Murugappa Group to invest Rs 20 billion in next two years

The Rs 328-billion Murugappa Group is stepping up investment for the next two years to expand capacities in its agriculture-related and engineering businesses, with an investment of around Rs 20 bn. The Group was seeing signs of recovery, especially in the sectors it operates, said M M Murugappan (pictured), chairman of Murugappa Group, addressing the media for the first time after taking over as chairman.

The plan includes a Rs 3.50-billion investment into expansion of its phosphoric acid facility in Visakhapatnam, which would add capacity of around 450 tonnes a day; it would continue to purchase the product as well. In engineering, it would invest in enhancing capacity in the railway wagon business, where it manufactures flat panels and chains in the automobile sector. There would also be investment into its Russian arm for power generation.

“The investment would be through internal accrual. Cash generation from these companies are good,” said Sridharan Rangarajan, president and chief financial officer. 

It is utilising 70-75 per cent of capacity in the fertiliser business and 70-85 per cent in engineering. There is still room in terms of capacity in these segments and in the sugar sector. The company said it is debottlenecking some capacity.

Murugappan, elaborating his vision on the Group, said the focus would be on the quality of customer engagement across the Group. 

“Our focus would be on profitability and strong cash flow,” said Murugappa.  “We would like to grow faster than GDP (gross domestic  product) growth, at double-digits. A new planning cycle will start by the end of this year. The momentum will be maintained.”

Implementation of more infrastructure projects, improvement in the rural economy and uptake in the automobile industry are helping the group's businesses.