Carborundum Universal Limited: history, ownership, mission, how it works & makes money

A Brief History of Carborundum Universal Limited

Founded in 1954, Carborundum Universal Limited (CUMI) is part of the Murugappa Group and has established itself as a leading manufacturer of abrasives, ceramics, and refractories. The company started its journey with the production of bonded abrasives and has progressively expanded its product range and market presence.

In 1967, CUMI made a significant move by establishing its production facility in Mysore, India. This development marked its commitment to manufacturing and meeting the domestic demand for high-quality abrasives. Today, the company operates multiple manufacturing units across India and has extended its footprint internationally.

By 1992, CUMI ventured into the manufacture of advanced ceramics, further diversifying its portfolio. This move opened up new markets and opportunities, particularly in sectors such as defense and aerospace. The company has been at the forefront of research and development, constantly innovating to meet the evolving needs of its customers.

In 2001, CUMI took a significant step by acquiring a controlling stake in Carborundum Abrasives, a US-based company. This acquisition not only enhanced its product capabilities but also increased its market share in North America.

The financial performance of Carborundum Universal Limited has been robust over the years. For the financial year ended March 2023, the company reported revenues of ₹2,250 crores, representing a growth of 15% compared to the previous year. The net profit for the same period stood at ₹230 crores, reflecting an increase of 12%.

As of October 2023, CUMI's market capitalization stands at approximately ₹7,500 crores. The company's stock performance has shown resilience, with a year-to-date return of 22% as per the National Stock Exchange (NSE) data. The stock is currently trading at around ₹700 per share, up from ₹575 at the beginning of the year.

Carborundum Universal Limited has consistently invested in capacity expansion and technological advancements. In 2022, the company announced plans to invest ₹300 crores in enhancing its manufacturing capabilities, aimed at increasing production efficiency and introducing new products. This strategic investment underscores CUMI's intent to maintain its competitive edge in the global market.

Additionally, CUMI has made strides in sustainability, focusing on reducing its carbon footprint. The company aims for a 25% reduction in carbon emissions by 2025. As part of its corporate social responsibility initiatives, CUMI actively participates in community development programs, including education and health initiatives.

Overall, Carborundum Universal Limited's journey from a domestic manufacturer to a global player in the abrasives and ceramics industry showcases its commitment to innovation and growth, supported by solid financial performance and strategic investments.

A Who Owns Carborundum Universal Limited

Carborundum Universal Limited (CUMI), a part of the Murugappa Group, is one of India's leading manufacturers of industrial abrasives and ceramics. As of the latest available data, the ownership structure of CUMI is primarily composed of institutional investors, retail investors, and key stakeholders.

The largest promoter group is the Murugappa family, which holds a substantial share of the company's equity. The company has witnessed a stable increase in its share price over the past fiscal year, reflecting the confidence of institutional investors. As of October 2023, the price per share stood at approximately ₹290, marking a year-to-date increase of about 25%.

In the latest earnings report for Q2 FY2023, CUMI reported a revenue of ₹1,050 Crores, representing a growth of 15% year-on-year. The net profit for the same quarter was ₹100 Crores, with a net profit margin of 9.52%.

CUMI's strategic initiatives in expanding its product portfolio and enhancing production capabilities have attracted attention from both domestic and international investors, contributing to its robust ownership pattern.

With a market capitalization exceeding ₹25 billion, CUMI has established itself as a key player in the abrasives market, benefiting from diversification and global expansion strategies.

Carborundum Universal Limited Mission Statement

Carborundum Universal Limited (CUMI) is a leading player in the abrasives, ceramics, and electro minerals sector in India. The mission statement of CUMI emphasizes its commitment to quality, innovation, and sustainable growth while enhancing stakeholder value.

The core elements of CUMI's mission statement are:

• To deliver superior quality products and services to its customers.
• To foster innovation and enhance production processes.
• To maintain environmental stewardship and sustainable practices.
• To ensure the safety and well-being of its employees.
• To create value for all stakeholders involved.

In the fiscal year 2022-2023, Carborundum Universal Limited reported revenue of ₹3,270 crore, representing a growth of 12% compared to the previous fiscal year. The company's Net Profit stood at ₹304 crore, indicating a profit margin of approximately 9.3%.

CUMI is dedicated to research and development, with an annual investment of approximately 3% of revenue into innovation. This commitment reflects its aim to lead in technological advancements in the abrasives industry, focusing on high-performance and environmentally conscious products.

Furthermore, CUMI's sustainable practices include using advanced materials and processes that reduce carbon emissions by 25% since 2020. The company aims to achieve carbon neutrality in its operations by 2030.

In recent years, CUMI has expanded its international footprint, with exports accounting for 25% of its total revenue. Key markets include the United States, Europe, and various Asian countries, contributing to the company's diverse customer base.

