Grindwell Norton Management Discussions

General Review:

Grindwell Norton Limited ("GNO") is one of the subsidiaries of Compagnie de Saint-Gobain (Saint-Gobain), a transnational group with its headquarters in Paris and with sales of Euro 51.20 billion in 2022. Saint-Gobain has organised its businesses into two broad areas: Construction or Building related businesses focused on serving the regional market, and High Performance Solutions ("HPS") catering to the global market. GNOs businesses are part of the HPS Sector. Within GNO, the businesses are divided into two major segments;

1. Abrasives

2. Ceramics & Plastics

Business environment:

Indias current growth continues to be resilient despite some signs of moderation. The overall growth remains robust and is estimated to be between 6.5% to 7% for the full year. Growth was underpinned by strong investment activity bolstered by the governments capex push and buoyant private consumption. The Index for Industrial Production ("IIP") grew by 5.5% over 2021-22 and the growth was widespread. The global geo-political disturbances resulted in rising commodity price and input cost which resulted in rise in inflation and depreciation in Rupee against the USD.

Abrasives Segment Review

Products & Plants:

Bonded abrasives, generally available in the form of wheels and other shapes such as Segments, Sticks & Cones, etc., are used for various precision applications such as OD grinding, ID grinding, Surface grinding, Face grinding, Lapping, Honing, Super-finishing, Thread grinding, Fluting etc. They are also used in rough applications such as Snagging, Burr removal and Off-hand grinding. Bonded Abrasives are used by a variety of Industries like Steel, Bearings, Auto Ancillaries, Auto OEMs, Foundries, Cutting Tools, Needle, Razor, Food Processing, Aerospace and General Engineering. The variety of products is large and consists of both Made-to-Order and Made-to-stock products. GNO makes over 15,000 different products in a year.

Thin Wheels are predominantly Cutting and Grinding Wheels used for Cutting, Deburring and Weld-removal. These are generally used in Fabrication, Construction, Foundry and General Engineering. With the increasing affordability of Power Tools, usage of TWs is growing significantly.

Coated Abrasives products are engineered composites comprising of a backing, a bond system and abrasive grains and are designed for material removal and surface preparation and finishing. Coated Abrasive products are available in various shapes like Discs, Belts, Wheels, Sheets & Rolls to suit a wide gamut of surface preparation and polishing applications. Non-Woven Abrasives, which are a part of Coated, are used for getting the desired high quality surface finish for metals, woods and other composites. Non-woven products are also used for consumer applications like utensil cleaning, floor cleaning etc as well.

Super Abrasives are made of Diamond (synthetic or natural) or Cubic Boron Nitride and are used in precision applications in Auto, Bearing, Steel, Solar, Electronics and many similar industries.

GNO offers the widest range of cutting-edge Abrasive products to the Indian market. While the vast majority of these products are made by GNO in India, some are sourced from other plants of Saint-Gobain or from third parties.

Saint-Gobain has good backward integration for certain Abrasives as the Ceramic Materials Division of Saint-Gobain manufactures high-end Abrasive grains. Besides, Saint-Gobain has strong Research and Development capabilities and is uniquely positioned in the Abrasives industry.

Abrasives business in India has four manufacturing sites: Mora (near Mumbai), Bengaluru, Nagpur and Badi (Himachal Pradesh).

All the sites are certified under ISO 9001, ISO 14001 and ISO 45001. Besides, to augment its manufacturing capacity, GNO also has contract manufacturing and extensive sourcing arrangements both at domestic and international level.

In the last few years, we have started to offer a range of Sealants & Adhesives under the Brand ‘Tekbond based on the successful acquisition of a few businesses by Saint-Gobain in the rest of the world.


The Abrasives industry in India currently has two major players offering a full range of Abrasives products, one of which is GNO. GNO has a leadership position in several product-market segments. Apart from these two major players, there are several multi-national players, primarily, European, Korean and Japanese, present in the market through their local entities or agents or distributors. Also, there are several small local players present in a select range of products.

