Murugappa group turnover tops $1 bn

The Chennai-based Murugappa group's turnover has crossed the $1 billion mark to touch Rs 5,200 crore ($1.17 billion) for the year ended on March 31, 2004.

The group plans to invest about Rs 100 crore in major projects and Rs 150 crore on upgradation and modernisation during the current financial year.

A Vellayan, director-marketing, Murugappa group, said, "The group's top line has shown a 25 per cent growth over last year, which is estimated to result in a 40 per cent growth in profit before tax. We have our business operations in 12 states and are present in 20 locations and will like to have more presence in the country."

He said the group expects its exports to contribute about 15 per cent to the turnover in three years. "We are not satisfied with our exports contribution to the turnover, which is currently at 5 per cent. To achieve this, the group plans to focus on manufacturing companies in the US, Europe and south-east Asia, which can outsource from us and also acquire small companies so as to market through them," Vellayan said.

Vellayan said, "There is no advantage to operate in China by building base there, considering the risks. We will strictly confine to direct exports." "Our exports to China in partnership with Japanese original equipment manufacturers (OEMs) will target high-end products in China, as the quality of products available domestically are low and cheaply priced. On the other hand, we will look at entering Malaysia, Indonesia when Indian two-wheelers manufacturers make their presence in south-east Asia," he added.

China has realised that its domestic consumption of steel has resulted in steel price rise. The price of steel is to be watched after June: if China reduces its steel consumption then, automatically steel prices will come down.

On the contrary, if China's demand for steel increases between July and August, there would be a demand and supply mismatch of steel which would result in further spiralling of prices.

EID Parry, a group company, will set-up a refinery unit for its branded refined sugar with a capacity of 30,000 tonne. The branded refined sugar is expected to be 25 per cent of its total output.

Vellayan said if Tamil Nadu is to be competitive in sugar exports, two issues should be addressed: purchase tax levied only by the Tamil Nadu government and the pricing of cane.

Speaking about building the Murugappa group brand, Vellayan said a detailed study was conducted. The study revealed that individual brands, such as Parryware, EID Parry and Cholamandalam, had greater brand recognition than the Murugappa group brand.

Murugappa group will be an umbrella brand, which provides management and technical services to its group companies. To gain familiarity and to create a corporate identity in the north, 'Murugappa' will be promoted as a group brand. The group has been active on the campus recruitment front for the past two years.

The group companies include: Tube Investment of India Ltd, Cholamandalam Investment & Finance Co Ltd, Carborundum Universal Ltd, Coromandel Fertilisers Ltd, EID Parry (India) Ltd, Parry agro Industries Ltd and Parry Confectionery Ltd.