Abrasives/Industrial Ceramics/Electro-Minerals Industry

Understanding the Industry & Products


Abrasives is short cycled Industrial product as 90% of the abrasives products require replacement in 3 months but it stand out to be a key consumable in varied Industries.

Abrasives are extremely commonplace and are used very extensively in a wide variety of industrial, domestic, and technological applications. This gives rise to a large variation in the physical and chemical composition of abrasives as well as the shape of the abrasive used for Industrial applications like grinding, polishing, buffing, honing, cutting, drilling, sharpening, lapping and sanding.

Types of Abrasives:

a. Bonded Abrasives:  Bonded abrasives contain abrasive grains held together in a matrix of glass, resin, rubber, or other binders. These are formed into grinding wheels, cut off wheels, segments, cones, and other such formed or “bonded” types used for different aspects of wood working and metal finishing or cutting applications.

b. Coated Abrasives: Coated Abrasives are also minerals that are used in the same way as bonded abrasives. A coated abrasive is an abrasive fixed on to a form of backing material like paper, metal, rubber, resin, cloth and polyester. Sandpaper is a best example of coated abrasive.

c. Super Abrasives: Super Abrasives are one of a group of relatively expensive but effective materials possessing superior hardness and abrasion resistance. Super Abrasives include cubic boron nitride (CBN) and diamond. Super Abrasives have been developed to meet the needs of modern industry and major user industries are oil industry, medical, aerospace, composites, automotive, electronics.

Factors Impacting the segment

Abrasives industry growth is completely dependent on how the country's Industrial production is developing reflected by Index of Industrial production. Over past few years Industrial activity had been on a slow growth except during recent few months this past year, where YOY growth in IIP showed an increase by ~5%, a minor rise as compared to last year same period. As per RBI data till September 2018, there has been increasing capacity utilisation which signifies further pickup in the industrial activity.

Capacity utilisation of the abrasives industry as per RBI data from Q2 of 2017-18 to Q2 of 2018-19

Main User Industries for Abrasives

User industries of abrasives  - Auto OEM & ancillaries, steel, bearings, electronic components and devices, aerospace & turbine market and medical devices/equipments

Ceramics & Plastics

The products in the segment include Industrial Ceramics, Super Refractories, Anti-Corrosives and High Performance Plastics.

Industrial Ceramics

  • Metals, plastics & ceramics are the significant engineering material. Among the three ceramic are largely synthetic. Ceramics comprise of Routine materials like cement, glass, porcelain, and brick & strange material like spacecraft & electronics.
  • Due to the excellent power of resistance to heat & chemicals, ceramics finds wide use in industries.
  • Ceramic materials that contain alumina and silicon carbide are extremely rigid and are used to sand various surfaces, cut metals, polish, and grind.
  • Ceramics that consists of silica, zirconium oxide, magnesium oxide, silicon carbide & alumina are used in making refractories.
  • High voltage insulators and spark plugs are made from ceramics due to its electrical conductivity properties. Good thermal insulation has ceramic tiles used in ovens and as exterior tiles on the Shuttle orbiter Some ceramics are transparent to radar and other electromagnetic waves and are used in radomes and transmitters.

Super Refractories

Refractory is a material that will retain its shape and chemical identity when subjected to high temperatures and is used in applications that require extreme resistance to heat, such as furnace linings. Refractory products are basically used in industries for heat resistant and containment.

Refractory materials are used in glass making, steel industry, hearth and shaft of blast furnaces, lime and ceramic kilns, cement kilns, glass tanks and  crucibles for melting a wide range of metals. 

Zirconia refractories have a very high strength at room temperature which is maintained up to temperatures as high as 15000C. They are useful as high temperature constructional materials for metallurgical furnaces and glass furnaces.

High Performance Plastics (HPP)

High performance plastics meet higher requirements than standard and engineering plastics because of their better mechanical properties, higher chemical and/or a higher heat stability.

  • Various types of HPP like Polypropylene, Poly-Vinyl-Chloride, Acrylonitrile Butadiene Styrene etc. are used in automotive bumpers, chemical tanks, cable insulation, gas cans, carpet fibers, elastomeric wheels and tires, automotive suspension bushings, cushions, electrical potting compounds, automotive body parts, dashboards, wheel covers, gears and few other automotive components.
  • In Medical components, pharmaceutical systems/biotech/lab equipments, High Performance Plastics are used in various applications including  cap liners, stoppers, plunger laminates, sensitive fluid transfer applications, Test Chambers, Ophthalmic Valved Trocar Cannulas and many other surgical tools as well.
  • High Performance Plastics are used in production of composites, fluid systems, seals, engineered components and process systems in many industries including aerospace, electronics, transportation, electric motors, chemicals/fuels, energy and food processing.

