By IANS,
Chennai: The Rs.15,646-crore ($3.15-billion) Murugappa group will invest Rs.586 crore in its existing businesses this fiscal, said senior company officials here Tuesday.
“The investments will be towards completing the existing projects as well as setting up of new facilities,” said A. Vellayan, the group’s vice chairman and director (strategy) while announcing the consolidated group results.
Added N. Srinivasan, director (finance): “The investments will be funded by debt as the group’s debt-equity ratio is very comfortable.”
The city-based group has interests in fertiliser, sugar, engineering, financial services and plantations.
As to the company-wise capital expenditure planned, Srinivasan said: “Tube Investments will spend Rs.145 crore, EID Parry Rs.115 crore, Carborundum Universal Rs.80 crore, Coromandel Fertilisers Rs.180 crore and other units Rs.65 crore.”
During 2008-09 the group’s capital expenditure was Rs.850 crore as against the planned Rs.1,300 crore.
“We put on hold some projects and re-sized some based on the market conditions,” Vellayan said.
Bulk of the capital expenditure spent last fiscal was by EID Parry (Rs.319 crore), spent its sugar refinery at Kakinada, cogeneration and distillery plants.
According to Vellayan, Silk Road Refinery, a sugar refinery joint venture with Cargill, will start operations next month.
The refinery is set up over 50 acres inside the 250-acre special economic zone in Kakinada promoted by a group company Parry Infrastructure, wholly owned by EID Parry.
“We will be spending another Rs.50 crore to improve the facilities so as to attract food processing units to the SEZ,” Vellayan added.
According to him, the group owns around 2,000 acres in different parts of the country, which it wanted to put to good use depending on the market situation.
He said the group has bucked the general economic slowdown logging a 63.3 percent growth over the previous fiscal’s turnover of Rs.9,582 crore.
Agriculture-related businesses – Coromandel Fertilisers, EID Parry and Parry Agro – posted profits during the period under review.
“Coromandel Fertilisers will be getting into retailing segment, selling fertiliser, seeds, pesticides, as well as products like mobile phones,” Vellayan said.
Each of the 400 retail outlets will be spread over 5,000 square feet.
Last year, the company increased its stake in South African company Foskor – a leading producer of phosphate and phosphoric acid – to 14 percent from 2.5 percent, thereby securing the raw material supply for its fertiliser business.
The company also invested $29 million in a phosphoric acid plant in Tunisia.
Vellayan said the engineering firm Tube Investments will expand its component supplies to railway wagon manufacturer.
According to him, the group’s other engineering firm, Carborundum Universal, has seen its Russian acquisition Volzhsky Abrasive Works registering a growth of 70 percent.
Carborundum has also acquired 51 percent stake in Foskor Zirconia of South Africa.
In the financial services segment, while the group’s non-life insurance Chola MS Insurance grew its business, its non-banking finance company Chola DBS has exited personal loan portfolio following huge losses.