30 April, 2008

Annual Net Sales up by 26%
Consolidated Net Sales up by 46%
Consolidated PAT at Rs.119 crores

The Board of Directors met today and approved the audited financial results for the year ended 31st March 2008.

Net Sales grew to Rs. 165 crores, representing a growth of 27% over the sales for the corresponding quarter of last year (Rs.130 crores). Profits before interest and tax (before profit on sale of assets and investments) grew by 12%. The Company earned Rs.11 crores profits on sale of investments during the quarter. Profits before tax grew to Rs.32 crores (previous year Rs.23 crores) . .Profits after tax increased from Rs.17 crores to Rs.25 crores.

Pursuant to the approval of the High Court of Judicature at Madras, Prodorite Anticorrosives Limited (‘PACL’), a wholly owned subsidiary of the Company has been merged with the Company with effect from 1st April 2007. PACL is engaged in the business of acid resisting cements, corrosion resisting products, polymer concrete and fibre reinforced plastics and has synergies with that of the ceramics business of CUMI. The anticorrosives business recorded a net sales of Rs.26 crores and a PAT of Rs. 0.7 crores for the year.

Riding on the back of an optimistic mood in the economy, net sales recorded a 26% growth over previous year. The sales growth was 20% without the anticorrosives business.

Domestic net sales grew by 21% from Rs. 394 crores to Rs. 479 crores (excluding anticorrosives). Buoyed by the strong performance of several user industries, all business segments registered double digit growth rates viz. abrasives (15%), ceramics (29% excluding anticorrosives ) and electrominerals (29%).

Export sales were impacted by the unexpected and sharp appreciation in the rupee. Despite this, exports (excluding anticorrosives) increased from Rs. 71 crores to Rs. 82 crores, a growth of 16%. Backed by good off-take from key customers of high alumina ceramic products, the ceramics business registered a growth of 26% with good response in Australia and Middle East. The electrominerals business grew by 48% due to several sales promotion initiatives and other concerted steps undertaken to become a visible player in European market.

The profits from operations before interest and tax and excluding profit on sale of fixed assets and investments was Rs. 93 crores representing a growth of 9% over previous year.. Interest costs have risen by over 130% in the current year from Rs. 7 crores to Rs. 17 crores and depreciation by over 50% as a result of the aggressive capital investments in creating a strong back end, the benefits of which will be reaped over the subsequent quarters.. The Company’s operating PBT was at Rs.76 crores as against Rs.78 crores in the previous year

A sum of Rs. 103 crores was spent on Greenfield / brownfield expansions, new product and technology upgradation projects taking the total capital expenditure during the last three years to Rs. 281 crores.

During the year, a profit of over Rs. 62 crores was realised through sale of immovable properties (mainly land and building of the coated abrasives facility at Pallikaranai near Chennai which was closed during the year) and also sale of investments, which accounted for the profits before and after tax being higher than that of 2006-07.

All major subsidiaries and joint ventures performed well. Consolidated net sales (including proportionate share of income in joint ventures) went up by 46%. Profit before tax and sale of assets and investments increased by 7%.

VAW, Russia registered a turnover of Russian RUB 1057 million (about Rs. 176 crores) during the seven months period ended March 08. Post the acquisition, several project teams are at work to enhance the width and scale of operations of VAW.

In China, the Company’s joint venture, JingRi-CUMI Super-Hard Materials Co. Ltd., performed reasonably in its existing business lines viz., industrial diamonds diamond cutting wheels. Sales for the 12 months ended March 2008 was RMB 88 Million (approximately Rs.47 crores). A modern 2000 tonne facility for resin bonded abrasives was commissioned in the third quarter of 2007-08 and a 1000 tonne vitrified bonded abrasives plant in the last quarter of 2007-08.

In Australia, CUMI Australia performed well achieving a turnover of AUD 8.74 million, (approximately Rs.30 crores) a growth of 18% over previous year. With markets in a state of flux, the Company increased business volumes by acquiring new clients, focusing on new applications and launching new products.

In the Middle East, CUMI Middle East continues to ramp up business volumes as planned. CUMI America maintained its performance in a declining US market. The performance of CUMI Canada (which caters mainly to the US and Canadian markets) was however adversely impacted due to the recession in the housing sector.

In India, Murugappa Morgan Thermal Ceramics Limited (which is in refractory fibre business) and Ciria India Limited (engaged in designing and installation of refractory systems), both of which are joint ventures with the Morgan Crucible plc., U.K., registered growth of 14% and 71% respectively in sales driven by good inflow of project orders. Wendt India Limited, which is now a joint venture with the Winterthur Group, increased sales by 9%. Sterling Abrasives registered a strong performance with a growth of 17% in sales. Southern Energy Development Corporation Limited, which is in gas based power generation increased revenues by 13%. Net Access India Private Limited which is in IT facilities management increased revenues by 40%.

The Board has recommended a dividend of 100% (i.e. Rs.2 per equity share of Rs 2/- each) for 2007-08. Last year a dividend of 75% was paid.

Headquartered in Chennai, the USD 2 billion (Rs.8500 crore) Murugappa Group is India’s leading business conglomerate. Market leaders in diverse areas of business including engineering, abrasives, finance, general insurance, sanitaryware, cycles, sugar, farm inputs, fertilizers, plantations, bio-products and nutraceuticals, its 29 registered companies have manufacturing facilities spread across 14 states in India. The organisation fosters an environment of professionalism and has a workforce of over 30,000 employees.

The Group has forged strong joint venture alliances with leading international companies like Roca, Cargill, DBS Bank, Mitsui Sumitomo and Groupe Chimique Tunisien and has consolidated its status as one of the fastest growing diversified business houses in India.

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