Leading Players of the Industry

This industry is dominated by 2 leading players in India. Abrasives Industry, which is around Rs. 3,000/- crores, 50% of the market share is with Carborundum Universal Ltd. and Grindwell Norton Ltd. each having ~24-25% of the market share.

Carborundum Universal Ltd.

Carborundum Universal Ltd. is part of INR 269 billion Murugappa group, a giant conglomerate founded in 1990. Varied businesses fall under the group; bicycles, sugar, abrasives, fertilizers, financial services, and manufacturing. The group was establsihed by Dewan Bahadur A M Murugappa Chettiyar. Currently 4th generation of Murugappa Group promoters is now navigating the Group’s strategic direction and growth, while the 5th generation has taken up different roles across functions and businesses.

Carborundum Universal Ltd. is one of the major companies of the Group. It was incorporated as a Joint Venture amongst Carborundum company, USA, Universal grinding wheels, UK and Murugappa group. Carborundum is a global player with ~45% exports sale.

Grindwell Norton Ltd.

Grindwell Norton Ltd. is subsidiary of Saint Gobain, a French Group that manufactures high class mirrors & other industrial construction material. Two Parsi entrepreneurs Mr. P.H. Sidhwa and Mr. R.D. Sidhwa promoted the company in 1941.

In 1967 the company entered into a technical collaboration with Norton co. of USA & thus changed its name to Grindwell Norton Lltd from its initial years' name Grindwell Abrasives Ltd.

In 1983, Grindwell Norton Ltd. which was by then a Joint Venture between Norton Company and the Indian Promoters, was listed on the Bombay Stock Exchange. In 1996, GNO became a majority-owned subsidiary of Compagnie de Saint-Gobain (which had acquired Norton a few years earlier). With its headquarters in Paris, Saint-Gobain is a large, transnational Group with a presence in 67 countries.

Key Points of the Players

Shareholding Pattern

Promoter holding is 59.33% in Grindwell Norton Ltd., with Saint-Gobain Abrasives Inc. holding 26.77%, Spafi-Societe De Participations Financieres Et Industrielles (subsidiary of Compagnie de Saint-Gobain S.A.) 24.56% and 7% with Individual promoters (Anand Mahajan and family)

Promoter holding is 42.39% in Carborundum Universal Ltd. that is held by Murugappa family and other companies under the Group.

Promoters' institutions and non institutions share holding in Carborundum Universal Ltd and Grindwell Norton Ltd

Institutional Holding

Mutual Fund and Foreign Institutional Investors holding more than 1% shareholding:

Share holding of MFs and institutions holding more than 1% capital in Carborundum Universal Ltd and Grindwell Norton Ltd

Business Segments

Carborundum Universal Ltd. has 3 major business segments; Abrasives, Electro-Minerals and Ceramics and Grindwell Norton Ltd. is into 2 main business lines that are Abrasives and Ceramics & Plastics business.

Business Segments of Carborundum Universal Ltd and Grindwell Norton Ltd - Abrasives, ceramics, electrominerals and high performance plastics

Products Range & Applications Served

To understand which each company caters to which user industry, following charts have been included with complete range of their product offerings. Understanding the user industries of the final product  is crucial to understand a business.

Carborundum Universal Ltd.


a. Coated Abrasives: Light Polishing Applications in Automobile, Auto Ancillaries, White Goods, Hand And Power Tools, Sanitary Ware, Furniture, Fabrication and Construction Industry.

b. Bonded Abrasives:  Floor Polishing, Fabrication, Polishing, Off-Hand Tool Grinding And Precision Grinding of Diverse Products like Crank Shaft, Balls And Razor Blade across a wide spectrum of Industries.

c. Tools for Stones: CUMI is present in this segment, through its joint venture Wendt India Ltd., Bangalore, India. Diamond and cubic boron nitride CBN are known as Tools for Stones. Wheels and tools made with these abrasives are used in high end applications. The major user industries for Tools for Stones are automobile, engineering, cutting tools, refractories, ceramics tile, glass and steel.

d. Power Tools: Wood working tools, Tile cutters and Angle grinders, drills and other tools used in metal working, construction, wood working and interior decoration.

e. Metal Working Fluids: Used in grinding process - water solubles, rust preventives, neat oils and cleaners.

