CHENNAI: Chennai-based conglomerate Murugappa Group said on Wednesday it was investing Rs. 2000 crore over the next two years to cater to demand for phosphate-based fertilizers, remove bottlenecks in certain facilities in its engineering unit, and build a gas-based power plant in Russia.
The company, which is valued at Rs. 300 billion, said a major part of its exports out of India were crop protecting fertilizers, steel tubes and ceramics, and it was, therefore, building capacity to meet burgeoning demand.
Murugappa Group said it planned to use the Rs. 2000 crore of funds it would raise through internal accruals in agricultural inputs, capacity expansion and building a phosphate plant with 450 tpa capacity in Vizag to become self-sufficient.
The company said it felt the need to ramp up phosphate production due to the shutdown and relocation of phosphorous acid producing facilities in South Africa to Cochin as a result of expensive labour and amenities. Murugappa also said that a phosphate plant of Groupe Chimique Tunisien (GTC), in which it has a 15 per cent stake, had not operated at full capacity due to the fallout of the Arab Spring.
The company also said it had to shut down two plants in China that manufactured abrasives.
The group’s revenue for the year rose 13 per cent to Rs. 32,893 crore and EBITDA was up 34 per cent as its insurance and financing business was lifted by a robust demand for cars in India. However, the company’s EID Parry business posted a 35 per cent fall in EBITDA due to domestic and international oversupply of sugar in the market.
“Let alone the supply glut, we faced 50 per cent lesser availability in sugarcane due to the drought conditions in Tamil Nadu. Apart from sugar, we use molasses for power generation and also produce industrial alcohol, which was a challenge for us. We had also paid about Rs. 87 crore in arrears to farmers this year,” MM Murugappan, Executive Chairman of Murugappa Group, said.
Murugappa Group’s Tube Investments unit, which makes steel tubes, cycles, metal-formed products and gears, clocked a growth of 11 per cent during the year, but faced challenges in trade volumes across bicycles and related accessories.