Over the years, imports from China have significantly increased in the lower tiers of the market. As the Quality and performance levels of these products is acceptable, they offer competitive value proposition to the customers and increasingly occupy higher shelf-space in Retail counters. In case of Coated Abrasives, a few important international players including from Korea, have set up conversion facilities in India. Abrasives business has over a period of time become very competitive with Power Tool players, Cutting Tool and Paint companies entering in a big way. The abrasives market is thus becoming a lot more competitive every year. Implementation of GST made it feasible for the large foreign players to set-up their warehouses in India. For the products imported from China, the CVD paid is effectively reimbursed. This has led to a signficant increase in competition.

The Key Success Factors for Abrasives in India are; range, loyal distribution, reach, high level of technical competence to work on specific solutions for different customers, good cost position, agility in offering new products & solutions, reliable service and quality and innovation.

Development & Outlook:

Saint-Gobain is a major player worldwide in Abrasives. It has a strong product portfolio with Centres of Excellence, footprint in several countries for manufacturing and R&D centres located in different parts of the world to cater to both the local and global needs in terms of products, manufacturing process etc. Besides, the Ceramic Materials Division of Saint Gobain develops high end Abrasive Grains.

GNO benefits from being a part of such an organization, in terms of access to all developments in products and process technology. After two years of COVID related disturbances, Financial year 2022-23 was a stable year, relatively. While there was reasonable stability on the Supply-chain front in terms of availability, inflation rose to very high levels and stayed there for most part of the year. The conflict between Russia and Ukraine created a lot of uncertainties that led to all European manufacturers raising prices. Some specific commodities saw inflation at much higher levels. Energy prices too went up substantially.

On the other hand, China didnt experience such high levels of inflation and the suppliers have started to lower prices for exports given the overall low demand. Thus in India, we had to put-up with higher inflation for many of our Raw Materials for a good part of the year while the prices of many products imported from China have started to get lower.

Throughout the year, we had to make a fine, tightrope walk, balancing high inflation in input costs with lowering finished products prices. We had to make difficult choices of exiting some non-profitable customers & product-lines while persevering with some customers for price compensation in the face of heavy resistance.

Demand was stable but somewhat subdued. Auto Industry has witnessed stable growth. Export dependent industries saw a big decline in order-books. Rural demand was weak, FMCG companies did have a soft volume growth.

Despite the global head-winds and uncertainties associated with geo-political conflicts & realignments, India is expected to register a higher economic growth for several years to come. Indian Government is rapidly investing in developing infrastructure in several areas including roads, airports, railways etc. Indian Steel Industry which is already the 2nd largest in the world will continue to grow much faster with new capacities for value added steels. With the western world relooking at their excessive supply chain dependence on China, several new opportunities will emerge for India.

These will mean, a faster and sustained growth of Abrasives industry in the near future. The evolution of Electric Vehicles is expected to result in somewhat lower potential for Abrasives.

Overall, with the focus on expansion of our reach and distribution and on diversification to non-engineering channels, we grew our sales by 12.5% to 1,278 crores and Operating Profit by 15.2% to179 crores in 2022-23.

We also successfully commissioned the new Paper maker in Bengaluru. This new capability would open-up many new opportunities in India and in export markets.

Risks & Concerns:

Post pandemic, the Economic recovery in India seems to be K shaped. Outlook for India for 2023-24 seems to be stable, albeit, at a lower level compared to 2022-23. On the other hand, the global economy is expected to see head-winds in the form of recession.

Several agencies like International Monetary Fund ("IMF") & World Bank ("WB") are forecasting a much lower economic growth in Europe and US.

China economy is expected to bounce back after the full opening-up post COVID restrictions. This is expected to lead to inflation in commodity prices. So far, though, this doesnt seem to be happening. On the other hand, low demand in China may mean the manufacturers will be aggressive in exports. This can exert price pressure in India for the abrasive products.