Electro Minerals

Sintered aluminum oxide and Silicon carbide grains: Electro minerals are used as basic raw material in the manufacture of abrasives and refractories.


a. Industrial Ceramics: Used in Extreme Wear and impact Resistant-RBSiC, Electrical Resistant, Wear and Thermal resistant, corrosion resistant Products. These products caters to critical and demanding applications in thermal power plants, material handling, coal washeries, cement, steel, floor and wall tiles, paints, food processing, mineral processing, electrical and electronic industries.

b. Anticorrosion Products: Meeting anti corrosive requirements in industries particularly petrochemicals, copper and zinc refineries, paper and pulp, fertilizers etc.

c. Bio-ceramics: Ceramics wound dressing products. Application in health care industry for post surgical medical care and treatment of various wounds and ulcers.

Super Refractories

Fired (or shaped) refractories: Murugappa Morgan Thermal Ceramics Ltd., CUMI's joint venture with the Morgran Crucible Company plc., U.K. manufactures ceramic fibre and other insulating products. An outstanding material for use in high temperature applications. The major user industries are petrochemicals, steel, power and furnace building industries.

Grindwell Norton Ltd.


Bonded Abrasives, Coated Abrasives, Super Abrasives and Thin Wheels: From cutting to grinding to polishing applications in Metal Fabrication, Building & Construction, Automobile & Automobile Component Manufacturing, Bearing, Foundry, Steel, Precision Engineering, Wood Working, Bare wood sanding, General Engineering, MRO,

Ceramics and Plastics

a. High performance refractories: Design, engineering and product manufacturing for refractory systems for high temperature applications, ballistic applications and wear applications in Ceramic Industry, Non Ferrous (Copper, Zinc and Aluminium), Iron & Steel, Chemical Transportation,

b. Silicon carbide: Refractory, Metallurgy and Abrasives manufacturing

c. Performance plastics: Used in medical/ pharma/ Biotech & laboratory solutions and in wide range of industrial component manufacturing.

Other Business

a. CertainTeed: Exterior building products

b. INDEC: IT Development Centre of the Saint-Gobain Group to provide timely, high-quality and cost-effective IT solutions to Saint-Gobain businesses globally.

Segment Performance

Revenue from operations

For Carborundum Universal Ltd. CAGR in each segment over past 5 years has been:

    • Abrasives: 3.51%
    • Ceramics: 0.11%
    • Electrominerals: 4.39%

For Grindwell Norton Ltd. CAGR in each segment over past 5 years has been:

    • Abrasives: 8.53%
    • Ceramics and Plastics: 9.68%
    • Others: 17.36%

Annual percentage growth of sales of Carborundum Universal ltd and grindwell norton ltd from 2013-14 to 2017-18

Segment Results

Segment wise results of carborundum universal ltd and grindwell norton ltd from 2013-14 to 2017-18

gno ebit margin.png

Recent Quarter Review 

Results for the Quarter and nine months ended Dec 31, 2018 

YOY growth % of segment wise results for the Quarter Dec 18 of Carborundum Universal Ltd and Grindwell Norton Ltd

Carborundum Universal Ltd. achieved margin improvement on the Ceramics business while for Grindwell Norton Ltd. margins did not improve in any of the main business segments

(Other business of Grindwell Norton is Exterior building material and IT Development centre which forms 10% of the total revenue)

Financial Ratios

exitda margin.png

PAT margin




Carborundum Universal Ltd.

  1. One of the company's subsidiary (98.07%) Volzhsky Abrasives Works, Russia where bonded abrasives and refarctory products are manufactured is quite profitable, contributing around 38% of the consolidated PBT. For 3rd Quarter of F.Y. 2018-19 also, Volzhky has delivered 13% growth in the Abrasive business.
  2. The company's topline increase in recent periods has been due to volume increase and only a minor overall impact of price increase.
  3. The company's another subsidiary (51%) Foskor Zirconia (Pty) Limited in South Africa is a loss making entity, it generates revenue of about 20-25 crores with loss of 11% (PBIT)The entity is into Zirconia - electromineral. Its new product Z450 has taken significantly longer time to find acceptance in market and achieve its target sales quantity which was announced to be as 400-450 tonnes in mid 2018-19 with expected revenue of Rs. 30 Cr.
  4. The company's Ceramics business is growing and with good margins growth on account of its product "Metalized Cylinder" which is the housing in which the vacuum circuit breakup bottle is built. It is used by all switchgear manufacturers. ABB, Areva, Siemens, Eaton, Schneider, Tarvida, LG, everybody who make switchgear uses them. The main growth in this product is due to its export with small count of domestic buyers.
  5.  ~45% of the sales are export sales and thus the comapany's NP position is impacted by currency fluctuations on closed and restatement on open psoition.
  6. The company is counting on major revenue increase on launch of its new innovative products and few other improvements:

a) Z450 which is in line to be brought into actual marketability, it is highly cost competitive, the companyis counting on this product for volumes breakthrough at Foscor. It requires less than 1/3rd of graphite amount as compared to current zirconia and thus power required for its fusion is required less than half. Its redioactive wastage is also quite less.

