering. However, it has not entered into new business unrelated to their businesses—agriculture, engineering and financial services—for over a decade now," said an investment banker who tracks the group, but did not want to be identified.
It was a difficult year and the environment was not highly conducive, forcing the group to focus on better operating efficiency, lower debt and consolidation of manufacturing capacities, said M.M. Murugappan, group vice-chairman.
Group chairman A. Vellayan had stepped down on 23 May after the market regulator charged him with insider trading. He is accused of passing on information on the acquisition of Sabero Organics Gujarat Ltd by Coromandel International to some individuals.
Murugappa Group is also looking to improve lending to farmers in Andhra Pradesh and Karnataka and cross-selling products. The group has no plan to enter the e-commerce or start-up space.
The group’s outlook for the current fiscal is more positive.
“Our businesses are sensitive to the vagaries of weather and growth in infrastructure sector, but our aspiration is to grow higher than 11%," said 59-year-old Murugappan.
The group also exited its abrasives business in South Africa, citing high power costs and labour issues.
“It was a waste in the sense that we entered South Africa for raw materials," said Murugappan. It also became difficult to do business for the long term, he added. Loss on closure of Foskor Zirconia, a South African subsidiary, was $4 million. The assets have been moved to its facility in Kerala.
The group plans to invest ₹ 250 crore this financial year, similar to last year’s capital expenditure. Of this, ₹ 95 core will go into a cycle factory in Punjab to make 1.5 million cycles. Other investments will go towards new facilities and technologies.
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