Murugappa group PAT up 46% owing to one-time income

The group expects 20% growth this year due to better industry scenario

Murugappa Group has posted a growth of 46.37 per cent in Profit After Tax (PAT) at Rs 1,878 crore during FY16 as compared to the PAT of Rs 1,283 crore posted during the previous year, mainly owing to the one time income of Rs 883 crore on account of the stake sale in the insurance JV to the foreign partner.

The group is expected to grow at 20 per cent during the current financial year, said the Executive Chairman A Vellayan.

"Despite the challenges, we have posted a good growth during the FY16. We expect the business to grow better during this financial year," he said. He added that the central government has paid heed to the industry and introduced the ethanol policy, removed excise duty on molasses and such steps are expected to improve the growth of the sugar industry.

The group turnover grew by 9 per cent, to Rs 29,470 crore during FY16 compared to Rs 26,926 crore during the previous year. The PAT and extraordinary items that registered a growth of 6 per cent to Rs 1,880 crore as compared to the Rs 1,780 crore.

The group has earned a one-time income of Rs 883 crore on account of 14 per cent stake sale in Cholamandalam MS General Insurance company.

The financial sector subsidiaries Cholamandalam Investment and Cholamandalam MS General Insurance posted a sales of Rs 4,214 crore (13 per cent growth over previous year) and Rs 2,452 crore (30 per cent) respectively.

EID Parry (India) has registered a gross sales of Rs 3,897 crore, which is 46 per cent and Coromandel International Ltd revenue grew to Rs 11,614 crore, with two per cent growth. Coromandel Engineering Company has seen a drop of 47 per cent to Rs 122 crore.

In the financial sector, Cholamandalam Investment and Finance Company saw disbursement grew by 32 per cent and home equity disbursement grew by 14 per cent. The indurance JV posted a gross written premium recorded a strong growth of 30 per cent against an industry growth of 14 per cent.

Vellayan said that the financial service segment will continue the momentum and there is an opportunity in NBFC at a time, when the Banks are facing the NPA pressure. In other businesses, the large diameter tube business was lagging, and it has come out of trouble and the company will see growth in there too now, he said.

He added that overall industry growth is expected to improve and second half of this year more capital expenditure. In sugar industry there will be a swing.

Even a Rs 15 increase in sugar prices will result in the Sugar business making profit. The company has been posting around 10-15 per cent growth and with the improved environment, the target of 20 per cent growth during the year is possible, said N Srinivasan, director - finance, Murugappa Group.

During the year, Polutech Ltd has entered into a 51:49 JV with Organo Group of Japan, a leading player in water treatment engineering services, targetin emerging needs of industrial water requirements of the grow in manufacturing sector in India.