Murugappa group, a leading business house in south India, is going ahead with capacity expansion plans of ₹1,300 crore across companies during the current fiscal to take advantage of the growth opportunities even as it treads a cautious path.
After achieving a double digit growth in 2018-19, the group is cautiously optimistic about the outlook in this fiscal.
Challenges across biz
“Aspiration is always there for double digit growth and certainly we are planning on that basis. But we are clearly seeing challenges across businesses – agriculture, engineering and financial services. Nevertheless, we want to ready for the future growth,” MM Murugappan, Executive Chairman of Murugappa Group, said here.
The group will spend the capex of about ₹1,300 crore in expansion of capacities, de-bottlenecking and in IT infrastructure.
For Coromandel International, the capacity expansion will be for phosphoric acid and in the pesticide business.
Tube Investments will invest in its new plant at Rajpura, Punjab while it will ramp up capacity of door frames. It will also expand the capacity for railway coach business.
Carborundum Universal is ramping up the capacity of coated products and metallised cylinders. The group is also expected to invest about ₹200 crore in IT infrastructure of its financial services and insurance businesses.
Earlier, discussing the FY19 performance, Murugappan said that it was reasonably a good year for the group.
Group’s PAT rises 18%
The group’s profit after tax grew 18 per cent at ₹2,880 crore (₹2432 crore), while its net sales increased by 12 per cent at ₹36,893 crore in 2018-19 as against ₹33,079 crore in the previous year. EBITDA (earnings before interest, taxes, depreciation and amortisation) stood at ₹5,190 crore as against ₹4,618 crore, an increase of 12 per cent.
“Last year’s numbers are restated because of IndAS adoption,” said Sridhar Rangarajan Group Chief Financial Officer, Murugappa Group.
Engineering business, which comprises Carborundum and Tube Investments, recorded a revenue growth of 15 per cent at ₹8,119 crore, while financial services businesses’ (Chola NBFC and Chola MS Insurance) revenue increased by 15 per cent at ₹11,537 crore. In agriculture business, Coromandel’s revenue grew 19 per cent, but EID Parry’s topline fell 28 per cent, mainly on account of sugar, which was impacted by depressed prices.
“Overall, topline growth is coming well for the group, balance sheet has strengthened, debts are coming down and free cash flows helped. All the capex we said we will do are on track. We continue to invest so that future of the group is secured,” said Rangarajan.
The group’s long-term debt has come down to ₹825 crore in 2018-19 from ₹1,625 crore in 2016-17.
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