Chennai, May 03, 2005:
Murugappa group draws up Rs. 650 cr. capex programme

The Rs. 6,250-crore ($1.44 billion) Murugappa Group has drawn up a Rs. 650-crore capital expenditure programme for 2005-06. Stating this at a press conference here on Monday, A. Vellayan, Director (External Relations) of the Group, said a major part of the capital expenditure would go into EID Parry, Carborundum Universal (CUMI), Tube Products of India and the overseas venture of Coromandel Fertilisers Limited.

Main investments in EID Parry, Carborundum Universal

"The capital expenditure for the current year is equal to the total capital expenditure of the group in the last three years," Mr. Vellayan said.

The Parryware division of the group would set up a project at Perundurai off Erode for the manufacture of sanitaryware at an investment of around Rs. 60 crores.

The group had already acquired 50 acres there. Mr. Vellayan said that the Perundurai project could ideally feed the Kerala and South Tamil Nadu markets. Carborundum Universal (CUMI), he said, would set up a plant to make coated abrasives at Sriperumbudur at an investment of Rs.75 crores.

Tube Products of India would go in for an expansion of its export-oriented unit at Avadi. The group's sugar mills at Pugalur, Pudukottai and Pettavaithalai would be converted into fully integrated plants.

The Indian Bank had accepted EID Parry as the highest bidder for New Horizon Mills Ltd. in Pondicherry.

"A profit before tax of Rs. 550 crores during 2004-05 gives us base and confidence to build on in the domestic as well as in overseas markets," Mr. Vellayan said.

Pact with Foskor

Mr. Vellayan said Coromandel Fertilisers had signed a business assistance pact with Foskor of South Africa and acquired a 2.5 per cent stake. The pact provided for an eventual ownership of 16.5 per cent in the South African company. "We will acquire them through sweat equity," he said. On the group's proposal to set up a three-million tonne greenfield steel project in Orissa, he said things were still at an early stage. He said discussions were on for a technical partner.

The group itself consumed three lakh tonnes of steel a year and the per capita consumption was much less in India, he added. Responding to a question on Cholamandalam Investment, he said "for another couple of years we will continue to be a non-banking finance company," Mr. Vellayan said, adding that there was no clarity on rules for NBFCs.

Asked if any of the group's company would be listed overseas, Partho S. Datta, Director (Finance), Murugappa Corporate Board (MCB), said at least three companies in the group were capable of going in for overseas listing. "As of now, however, we can manage from our internal resources,'' he added.

On the performance of MCB, Mr. Vellayan said, "we (the directors on MCB) have moved away from functioning to business monitoring.''

On the current year, he said, "the general mood is positive and there is no question of going back."