Grindwell Norton Ltd Management Discussions.


Grindwell Norton Ltd ("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 44.2 billion in 2021. Saint-Gobain has organized its businesses into two broad areas: Construction or Building related businesses that serve Regional markets and businesses that serve Global markets. The businesses that serve Global markets fall within the High Performance Solutions sector of Saint-Gobain. GNOs businesses are part of the High Performance Solutions sector. Within GNO, the businesses are divided into two major segments:

1. Abrasives

2. Ceramics & Plastics


With ease of COVID restrictions and supply disruptions post the second wave of COVID the output levels reached pre-pandemic levels. The recovery in the economy was broad based. The improved performance especially in farm, mining and manufacturing sectors contributed to the growth. As a result, the Indian economy after a witnessing a contraction of 7.3% in the financial year 2020-21 is likely to end with the growth of 8.7% during the financial year 2021-22. The Industrial output growth rate has remained positive since the beginning of the financial year. The Index for Industrial Production (IIP) has registered a growth of 11.3% during the financial year compared to a contraction of 8.4% in the previous financial year. The rising input cost and the commodity prices contributed to the rise in inflation and depreciation of Indian Rupee against USD. RBI in order to sustain the growth continued with accommodative policy measures such as retaining the interest rates and ensuring the liquidity conditions.


Products & Plants :

Bonded abrasives, generally available in the form of wheels and other shapes such as Segments, Sticks etc., are used for various precision applications such as Lapping, Honing, Super-finishing, Thread grinding, Fluting, OD grinding, ID grinding & Surface grinding. They are also used in rough applications such as Snagging, Cutting-off, Burr removal and Weld preparation. Bonded Abrasives are used by a very large number of Industries like Steel, Bearings, Auto Ancillaries, Auto OEMs, Cutting Tools, Needle, Razor, Food Processing, Aerospace and General Engineering. The variety of products is large and consists more of Made-to-Order 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 and Construction. In addition to different forms of Steel, lately the usage of other metals like Aluminum in fabrication has increased. With the increasing affordability of Power Tools, usage of TWs is growing. Super Abrasives are made of Diamond (synthetic or natural) or Cubic Boron Nitride and are used in precision applications.

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, cater to the consumer market in scouring applications and for high quality surface finish in Industrial applications. 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. The Abrasives business has four manufacturing sites: Mora (near Mumbai), Bengaluru, Nagpur and Bated (Himachal Pradesh). All the sites are certified under ISO 9001, ISO 14001 and OHSAS 18001/ISO 45001. Besides, to augment its manufacturing capacity, GNO also has contract manufacturing facilities in India and extensive sourcing arrangements from countries outside of India.

Industry :

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 have also improved, they offer a very good value proposition to the customers and increasingly occupy higher shelf-space in Retail counters. Post implementation of GST, major European and Japanese players have started billing in INR from local ware-houses. 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.

The Key Success Factors for Abrasives in India are good cost position, reliable service, consistent quality, strong distribution and reach, agile innovation and high level of collaboration with customers.

Development & Outlook:

Saint-Gobain is a major player worldwide in Abrasives. It has a strong product portfolio, a strong R&D set-up with projects in process, products and applications, with plants and marketing/sales organizations all over the world. GNO benefits from being a part of such an organization, in terms of access to all developments in products and process technology, sourcing of products and development of exports.

Year 2021-22 was expected to start on a strong note. However, pandemic Wave 2 hit the country very hard during Apr - Jun and severely impacted several of our stakeholders - employees, distributors, retailers, customers and suppliers. This created challenges in operations & sales. However, the Company responded proactively to the situation by mobilizing and facilitating the best possible support. On the other hand, economic activities continued at reasonably normal level as government imposed lesser restrictions than in wave 1. We managed to report a good overall performance in the given context in first quarter of the financial year 2021-22. The second and third quarter of the financial year on the other hand saw significant twin challenges of high inflation and severe disruption of Supply Chains. Initially high demand and constrained supply side led to high inflation. This got exacerbated further with the energy crisis in China and the implementation of severe environment protection measures preceding Winter Olympics. Constraints in availability of good quality bauxite in India and consequent impact on manufacturing of Brown Fused Alumina did pose severe challenges. Grain manufacturers in India are adopting alternative methods to achieve the production of required quality of BFA avoiding dependency on bauxite and we are working closely with the large, well established companies to secure Supply Chain.

