Company Overview
Grindwell Norton Ltd (GNO) is India’s leading manufacturer of Abrasives (Bonded,
Coated, Non-Woven, Superabrasives and Thin Wheels) and Silicon Carbide. It also
manufactures and markets High Performance Refractories and Performance Plastics
products. It is part of the 42 bn euro multinational group Saint Gobain.
Investment Rationale
Market leadership position in the Abrasives market in India
GNO is a market leader in the Abrasives market in India. It is one of the two major
players and together they have a market share of ~70% split among them equally. The
estimated market size of Abrasives in India for FY12 was ~Rs 2500 cr. The demand for
abrasive products in India is steady and any revival in the capex can lead to significant
improvement in the demand.
Wide range of products to cater to different industries
The abrasive products are used in a number of industries such as Steel, Automobiles,
Auto Components, General Metal Fabrication and Woodworking. GNO makes wide
range of products like Bonded, Super and Coated in the abrasives segment. Most of
these products are made indigenously or sourced from Saint Gobain plants across the
world. The dependence on any single industry for these products is less than 15%. The
largest customer accounts for less than 2% of the sales and the largest dealer accounts
for less than 3% of the total sales. This coupled with wide range of products helps
diversify the business risk for the company.
Expansion of capacity will help the company grow
Grindwell is looking to make a capital expenditure of Rs 100 crore per annum over the
next 2-3 years. It plans to set up Phase II of its High Performance Refractories (HPR)
plant in Gujarat this fiscal. Also, it would be investing in capacity expansion at bonded
abrasives plant in Nagpur and thin wheels and coated abrasives plant in Himachal
Pradesh. It is setting up a new non-woven abrasives line along with new plant for
performance plastics at Bangalore, too. The expansion projects (the major ones being
the Bonded expansion at Nagpur and the new Non-Woven plant at Bangalore)
planned are progressing as per schedule and are expected to be completed in the first
half of the current financial year. GNO has already done a capex of close to Rs 100 cr
in FY12 and is expected to invest similar amount in FY13 to expand its capacity. The
benefit of this capex will be seen in the coming years.
