Presenting the group's financial performance in 2007-08, A Vellayan, vice chairman and director (strategy) to the media in Chennai today, said that overall group performance was below expectation and hoped to recover some ground in the current financial year. "For a group of our size, we expected to grow three times the country's GDP growth rate which would be 24 per cent. In the current year we hope to grow by 20 per cent," he said. The group's turnover in 2007-08 nearly kissed Rs 10,000 crore growing at 15.5 per cent over 2006-07.
Net profit for the group at Rs 535 crore in 2007-08 was 13 per cent lower than the preceding year. The group's financial director, N Srinivasan said that this was due to extraordinary income of Rs 197 crore reported in the previous fiscal due to realisation of some investments.
In terms of margins (EBIDTA) the group has reported a growth of 17.4 per cent to Rs 1075 crore. The two major laggards in the group that pulled down the EBIDTA margin were sugar company EID Parry and tubes and cycle making company Tube Investments of India. The downward cycle in the sugar industry and rising cost steel were cited as reasons for the poor performance of these two companies. The group's plans to sell its mutual funds business has been abandoned with strategies to revive the business put in place now.
Vellayan said that the expansion and diversifications would be funded with a mix of internal accruals and debt.
Discussing the diversification plans, Vellayan said that his group would branch into retail in the rural sector and push the group's products. "You create a need in the urban market, whereas in the rural area you satisfy the need," he stated as his justification for the rural retail push. The group has access to 25 lakh farmers as a captive market when it makes the retail move.
In the life sciences sector the group would look at "active ingredients and products". The Murugappa Group already has limited interest in this sector through neem and algae-based products.
