Murugappa Group confident of 20% growth this year

The ₹29,000-crore Murugappa Group is confident of a 20 per cent growth in 2016-17 powered by an upswing across its major business verticals, including financial services, agriculture and engineering.

The diversified group reported gross sales of ₹29,470 crore in 2015-16, a growth of 9 per cent over the previous year, with a 4 per cent growth in EBITDA at ₹3,035 crore.

The group has managed this performance in a challenging year for the economy.

The focus in the current year is on targeting higher capacity utilisations across its production facilities and capital expenditure is not envisaged. Addressing the Group’s annual press meet, A Vellayan, Executive Chairman, Murugappa Group, told media persons, “in the current year we are seeing growth potential at 20 per cent” with financial services, including NBFC and insurance registering about 20-25 per cent, agriculture and engineering seeing an upswing on improved policy and business environment.

The Group is also seeing emerging opportunities with two new ventures, Polutech Ltd a joint venture with Organo Group of Japan for industrial water treatment requirements of the manufacturing sector and TI Tsubamex, a joint venture with Tsubamex of Japan for sheet metal stamping dies for automotive and white goods sector will also see significant development.

The growth in number of Japanese brands and models has opened opportunities that the Tsubamex joint venture will exploit, he said.

The Centre’s push to increase insurance penetration will support growth of the insurance business.

The group company, Cholamandalam MS General Insurance Company grew 30 per cent in terms of gross written premium in 2015-16 against an industry average of 14 per cent.

It has a strong network of insurance products outlets in tier II and III towns in the form of kiosks for weather and crop insurance.

The growth in two- and four-wheeler sales and commercial vehicles will drive its NBFC business through Cholamandalam Investment and Finance.

With the forecast of a good monsoon after two years of drought, the fertiliser business will bounce back, Vellayan said.

Also, the policy environment has improved with the Centre expediting subsidy disbursements and considering new initiatives such as direct payments to farmers rather than through fertiliser companies.

Similarly, the sugar business will benefit in the coming season as the government action on supporting exports helped bring down a 10-million-tonne surplus, boost to ethanol policy and waiver of excise on molasses for ethanol production have all contributed to the overall health of the sector. Sugar prices have improved to about ₹34 a kg from lows of about ₹20.

The network of 775 agri input retail outlets under Gromor in Andhra Pradesh, Telangana and parts of Karnataka will be expanded to North Karnataka and South Maharashtra before coming to Tamil Nadu next year, he said.

TI Cycles’ business will benefit from the growth in cycles businesses with a new factory, with enhanced capacity, to be inaugurated tomorrow at Rajpura, near Ludhiana.

Tube Investments’ large diameter tubes factory which faced some teething trouble due to technical issues has sorted out the problems and capacity utilisation will grow in the current year, Vellayan said.