On the other hand, to mitigate the impact of unparalleled inflation, we had no other option but to pass on the increases to the market and customers. We thus had to take the unprecedented step of increasing prices multiple times during the year.

Inflationary pressures continued in Q4 while the availability of key materials improved. However, the new geo political tensions and the zero tolerance approach to Covid in China created new uncertainties and started dampening the sentiment and activity towards the year-end.

Our efforts to gain share in the market continued at a good pace in spite of the disruptions and as a result we grew our sales by 22% as compared to 2020-21 and by 23% as compared to 2019-20. With continued control over costs, we reported an Operating Profit of ?155,61 lacs reflecting an increase of 39%. Operating Margin stood at 13.70%.

Given the strong growth expected in different segments of Abrasives, we have accelerated our Capex in 2021-22. We have progressed as per schedule on the new Coated Maker. The company is investing in a new & modernized manufacturing facility for Non-woven products to increase the capacity, and it would be commissioned by early-2023.

Risks & Concerns:

The direct risks posed by the pandemic have reduced. On the other hand, the global supply chains continue to be impacted due to the spread of more transmissible variants leading to increased costs and lead-times. India has handled the Wave 3 well due to vaccination and we do believe that as a country we are better prepared to handle any new mutants that are fast paced. However, even as the fear of pandemic has reduced in the general public, the lingering uncertainty may have an adverse impact on consumer spending. We will keep a close watch on the developments, prioritize the safety and wellbeing of our employees while being agile to respond to the changing demand. We will continue to keep discretionary costs under check.

The crisis related to availability of semi-conductors has affected several industries and more particularly, the auto sector. The ongoing war between Russia and Ukraine has posed new challenges regarding inflation, supply chains and growth. Fuel prices are ruling at sustained high levels. Inflation - both the Wholesale and Consumer, continues to rise in India and globally. This is causing the Central banks to consider interest rate hikes and roll-back of the expansionary monetary policy. This is expected to have an impact on the credit availability and overall demand.

(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. Demand for Abrasive products can get affected if all sub-segments of the industry perform badly at the same time or if a significant downturn happens in Auto industry that impacts Abrasives potential significantly, directly or indirectly. Normally, this happens in an economic slowdown. There are a number of large customers serviced directly and there are several dealers to service small and medium customers. The largest customer accounts for less than 4% of the total sales and the largest dealer also accounts for less than 3% of the total sales. In order to minimize the impact of a domestic downturn, GNO has been putting in efforts to develop export markets and will continue to do so. Export sales are not concentrated in any single country, but are spread over several countries.

(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 has clearly been evolving from two major players to multi-players. The competitive landscape has become much more dynamic with players from Power Tools, Paints, Cutting Tools and other trading-houses actively entering into the market in the last few years. We have, on the one hand, competition from the high-end European manufacturers and on the other, from the low-end Chinese imports. Hence it is important to be differentiated as well as highly competitive to stay ahead in the market. 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.


Products & Plants

Silicon Carbide grains are used primarily as raw material in the manufacture of Abrasives, Refractories 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. GNO is the market leader. This market is also catered to 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:

The Silicon Carbide domestic demand increased over the previous year primarily driven by the refractory Market. SiC business witnessed the worst inflation on the cost front. The Petcoke which is one of the Primary Raw material touched historical high levels. In your companys subsidiary in Bhutan we shifted to Low Sulphur coke (RPC) to be in line with the local norms.. This change has come with a structural change in our cost as this RPC is priced much higher than Petcoke. While on one side we started using RPC which was priced much higher than conventional Petcoke, the spike in the RPC prices witnessed globally added further to our input costs. While the Costs touched historical highs, at both Tirupati and at Bhuta, we were able to cover this with the substantial increase in selling prices. .

On the supply side, production at your Companys Tirupati Plant was higher than in the previous year. . While supply from Tirupati increased, the production at Bhutan continued to be a challenge due to the restrictions on the movement of people imposed by the Government of Bhutan to control the spread of COVID-19.

Looking ahead, the focus in 2022-23 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 be effecting us and we are yet to see a reversal in the trend for our input costs. This needs a very close management.


