The Murugappa group has reported a 18% growth in its profit to Rs 2,880 crore for the fiscal ending March 31, 2019 as compared to Rs 2,432 crore in fiscal 2018, led by listed entities such as Cholamandalam Investment and Finance as well Coromandel International.
The Murugappa group has reported a 18% growth in its profit to Rs 2,880 crore for the fiscal ending March 31, 2019 as compared to Rs 2,432 crore in fiscal 2018, led by listed entities such as Cholamandalam Investment and Finance as well Coromandel International. The revenue for the group, which has interests in agriculture, engineering, financial services, automotive sectors, jumped 12% to Rs 36,893 crore as compared to Rs 33,079 crore in the last fiscal.
Amidst volatile market conditions, uncertainty over the growth prospects in companies like EID Parry (India) due to glut in the sugar sector, the group said that it is committed to invest `1,250 crore in the current fiscal, across group companies.
Addressing the annual press conference held here on Wednesday, MM Murugappan, executive chairman, Murugappa group, said, “Last fiscal was reasonably a good year for as almost all our group companies, except EID Parry. We have reported a healthy growth in terms of revenue as well profit. Market capitalisation of our listed companies of the group aggregates to `66,000 crore as on March 2019, which was encouraging.
“Though we foresee challenging times ahead owing to uncertainty across various issues, including normal monsoon, downturn in automotive sector and glut in sugar market , both in India as well abroad due to oversupply, Murugappa group still hopes to maintain a modest double-digit growth in the current fiscal with a note of caution. We will wait for three months to have some clarity on the overall growth prospects.”
Sridharan Rangarajan, chief financial officer of the group said, “We have done extremely well given the volatile market conditions in the second half of last fiscal. Though our sugar and general insurance businesses could end up with negative growth, the group’s Ebitda grew 12% to `5,190 crore in FY19 as compared to `4,618 crore in the previous fiscal.”
He said owing to glut in the market, the group lost `240 crore in the sugar business resulting from a price reduction of `6 per kg.
Group company EID Parry has reported a 28% degrowth in its net sales to `3,283 crore. The performance of the company got hit due to depressed sugar prices owing to a glut in the market. Similarly, Cholamandalam MS General Insurance Company has reported a sharp fall in its profit to `179 crore as against `243 crore in the previous fiscal as its combined ratio deteriorated to 104.6% as against 100.79% in the previous fiscal, Rangarajan added.
Responding to a query, he said, the group is investing `1,250 crore during the fiscal, mainly in Coromandel International’s expansion plans of phosphoric acid plant at Vishakapatnam in Andhra Pradesh by adding 100,000 tonne per annum. Part of the investments, including `200 crore in IT infrastructure of Chola Financial Services as well Chola MS general insurance business is to strengthen digital services. The debt equity ratio is pegged at 0.6% and the short term debt is around `6,000 crore, he added.
Rangarajan also said the company has already applied for an approval from NHB to float a housing finance subsidiary under Cholamandalam Investments company.
“We expect to get the approval soon and we will be investing `500 crore over a period of 3 years as capital into the company. The proposed housing finance subsidiary will be 100% owned by Cholamandalam Investments. The housing finance AUM is currently pegged at `1,900 crore and is growing fast, hence we plan to float a separate subsidiary for the same,” he said further.