Murugappa group to invest Rs 1,500 cr in 2011-12

The Chennai-based diversified Murugappa group would invest Rs 1,500 crore in the current financial year, which is expected to help it reach the $7.2 billion level by 2013-14.

Addressing the group's annual press conference in Chennai, A Vellayan, executive chairman, Murugappa group, said that its turnover in 2010-11 stood at Rs 17,051 crore from Rs 13,617 crore in 2009-10, an increase of around 25 per cent.

In 2011-12, the group would invest around Rs 1,500 crore for organic growth, while it would also look for opportunities for mergers and acquisitions to drive synergistic inorganic growth. It will be funded through debt and internal accruals.

The group is positioned to achieve the vision of $7.2 billion turnover by 2013-14, from the current Rs 17,051 crore, said Vellayan.

Coromandel International Ltd clocked sales of Rs 7,585 crore, while Tube Investments of India contributed Rs 3,308 crore, EID Parry (India) Ltd Rs 1,750 crore and Carborundum Universal Ltd (Rs 1,676 crore).

“Financial services business, Cholamandalam Investment and Finance Company, was the star performer, which clocked the highest growth of 214 per cent and a revenue of Rs 1,222 crore,” said Vellayan. The Cholamandalam MS General Insurance Company Ltd has clocked a revenue of Rs 968 crore, an increase of 142 per cent, with the rest contributed by other businesses.

Commenting on the sugar division, he said EID Parry registered a 46 per cent growth. However the profitability of this business was impacted due to depressed sugar prices.

It may be noted that the division acquired 65 per cent stake in GMR Industries and renamed it Parrys Sugar Industries Ltd. It helped the company to expand from Tamil Nadu and Puducherry to Karnataka and Andhra Pradesh. “Standalone profitability will be the first focus, before we integrate this business,” said Vellayan.

The group is also open to inorganic growth and it is a strong point for the group's expansion, especially to acquire raw materials resource, provided pricing is attractive, he added.

The group was planning to acquire overseas gas resource for around $900 million (around Rs 4,500 crore) has hit the road block due to economic situation and valuation. The company was supposed to finalise the deal by December 2009. “We are still on the look out, valuations have gone up, because of US consumption,” he said.