Products & Plants:

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 include "dry ramming masses" and a few specialized "castables". PCR Business offers comprehensive solutions, based on deep expertise acquired over the years, in 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 (Aluminum, Copper, Zinc etc.), Secondary Steel, Secondary Iron, Secondary Non Ferrous (Aluminum, Copper), Petrochemicals, Waste to Energy Systems etc. PCR Ceramic products are used in applications in industry segments like Sanitary-ware, Table-ware, Ballistic Armor Protection, Wear Resistance Systems, etc.

Development & Outlook:

The 2nd wave of COVID-19 from March-May 22 did not have severe impact on supply and demand and the performance of the business. Sales in 2021-22 was 35% higher than 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, Iron & Steel and Foundry segments in export markets. Operating profit grew substantially , mainly due to the Price Increase (which was higher than input cost Inflation) and the continued improvement in manufacturing efficiencies. 2021 - 22 was also the first year of the new joint venture with Shinagawa Refractories, Japan - SG Shinagawa Refractories India private limited.

The outlook for 2022-23 is positive on account of the identified market opportunities but concerns, on account of inflation and supply chain disruption risks, remain. Halol Expansion plan will be the key driver for strong growth (particularly in Export markets) in coming years.

Risks & Concerns:

The 4th wave of COVID 19 is a cause for concern and increases short-term uncertainty. Ensuring the health and safety of our employees is going to be a key priority. The sustained rise in the prices of key raw materials in recent months is a major concern. This needs to be mitigated primarily through price increase and cost reduction initiatives in the plants. 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.


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 Automotive, Oil & Gas, Life Sciences, Construction, Energy and General Industrial. GNO has a plant for ENC and FLS products situated at Bengaluru. This plant is certified under ISO 9001, ISO 14001, OHSAS 18001/ISO 45001 and TS 1694.

Development & Outlook

The major growth drivers are: a. New product development and new market penetration b. Success in new applications development and market launches. Broad-basing of existing applications and markets d. Specification driven approvals at customers. 2021-22 was an excellent year for the PPL business with both sales and profits registering significant increases. The Life Sciences segment was by far the biggest contributor to this outstanding performance through good growths in both domestic and exports markets. The domestic market witnessed good demand from manufacturers of COVID vaccines and drugs and also due to the conversion of new customers and applications. As global markets also witnessed strong growth demand, export orders for tubings from our affiliates saw a good increase. There was a sharp revival in Automotive business in the year which helped Bearings to register a strong growth surpassing the targets set for the year. Revival of Construction activity and industrial activity helped the Composites segment to do much better. Moreover, strong customer conversions and demand pick up in 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 inspite of a sluggish Energy market environment.

Looking ahead, the outlook for all businesses is positive with a favorable demand scenario in most of the markets. The Life Sciences business continues to have a strong outlook both on the domestic and exports front with establishment of India as an export hub through consistent delivery both on quality and lead time expectations. With Automotive demand expected to do well in the current year with lesser supply chain disruptions, Bearings and Composites businesses too have a good outlook. The main aim of the PPL business in 2022-23 would be to strengthen its position in existing markets, while accelerating growth in new markets in the industrial, life sciences and construction segments. Execution of Capex projects lined up in this year and timely commercial production is a key deliverable for us. 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, 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 as it is import-intensive.

IT- Services -

Development & Outlook and Risk & Concerns

GNO has captive IT services unit which provides various IT services (e.g. Application development, infrastructure management, and cybersecurity) to the Saint-Gobain group globally. The IT services unit has around 660 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. As the profit from this segment is more than 10% of the total profit of the Company during the current financial year, this segments results are separately provided. This may not be repeated in the subsequent years.

Risks & Concerns -



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.


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 2178 employees.


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 22.8% and 25.0% respectively and consolidated revenue from operations and operating profit increased by 22.9% and 25.0% respectively. The significant change in consolidated operating profit margin (19.9% vs 19.6%) and net profit margin (14.7% vs 14.5%) was mainly due to higher volume and improved realisation. Return on Net Worth (standalone) for the financial year ended March 31,2022 at 19.1% is higher than that of the previous financial year (17.8%) and Return on Net Worth (consolidated) for the financial year ended March 31, 2021 at 18.8% is higher than that of the previous financial year (17.4%).


GNO has an effective internal control environment which ensures that the businesses and operations are managed efficiently and 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.


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 IT Services.


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.