News
The Board of Directors met today and approved the unaudited financial results for the quarter ended 30th June 2008.
Q 1 FINANCIALS
Net Sales grew to Rs.157 crores, a growth of 23% over the first quarter of last year. Exports registered strong growth of 65%, from Rs. 18 crores to Rs. 30 crores.
Input costs including prices of key raw materials and fuel / power have increased, resulting in pressure on margins. Internal efficiencies are being focused upon to partly obviate cost increases. Further, Price increases are also being undertaken in a phased manner.
During the quarter, the Company contributed Rs. 4 Crores as part of the Corporate Social Responsibility (CSR) initiatives.
EBITDA (without reckoning the above contribution) grew from Rs. 26 crores to Rs. 33 crores, a growth of 29% ; the profit before tax was Rs. 21 crores (previous year Rs. 17 crores).
After considering the contribution made towards CSR initiatives, profit before tax remained at last year level at Rs. 17 crores.
OPERATIONS
Abrasives
Abrasives achieved a sale of Rs. 96 crores (previous year Rs. 84 crores), a growth of 15%. There was a slowdown in off take from Auto OE/Ancillary industries. Despite this, sales to other sectors helped to achieve double digit growth. The order inflow and sales of non-standard products registered strong growth rates. PBIT of the Abrasives business increased by 12%.
Ceramics
Sales for Ceramics registered a 27% growth, from Rs. 30 crores to Rs. 38 crores aided by good growth from HT insulators, power generation, coal washeries, steel, cement, carbon black and glass sectors. Strong growth was witnessed in both the domestic and export market. The division witnessed a strong growth of 26% in PBIT.
Electro Minerals
Turnover grew from Rs. 23 crores to Rs. 31 crores, a growth of 34%. All product lines viz., brown fused alumina, white fused alumina and silicon carbide performed well. The division nearly doubled its PBIT aided by the strong growth in volumes and product mix.
GROWTH INITIATIVES
The Metallised Cylinders plant being set up in Hosur is nearing completion and expected to go on stream in September 2008. Construction of the new facility for manufacture of super refractories and anticorrosion products in Vellore District is also progressing well and is expected to be completed in November 2008.
The Abrasives facility at Uttarkhand, the wear resistant tiles plant at Hosur and the engineered ceramics unit at Aurangabad, which were the major investments of last year, are stabilizing and scaling up production levels.
An Agreement has been entered into, for acquiring a 51% equity stake in Foskor Zirconia (Proprietary) Limited, Phalaborwa, South Africa, (FZL). With a 4200 tons per annum installed capacity for Zirconia, FZL is the 3rd largest producer of Zirconia in the world.
CONSOLIDATED OPERATIONS
Consolidated net sales was Rs. 293 crores as against Rs. 165 crores last year. The current quarter results includes operations of Volzhsky Abrasive Works, Russia, (VAW), which was acquired in September 2007.
The operations of VAW benefited significantly by the hardening minerals prices across the globe. The operations of the joint venture in China registered a growth of 12%. In Australia, continued buoyancy in the coal sector helped to ramp up sales by 80%. The Company also strengthened its presence in the Middle East markets through its subsidiary. Other subsidiaries and joint ventures also performed well, except in North America where the slowdown in the U.S. economy dented sales.
Profits before tax (before contribution as part of CSR initiatives) increased from Rs. 25 crores to Rs. 37 crores.
OUTLOOK
With rising inflation and the Government’s decision to reign in inflation at the cost of economic growth, several sectors of the Indian economy are poised for a gradual slowdown. Apart from the adverse impact on revenue growth, the inflationary effect on cost of inputs would have a negative impact on margins. The Company’s diversified user industry base and increasing geographical expansion is however expected to help mitigate the impact of these adverse trends. Further, the Company is also undertaking several cost reduction efforts to protect margins.
About the Murugappa Group
Headquartered in Chennai, the USD .4 billion (Rs. 9600 crore) Murugappa Group is India’s leading business conglomerate. Market leaders in diverse areas of business including engineering, abrasives, finance, general insurance, sanitaryware, cycles, sugar, farm inputs, fertilizers, plantations, bio-products and nutraceuticals, its 29 registered companies have manufacturing facilities spread across 12 states in India. The organisation fosters an environment of professionalism and has a workforce of over 32,000 employees.
The Group has forged strong joint venture alliances with leading international companies like Cargill, Cerdak, DBS Bank, Mitsui Sumitomo and Groupe Chimique Tunisien and has consolidated its status as one of the fastest growing diversified business houses in India.