(i) Industry & Market:

The Abrasives business caters to a number of industries such as Steel, Automobiles, Auto Components, General Metal

Fabrication, Construction and Woodworking. The dependence on any single industry segment is less than 15% even as Automotive coupled with ancillaries and Automotive After, has a significant impact. This broad-based nature of Abrasives business in a way protects it from the volatility of any particular segment.

GNO, over last few years has focused on growing the non-engineering channels and also diversifying in adjacency products.

We have also increased efforts to grow exports. This in a way, should partially insulate us from the ups and downs of specific market segments in India.

(ii) Technology:

Abrasives have been used over a very long period of time and technological changes in terms of applications are gradual. GNO Abrasives is well positioned to anticipate and take advantage of these technological changes as Saint-Gobain is one of the Worlds Leading manufacturers of Abrasives with a very strong R&D Centre in the USA with regional R&D centers located elsewhere (including a Centre in India). Both basic and applied research takes place at these R&D centers. GNO has full access to all the research and technology developments.

(iii) Competition:

The Abrasives Market in India has two major players and many other small, mid-size players. In the last few years, we have seen many Paint, Adhesives and similar companies entering the Abrasives market. With their deep distribution and aggressive prices, they have been able to penetrate the market in a short period of time. On the other hand, imports from China have grown over the period of time. We see organized players in power-tools segment and local traders importing from China in their own brands. High-end European and Japanese players continue to work in specific niches. They operate through their subsidiaries, distributors or agents. To meet the growing challenges in the market, the business will have to continue to invest in technology, capacities and capabilities and provide superior solutions.

PERFORMANCE PLASTICS ("PPL") Product, Plant & Industry:

The Performance Plastics business produces and markets more than 800 standard and custom-made polymer products through three business segments: Engineered Components ("ENC"), Life Sciences ("LS") and Composites ("CMP"). Each of the segments demonstrates innovation, responsiveness to customer needs and polymer expertise. The major product lines in PPL are Bearings, Seals, Tubing & Hoses, Films, Fabrics and Foams. The major markets addressed are Life Science, Automotive, Oil & Gas, Construction, Energy and General Industrial. GNO has a plant for ENC and LS products situated at Bengaluru. This plant is certified under ISO 9001, ISO 14001, ISO 45001 and TS 1694.

Development & Outlook:

The major growth drivers are:

(a) New product development and new customer /market conversions

(b) Success in new applications development

(c) Broad-basing of existing applications and markets

(d) Specification driven approvals at customers in Life Sciences and Automotive market segments. 2022-23 was an excellent year for the PPL business with both sales and profits registering significant increases. The Bearings segment of Engineered Components was the biggest contributor to this outstanding performance due to significant revivals seen in automotive volumes. The Life Sciences domestic market witnessed good demand from local manufacturers of vaccines and drugs and also due to the conversion of new customers and applications. As global markets witnessed demand slump, export orders for tubings from our affiliates saw a significant decrease. Revival of activity and industrial activity helped the Composites segment to do much better. Moreover, strong customer conversions and demand pick up in Electric Vehicle ("EV") automotive customers has led to a strong growth for the Composites business. Seals business too showed good growth volumes over last year with new customer additions in the Energy sector in spite of a sluggish Energy market environment.

Looking ahead, the outlook for all businesses is positive with a favourable demand scenario in most of the markets. The Life Sciences business continues to have a strong demand outlook on the domestic front and with local production of Bags there is a huge new business opportunity available for conversion. With Automotive demand expected to continue to do well in the current year with lesser supply chain disruptions, Bearings and Composites businesses too have a good outlook. Electric Vehicle Battery packs promises to be a significant growth driver for Composites business in 2023-24. The main aim of the PPL businessin

2023-24 would be to strengthen its position in existing markets, while accelerating growth in new markets in the industrial, life sciences and construction segments. Presence of well-trained technical sales and application engineers with good market coverage is a key requirement to identify and develop new applications and deliver high growth. Building such teams and local expertise will continue to be a high priority for the business.

