Carborundum Universal to invest Rs 480 crore in Russia, India

Carborundum Universal Ltd (CUMI), part of the $3 billion Chennai-based diversified Murugappa group is planning an investment of around Rs 480 crore in Russia and India. The proposed investment will go towards expanding its existing capacity and for setting up a greenfield facility in Gujarat. The company also said that it is scouting for good acquisition opportunities to support its growth plan.

K Srinivasan, managing director, CUMI said that the company is planning to expand its capacity by another 100,000 tonne at Volzhsky Abrasive Works in Russia. The facility manufactures silicon carbide fusion.

The capacity of the plant is 70,000 tonnes and the proposed enhancement will happen in a phased manner.

In phase I, over the next 18 months, the company is planning to increase capacity by 50,000 tonnes and the rest will follow. The total investment would be around $75 million (around Rs 345 crore).

He added that the company has also entered into an agreement with the Gujarat Mineral Development Corporation (GMDC) to set up brown fused alumina (BFA) plant with a capacity of 35,000 tonnes along with a lignite-based 24 mega watt power plant.

“We will sign a joint venture with GMDC in a month’s time. CUMI will hold majority stake, over 51 per cent,” said Srinivasan.

CUMI is planning to invest over Rs 100 crore in the proposed facility in the proposed venture.

Meanwhile, the company has reported a 126 per cent increase in the net profit during quarter-ended June 30, 2010, for Rs 43.47 crore compared to Rs 19.19 crore a year ago. The company’s income rose to Rs 359.96 crore from Rs 282.37 crore, an increase of 27 per cent.

Presently, 55 per cent of the revenues come from domestic market. “This percentage is expected to change as the overseas business is growing. We expect that it would (overseas business) touch the 60 per cent mark,” he added.

Meanwhile, the company said that it is scouting for good acquisition opportunities.

“The Europe and US acquisitions will be customer-centric, while in other parts of the world like South Africa, Russia, South America, China and others, it will be mainly for manufacturing capacity,” said Srinivasan.