Overall, Carborundum Universal Limited's mission statement reflects its strategic focus on sustainability, innovation, and growth while delivering value to its stakeholders, positioning itself as a leader in the abrasives and electro-minerals market.

How Carborundum Universal Limited Works

Carborundum Universal Limited (CUMI) operates primarily in the manufacturing of industrial products and materials, notably serving sectors such as abrasives, ceramics, and electro minerals. The company is a part of the Murugappa Group and has a significant presence in both domestic and international markets.

In FY 2022-23, CUMI reported a revenue of ₹2,650 crores, an increase from ₹2,305 crores in FY 2021-22, reflecting a growth of approximately 15%. The net profit for FY 2022-23 was recorded at ₹305 crores, up from ₹272 crores in the previous year, marking a growth of around 12%.

CUMI's operational segments include abrasives, ceramics, and power tools, with abrasives contributing the largest share to revenue at around 50%. The company's diversified product portfolio enhances its resilience against market fluctuations.

Business Segmentation

Geographically, CUMI has expanded its footprint across various regions, with significant exports contributing to its bottom line. Approximately 30% of total revenue comes from international markets, including the United States, Europe, and ASEAN countries.

Market Position and Strategy

CUMI holds a leading position in the Indian abrasives market, commanding a market share of around 25%. The company focuses on innovation and sustainability, investing about 5% of its revenue back into research and development (R&D). This commitment propelled the launch of several new products, including advanced ceramic materials and eco-friendly abrasives in 2023.

Moreover, CUMI has been enhancing its production capabilities through strategic expansions. The company invested approximately ₹200 crores in upgrading its manufacturing facilities in Krishnagiri, Tamil Nadu, aimed at increasing production efficiency and meeting growing demand.

Financial Health and Performance Metrics

CUMI has maintained a strong balance sheet, with a debt to equity ratio of 0.3, indicating a conservative approach to leverage. The company's EBITDA margin improved to 18%, reflecting better operational efficiencies and cost control measures.

In terms of stock performance, CUMI shares are listed on the National Stock Exchange (NSE) and have seen a year-to-date gain of around 22% as of October 2023, driven by positive market sentiment and robust quarterly performance.

Sustainability Initiatives

CUMI has also embarked on several sustainability initiatives, targeting a reduction in carbon emissions by 30% by 2030. The company has adopted green energy solutions, with around 15% of its energy requirements being met through renewable sources.

Overall, Carborundum Universal Limited's operational efficiency, strategic market positioning, and commitment to sustainability and innovation continue to drive its success in the competitive industrial sector.

How Carborundum Universal Limited Makes Money

Carborundum Universal Limited (CUMI) generates revenue through a diverse portfolio of products and services across various sectors, primarily abrasives, ceramics, and electro minerals. For the fiscal year 2023, CUMI reported a total revenue of ₹4,242 crore, showcasing a growth of approximately 8% compared to the previous year.

Abrasives Division

The abrasives segment is the largest contributor, accounting for around 55% of CUMI's total revenue. The company produces a wide range of grinding wheels, coated abrasives, and specialty products. In FY 2023, this division generated revenues of approximately ₹2,350 crore.

Ceramics Division

CUMI's ceramics division, focusing on engineered ceramics and refractory products, contributed about 25% of total revenues. For FY 2023, the ceramics segment reported revenues of around ₹1,060 crore, driven by increasing demand in automotive and industrial applications.

Electro Minerals Division

The electro minerals segment manufactures products such as silicon carbide and fused alumina. This division contributed roughly 15% of the total revenue, with FY 2023 revenues reaching ₹550 crore. The growth is primarily attributed to the rising demand for specialty materials in various industries.

Other Revenue Streams

CUMI also diversifies its income through a small but significant contribution from other solutions and services such as surface finishing, which accounts for around 5% of total revenues, generating approximately ₹282 crore in FY 2023.

Revenue Breakdown by Segment

Geographical Revenue Distribution

CUMI's revenue is not solely dependent on the Indian market; international sales contribute significantly to its overall performance. The company reports that approximately 30% of its revenues come from exports, with strong markets in North America, Europe, and the Asia-Pacific region.

Cost Structure

The cost of materials is a major factor in CUMI's profitability. For FY 2023, the cost of goods sold (COGS) accounted for about 70% of total revenue, resulting in a gross profit margin of approximately 30% . CUMI has focused on optimizing its supply chain to mitigate raw material cost fluctuations.

Investment in R&D

To maintain its competitive edge, CUMI allocates around 2.5% of its revenue to research and development. This investment facilitates innovation in product offerings and enhances operational efficiencies, ultimately driving revenue growth.

Market Trends Impacting Revenue

The global abrasives market is expected to grow at a CAGR of 5% over the next five years, with rising demand in the automotive and construction industries. This trend is favorable for CUMI's growth prospects and may significantly enhance its revenue streams in the coming years.