Murugappa group lines up Rs 650 crore capex

The Murugappa group has drawn up a capital expenditure plan of Rs 650 crore in 2005-06, directed largely towards its sugar, fertilisers and manufacturing operations.

The capex plan for the year is equal to the combined investement over the last three years and is to be raised using the group's own resources.

The Rs 6,250 crore group's capex this year will largely support the activities of Tube Investments, Carborundum Universal (Cumi), EID Parry and Coromandel Fertilisers.

"In the commodity business in India, if you are cost competitive, you can't go wrong," said A Vellayan, director, external relations, at a press conference.

Coromandel Fertilisers' investments would be aimed at securing its raw material imports, said Vellayan. Last year, Coromandel bought 2.5 per cent equity stake in South Africa's Foskor for $ 5 million to secure supplies of phosphoric acid for its fertiliser production. Coromandel plans to increase the stake to 16.5 per cent, subject to certain conditions.

EID Parry, one of the most profitable companies in the group, is to invest in both its sugar and sanitaryware operations. It plans to invest Rs 50 crore in a new sanitaryware plant that would be located in Perundurai, Tamil Nadu.

Parry also aims to transform three of its four sugar units in to integrated ones- one of them already is an integrated unit. In addition, Parry has successfully bid for the assets of a sugar unit located in Pondicherry.

The other group company, Cumi is planning an investment of Rs 75 crore in a coated abrasives plant in Sriperumbudur, near Chennai.

The Rs 650 crore capex planned by the group does not include the Rs 3,400 crore steel project that is to be located in Orissa. Tube Investments recently signed a memorandum of understanding with the Orissa government for the project.

Vellayan said the steel project would take around four years to be set up. The group has initiated talsk with potential technical partners, he added.

Other than traditional commodity businesses, Vellayan said that the group was upbeat about relatively new businesses such as nutraceuticals and bioproducts. The Murugappa group currently holds 37 patents and has filed for another 38 patents, said Vellayan.