COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES
SEARCH REDIFF

Recast on: tiles and audio arms on the block; insurance foray planned

As part of its first phase of restructuring exercise, the Madras-based Murugappa Group has sold its Parryware Ceramic Tiles unit to HNR Johnson and Meltrack cassette unit and electronic arm to the RPG Group for a combined consideration of Rs 250 million.

While the sell-off of the tile business has already been completed, the agreement for transferring the group's stake to RPG has just been signed, said A Vellayan, managing director, Tube Investments of India Limited.

He, however, declined to disclose the exact price for selling off the individual businesses. The entire restructuring exercise, which includes selling off part stakes in its other businesses, would be completed within two years.

Vellayan futher stated that while the group has sold off the Parryware Tiles business, the sanitaryware segment has been retained.

This restructuring is being effected on the recommendation of McKinsey Consultants. Pursuant to the exercise, the group would be moving out of its non-core arms and intends to retain only 10-12 core businesses by 2005 as against the existing 28.

The group, which originally had 33 business units, has already sold off five of its non-core businesses. Besides, talks are on to select partners and buyers for the other units. The group has decided to focus only on plantations, sugar and related industries, confectionery, abrasives, chains, sanitaryware, financial services and insurance. By 2005, rest of the non-core businesses will either be sold off or the group's stake reduced to a minority level.

Under the exercise, it had hived off the seed division of EID Parry into a separate company and would divest 51 per cent stake in the company in favour of Monsanto Holdings of the united states.

Vellayan said TII expects to increase its net profits by 80 per cent to Rs 379.4 million during 1999-2000 as against Rs 210.8 million the previous year. The group has also targetted to record a Rs 20 billion combined turnover for TII and TI Diamond Chains by 2004 as compared to the present figure of Rs 8 billion. Exports would amount to about Rs 2 billion of this turnover target.

Stating that the company would continue to remain in the bicycle and related industries, Vellayan said, TII is the third largest bicycle maker in the country and enjoys a 24 per cent market share.

TI expects to become the second largest bicycle seller in a year's time and has entered into manufacturing and marketing tie-ups with two regional players in the western and northern markets.

Meanwhile, company sources pointed out that the group intends to expand its presence in the financial services sector, particularly in the fund business. The company has already signed a memorandum of understanding with Guardian Royal Exchange to enter the insurance sector.

''We will enter as and when the regulations for the same are in place. It has already been decided that Murugappa will hold a majority stake in the venture which will look into both general and life insurance.''

Agriculture and related industries account for 45 per cent of the group's turnover and this will remain the thrust areas of its future growth.

The diversified group presently has interests in nine core businesses -- abrasives and refractories, building materials, engineering, farm inputs, food processing, financial services, marketing services, plantations and sugar, bio-products and chemicals.

UNI

ALSO SEE

TI Cycles drags France to WTO over non-tariff barriers

Business news