Risks & Concerns:

Demand disruption in key markets like Automotive, Life Sciences ,Industrial and Oil & Gas is a major risk due to the macro environment uncertainty in the short term. Inflationary environment and concerns over availability of Key Raw materials along with logistical uncertainties will be critical challenges to overcome for the business in the current year. Depreciation of the Rupee is also a risk as the business is import-intensive.


GNOs PCR Business Unit makes Ceramic and Refractory products for a wide range of industrial applications. The products manufactured mainly include Silicon Carbide based "shaped" refractory and ceramic products. The range of "unshaped (monolithic)" products primarily includes "dry ramming masses" and a few specialized "castables". PCR Business offers comprehensive solutions, based on deep expertise acquired over the years, in the design, engineering, and manufacturing of ceramic and refractory systems for addressable applications. In many cases, our offering includes installation support and training as part of the overall product-service package. PCR business unit has two manufacturing sites: one is located at Bengaluru, in Karnataka, and the other at

Halol, near Vadodara, in Gujarat. The plants in Halol & Bangalore are certified under ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018.


PCR Refractory products find use in applications across industry segments like Primary Iron & Steel, Primary Non-Ferrous Metals (Aluminium, Copper, Zinc, etc.), Secondary Steel, Secondary Iron, Secondary Non-Ferrous (Aluminium, Copper), Petrochemicals, Waste to Energy Systems, etc. PCR Ceramic products are used in applications in industry segments like Sanitaryware, Tableware, Ballistic Armor Protection, Wear Resistance Systems, etc.

Development & Outlook:

Sales in 2022-23 were 41% higher than the previous year. The business continued to develop the opportunities identified during the last few years in the following segments: Foundry, Iron & Steel, and Non-Ferrous segments in the domestic market and Ceramic systems, Armor, Iron & Steel, and Foundry segments in export markets. Operating profit grew substantially, mainly due to higher sales volume , improved sales realisation and continued improvement in manufacturing efficiencies. The new JV SGSR is still in the stabilization phase & expected to achieve break-even in 2023-24.

The outlook for 2023-24 is positive on account of the identified market opportunities but concerns, due to slowing Indian and global economy and supply chain disruption brought on by different economic & geopolitical circumstances. In the upcoming years, the Halol Expansion will serve as the primary engine of robust expansion (especially in export markets).

Significant changes in Key Financial Ratios along with detailed explanation:

During the Financial year ended March 31, 2023, the Debt-Equity Ratio of the Company has risen to 140% as a result of availing part of the sanctioned term loan during the financial year.

Risks & Concerns:

The business has a very high level of exposure to global supply chains – both for inputs and sales. There are many geo-political factors at play that can disrupt these supply chains. Contingency plans need to be developed for such situations.

SILICON CARBIDE ("SiC") Products & Plants:

Silicon Carbide grains are used primarily as raw material in the manufacture of Abrasives, Refractories, Iron Foundries and for stone polishing. SiC is manufactured at the plant located at Tirupati in Andhra Pradesh. SiC is also manufactured by the Companys subsidiary, Saint- Gobain Ceramic Materials Bhutan Private Limited, at its plant near Phuentsholing in Bhutan. Both the plants are certified under ISO 9001: 2015, ISO 14001:2015 and ISO 45001:2018.


In the domestic market, there are three main players (including GNO) in the SiC business. This market is also catered by imports, mainly from China, Vietnam and Russia. The key requirements for success in the industry are quality and cost competitiveness. Entry barriers are high by way of capital investment and technology.

Development & Outlook:

SiC business witnessed the worst inflation on the cost front. The Petcoke which is one of the Primary Raw material touched historical high levels for GNO as well as your Companys subsidiary in Bhutan. This increase in the Petcoke and RPC prices impacted adversely overall input costs. While the Costs touched historical highs, at both manufacturing sites, we were able to cover this with partly increase in selling prices during most part of the year. As the customers restricted their requirement purely based on consumption and bringing down their inventory levels resulted in drop in domestic demand over the previous year. During the last quarter, while there was some softening on the input costs, the Selling prices dropped far higher than input cost drop resulting in the decrease in overall Margins.

