As Foscor Zirconia losses mount, CUMI may sell stake in S Africa subsidiary

Company News

Caborundum Universal Ltd (CUMI) is looking at options, including selling its stake in Foscor Zirconia, a subsidiary in South Africa, as the business has not turned around over a period of time. The profit before interest and tax for the quarter ended June 30, 2019, was adversely impacted, amounting to about Rs 6 crore due to losses in this subsidiary.
The company has two options -- one, to shift the factory to a location where it can produce at a lower cost and another, to sell if off to a buyer and move out. The company said that it is likely that it would move towards the second option because there is a pressure locally to keep the jobs in South Africa, said senior management officials in a recent earnings call.
The plant produces monoclinic and calcia stabilised zirconia with fumed silica as a by-product, which could be used in various applications, including ceramic colours, abrasives, chemicals and refractory products for the glass and steel industries.
The plant produces between 2,800 to 3,000 tonnes of three grades of Zirconia, all of which is sold in Europe, India and the US. While the product is good, the company is still losing money.

"If you make more, we can still sell more, so the options with us was one, whether to relocate the plant and take it out and put it in a more, let us say, lower cost, manageable location and scale up. The other option was to find a buyer to whom we sell and move out. Today, it is moving towards the second option because there is a pressure locally to keep the jobs in South Africa, so that is the direction it is going," K Srinivasan, managing director, Carborundum Universal Ltd, told analysts in a recent earnings call."Any transaction would also facilitate our continuing to be engaged in either getting our requirement for India or for any other market that we address, so that will be part...Read More

Carborundum Universal wants 20% of its revenue to come from new products

Company News

Carborundum Universal, a Murugappa Group company, is aiming at growing its new products business share to reach 20 per cent in the overall revenue over next few years. The company, which is into abrasives, industrial ceramics, electrominerals and others, is working on bringing in various new products to the market.

In CUMI, the definition of new product is those products which are developed during the year or which are developed in last three years. Once it crosses the third year, it will no longer be seen as a new product. This is a moving number. Even if the product scale up rapidly after three years, it will not be a new product for the company. At present, the new products contribute to around 8 per cent of the revenue.

"The aim is to scale up rapidly in the first three years. For instance, our electromineral product Z450 will no longer be a new product for me next year and even if it makes more revenue from then on, it will not be considered in the new product revenue. The aim is how many you bring in and how soon can you scale up," said K Srinivasan, managing director, CUMI recently.The company is working on various projects including a material into energy storage systems and working with several such systems where it is developing applications along with its partners. It is also working on a product the automobile segment, which would be used in the engines with new emission norms.

Its one of the latest product, Z450, an electromineral used for ceramic colours, refractory products for glass and steel industries, but did not grow upto its expectations considering slower pick up by customers.


 The market for Z450 has not picked up as fast as the company expected.The customers need to tweak their process a little bit to switch from the existing monoclinc zirconia to Z450 and it also needed to get tested and approved by their customers...Read More