b) Graphene based products which are into stage of trial productions for testing expected to be made commercial in Q1 of 2019-20.

c) The company's Power Plant in Manyar was effected during Kerela floods and is expected to get back into operations in last quarter of 2018-19; the company will be benefitted by power cost savings on this improvement.

d) The planned capex is Rs. 145 Cr. for next year which includes maintenance capex and for capacity increase by around 10%.

7. The borrowings have reduced substantially over last 5 years with a minor debt                  balance standing due of Rs. 6.28 Cr.

Grindwell Norton Ltd.

  1. The company's main business segment is Abrasives that forms 65% of the revenue. The abrasives segment has been growing over years on account of introduction of new products and further more growth opportunities identified by the company are Automotives Industry and Steel Industry.
  2. Exports account for roughly ~16% of the sales, thus negligible impact of forex fluctuations and the company wants to endeavour on new innovative products.
  3. Grindwell Norton Ltd. derives abrasive volumes from varied sectors/segments with ~45% of the demand from automobile OEM and ancillary companies (which is above industry average share). Thus the company is under huge impact of the performance of the Auto Industry.
  4. The company has an advantage high quality R&D facilities of its parent Saint Gobain helping it with newer and better products to gain share in
    the highly competitive market. It has R&D centre (in chennai) and is uniquely positioned in the Abrasives industry, as it can leverage the capability of developing grain technologies suited for Abrasives applications.
  5. The Ceramics and Plastics business accounts for 27% of the revenue. The company remained effected till 2017 on account of substantial power price increase by Andhra Pradesh Gas Power Corporation Limited in 2012. The impact was brought to end in 2017-18 with higher energy availability.
  6. The company recognizes composites and automobile industry as the main growth drivers for further years. In High Performance Plastics segment, Composites business is witnessing good overall growth by identifying new applications and competition conversion.
  7. On November 9, 2018, BOD approved establishment of a Limited Liability Partnership (LLP) entity in India with Shinagawa Refractories Co Ltd, Japan to manufacture Tap hole clay refractory products for the steel industry. Projected investment by the company to be Rs. 15 Cr. initially with 49% holding.
  8. The company's capacity expansion capex was done till 2016 and no capex has been done in any of the business segment. The comapny is focussed on sales improvement ahead. Despite expansion capex done the company has remained cash rich and debt free over years.


  • The Abrasives industry is catered by few leading players serving major portion of the Indian market. Imports are predominantly in the high and low end Abrasives.  The unorganised market is to the extent of thirty per cent of overall market.
  • The Bonded Abrasives and the Coated Abrasives are important segments in the Indian scenario and contribute maximum in terms of revenues to this industry.
  • Asia Pacific represents the largest and the fastest growing market for the Abrasives
    industry and China is the largest producer of Abrasive materials and Abrasive products. The growing demand for various types of Abrasives from Transportation, Building & Construction and other durable goods industries is expected to drive the Asia Pacific Abrasives market.
  • The Abrasives business caters to a number of industries such as Steel, Automobiles, Auto Components, General Metal Fabrication, Construction and Woodworking and also it is not a value addition product thus can be severely impacted on major fluctuations at user indutry end.
  • High price sensitivity exists in the abrasives industry thus price hikes results in downtrading and consumers start buying lower cost products which is a challenge for the industry for raising margins.
  • The other segments; minerals, industrial ceramics and high performance plastics, opportunities lie in many user industries as stated earlier. They have newer innovative applications in the areas of life sciences, composites, refractories, electronics, road, defense and automotive components on account the differentiated characteristics of heat/power/chemical resistance.

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References: Companies' Annual reports, Media reports, Investor presentations, Industry reports. (We have taken the most recent published details of the companies and the latest investors' meet)

Disclaimer: The report only represents personal opinions and views of the author. No part of the report should be considered as recommendation for buying/selling any stock. The report & references mentioned are only for information of the readers about the industry stated.

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