On the supply side, with the easing of COVID curbs in Bhutan, there was an overall increase in the output of the plant. The power supply to the Tirupati site of your Company from the Andhra Pradesh Gas Power Corporation Limited (APGPCL) was affected during the second half of the financial year as APGPCL was shut down due to non-availability of the APM gas. As a result the overall out put was lower than the previous year.

Looking ahead, the focus in 2023-24 will be on maximizing supply from both manufacturing locations and to continue focus on the Price and Cost management.

Risks & Concerns:

Given the ongoing global Energy crisis, the Input cost pressure continues to affect us. While recently we have seen some softening of Input costs, this is still not sufficient given the reduction seen in the selling prices we have witnessed. This needs a very close management.

Digital Services

Development & Outlook and Risk & Concerns:

GNO has captive Digital services unit which provides various Digital services (e.g. Application development, infrastructure management, and cybersecurity) to the Saint-Gobain group globally. The Digital services unit has around 699 people. The captive center follows the cost-plus model. The growth in this segment is limited and future growth can happen only on account of cost inflation. The financial performance of this segment may be impacted due to the foreign exchange fluctuation and hedging strategy

Risks & Concerns -others

1. Financial:

GNOs financial management has always been governed by prudent policies, based on conservative principles. Currently, GNO has minimal borrowing. All the commercial transactions entered into by GNO in foreign currencies are managed by hedging them appropriately to minimize the exchange risk. GNO has a well-defined and structured treasury operation, with the emphasis being on security.

2. Legal & Statutory Contingent Liabilities:

Details of Contingent Liabilities are in the Notes forming part of the financial statements.

Statutory Compliance: GNO ensures statutory compliance of all applicable laws and is committed to the timely payment of statutory dues. The Company monitors compliance under various statutes periodically.

Human Resources:

GNOs Human Resources Policy aims to create a work environment that is conducive for the professional and personal development of employees. GNO continued to invest in training people in Environment, Health and Safety and in World Class Manufacturing and to provide a work environment in which employees can give their best and realize their full potential. At the end of the year, there were 2322 permanent employees on the rolls of the Company.

Overall Performance:

The financial year witnessed increased economic activity after a contraction in the previous year. The industrial economy witnessed a steady and sustained improvement despite increase in input costs and high commodity prices. Your Companys standalone revenue from operations and operating profit have increased by 18.10% and 17.90% respectively and consolidated revenue from operations and operating profit increased by 26.26% and 23.58% respectively. The consolidated operating profit margin (19.50% vs 19.92%) and net profit margin (14.23% vs 14.66%) was marginally lower than the previous year. Return on Net Worth (standalone) for the financial year ended March 31, 2023 at 19.60% is higher than that of the previous financial year 19.07% and Return on Net Worth (consolidated) for the financial year ended March 31, 2023 at 20.02% is higher than that of the previous financial year 18.81%.

Internal Control Systems:

GNO has an effective internal control environment which ensures that the businesses and operations are managed efficiently effectively, assets are safeguarded, regulatory requirements are complied with and transactions are recorded after appropriate authorisations. The efficacy of the internal control systems is validated by Internal as well as the Statutory Auditors. The Companys strong independent internal audit function performs regular audits. Every quarter the significant audit findings, the corrective steps recommended and their implementation status are presented to the Audit Committee.

Segment Financials:

For the current year, in line with the Accounting Standards on Segment reporting, GNO has identified three segments. These segments are Abrasives, Ceramics & Plastics and Digital Services.

Cautionary Statement:

The Management Discussion and Analysis Report contains a few forward looking statements based on the information and data available with the Company and assumptions with regard to the economic environment, the government policies etc. The Company cannot guarantee the validity of assumptions and performance of the Company in the future. Hence it is cautioned that the actual results may differ from those indicated, expressed, or implied in this report.