Carborundum Universal Ltd. (CUMI), a Murugappa Group company, continues to remain debt free on account of prudent working capital management and a well-executed capital expenditure programme, said a top official. “During the year, CUMI generated ₹231 crore in cash surplus from its operations on a standalone basis. All debts were serviced on time. As of March 31, 2020 its long and short-term borrowings were nil,” M.M. Murugappan, chairman, said in the annual report for 2019-20.
According to him, the financial requirement for capital expenditure programme, capacity augmentation, facilities for new products as well as maintenance was met entirely from internal accruals. Due to prudent capital expenditure and efficient working capital management, CUMI continued to have healthy cash generation and the surplus was parked in liquid schemes of mutual funds.
The company continues to remain debt free, he said. On similar lines, the debt at a consolidated level droppedcame down by 36% to ₹61.6 crore compared with the previous year. Cash and cash equivalent (net of borrowings) at a consolidated level stood at ₹297.9 crore. The debt-equity ratio for the company was nil at a standalone level and 0.03 at a consolidated level, he said. Stating that CUMI’s balance sheet remained robust and it augured well for the growth in the prevailing conditions, he said the credit ratings of the company, ‘A1+’ for short-term borrowings and ‘AA+Stable’ for long-term borrowings were re-affirmed by CRISIL.
Over the years, CUMI had been resorting to a prudent mix of rupee and foreign currency borrowings to finance its operations and achieve a reduction in financing cost. CUMI had earned ₹6.14 crore by investing surplus cash available for the short term.
At a consolidated level, the finance cost reduced from ₹8.5 crore to ₹6.3 crore. The repayment of loans has helped in bringing down the finance cost, he said.
Regarding the COVID-19, he said that the last fiscal was an unprecedented year which started with an economic slowdown and ended with the ‘great lockdown’.
At CUMI, the impact was felt, but we continued to remain resilient. Our long term strategic initiatives, our capacity enhancement projects, our focus on innovation and new product development, our capability building programmes, were on track as per the roadmap we had drawn for the year, he observed.