Chennai: Diversified business conglomerate Murugappa Group aims 18 per cent growth in its turnover during this fiscal following the formation of a new government at the Centre, a top company official said.
"Normally our target is to grow at three times of GDP. Now we are expecting the GDP to grow at 6-7 per cent. We hope we will get back to 18 per cent growth as a group," Murugappa Group Executive Chairman, A Vellayan told reporters. He said the growth rate last year was a result of "demand compression". "Our group recorded eight per cent growth in turnover in last (financial) year. It was Rs 24,350 crore and EBIDTA was Rs 2,627 crore", he said. He added that due to poor demand and uncertain market conditions, the group also took a "conscious decision" in the last financial year to go "slow" on capital expenditure. "About 75 per cent of capex was used and it dropped significantly last year. Right now we are hoping that in the second half of 2014-15, there will be a momentum change", he said.
Giving a break up of capital expenditure for 2013-14, Murugappa Group Director (Finance), N Srinivasan said last year it was Rs 166 crore while in the previous year (2012-13), it was Rs 1,750 crore. Vellayan said in the last financial year, the company's growth has been partly organic and partly inorganic. "This year there is a positive mood in the manifesto on agriculture. Industrial products will be related to the demand. So we will take stock of it in a couple of months and by the end of August-September, we will have a much clearer picture."
On plans to achieve USD 7.1 billion turnover by 2016-17, he said, "I think there are phases in the economy when you make certain projects. I think there are times when you hit certain realities. Last year, it was probably the worst of its kind. Now may be in September we will come out with clarity." To a query on making any short-term capex plans, he said "that is really runover from last (financial) year.
Main thing is the large diameter tube plant which we are setting up at a cost of Rs 400 crore. That is coming up in Tiruvallur." He said the company is focusing on two areas this year -- farm mechanisation and neutraceuticals business. "We have invested over Rs 150 crore in the neutraceuticals business. The best is yet to come. Last year, neutraceuticals business across various locations was profitable", he added. a
