Grauer and Weil Limited- 101 out of 100?

Grauer and weil annual report 2022

Few points

1…Performance

A… Surface Finishing Segment:

=Surface Finishing Segment continues to be significant part of overall business operations of the Company.
The segment accounts for nearly 88.0% of Total Segment Revenues.

=Its product portfolio includes

a…General Metal Finishing (such as functional coatings, decorative coatings, pre-treatments, plating on plastics,
anti-corrosion treatments etc.),

b…Paints & related coatings (such as high-performance industrial coatings, marine coatings, aerospace and
defence coatings, architectural coatings etc.) and

c… Industrial lubricants (such as rust preventive oils, cutting oils, deformation oils, heat
treatment oils etc.).

=Your Company continues to maintain its leadership position in the metal finishing products despite growing intensity of competition
from domestic and international Companies.

=Strong growth was also reported in Paints coatings.

=The Industrial lubricants also grew
extremely well in revenues and strong underlying volume growth.

B… Engineering Segment:

= In spite of strong recessionary trends in capital goods industry, the segment revenue witnessed an impressive growth of +15.1% in financial year 2021-22 over corresponding previous financial year
.
C… Mall Segment:

= The second wave of COVID-19 that struct the country in the first half of financial year 2021-22 dampened a quick recovery of the Mall business. However, the recovery, thereafter, was very rapid and the Company closed with an 57.0% growth as
compared to financial year 2020-21. Footfalls, however, continued to be lower than financial year 2019-20, the last year of normal pre￾COVID behaviour by customers.

2…Growth

=Whilst the total revenue of surface finishings segment grew by 27.4% in the financial year 2021-22, revenues of engineering segment posted a growth of 15.1% in same period

3…Resilience
=This growth of revenues, despite
challenging business environment, is
testimony of your Company’s strong
business resilience which is an
outcome of competencies and enablers that your Company has implemented across all business segments and operations in past few years.

4…Complete surface solution

= Your Company has inherent strength to grow as it is perhaps one of the few companies which offers complete
plating/coating solutions to its

=Growel is the Only Company in India and one of the few in the world to
offer a complete package of corrosion and protection solutions under one roof.

5… Service support
=Your Company not only
provide a wide range of coating
solutions but also provides complete
application and service support.

6…Market leader
= It is only with this customer-centric and service-oriented business approach, your Company continues to maintain its leadership position in general metal finishing.

7…R and D

=Your Company strongly believes that innovation is the only insurance against irrelevance. Setting up technical centre to supplement its research and development efforts, is one such step towards this direction.

= The construction of this technical centre is expected to start in financial year 2022-23.

8…FUTURE PROSPECTS

=The Company put into play the business strategy conceived last year to regrow our share in General Metal Finishing segment, with particular
focus on Anodising, Electroless Nickel and Plating over Plastics.

=We will continue to invest and build on long term assets and strategies with planned additions in capacities in our Jammu and Dadra plants.

=The new Technical Centre plan has also come closer to fruition and we expect to start construction in financial year 2022-23. This will further augment our businesses both in General Metal Finishing and Paints Coatings

9…Capex
=Besides this, your Company is
working towards setting-up additional
capacities at Dadra and Jammu as a
part of its long-term business strategy

10…Revenue break up

=Export@17%

Surface treatment@89%
Engineering@9%
Shop@2%

11…We are the first chemical company in India to have received the coveted AS9100 aerospace certification, established by the aerospace industry, which demonstrates our ability to satisfy DOD, NASA and FAA
quality standards.

12…VISION:
To be in Top 2 in all our businesses on the strength of our people and values

Disc…invested

My latest portfolio

4 Likes

•Acquisition of 1,50,000 Equity shares of Kamtress Automation Systems Private Limited from Poona Bottling Company Private Limited

•First, company sold poona bottling co. to promoters.Now company is acquiring subsidary from poona bottling.

Disc…invested

4 Likes

AGM notes (There could be some errors):

  • There were certain price corrections in last 4 months as a result revenue has grown nominally.

  • bottom line done well.

  • If the prices correct company will do well in this month.

  • There are exciting opportunities ahead due to thrust of indian govt on semiconductors, EV and reneweables. They need significant metal finishing.

  • We have products in these segments. If we can participate in these segments, there could be exponential growth in the company.

  • Our regular products have good market share in - surface treatment, oil doing well…overall market is very positive.

  • In these segments, company is seeks to increase share in the market.

  • electronics offers new opportunites and exciting time for our company

  • We are trying our best

  • We have this year 3 new capex/projects in planning.

  • 3 new factories - different parts of countries.

  • go into production by end of next year.

  • certain new verticals beyond electronics

  • change in industry structure.

  • geopolitical istuation is risk factor.

  • 63% chemicals of sales and 81% of PAT.

  • 100 people R&D …total expenditure 1.23cr capex…

  • big plan for a new R&D center.

  • trade discount is given to distributors…discounts and commissions for distributors.

  • engineering business 40-50cr order book which is a very good increase

  • We bought kamtres - electroplating company since 1989 - manufacturing equipment of PCB
    - growel does not have siginficance in this product.
    - engineering business getting a push
    - expnad in market.

  • chemical business is risk free…through dsitbrutors…payment on time/advance.

  • Capacity utilisation is 39% to 70% in different factories.

  • mall ocupancy 91% march 31…94% on july 31…

  • 3 areas of big potential - semiconductor, EV, reneweables - electroplating plays big role.

  • There is a big opportunity.

  • 2 plant under construction - paints and electroplating.

  • paints and lubes are big size opporutnities. We have small share…

10 Likes

Summary from annual report+ AGM 2023

1…PERFORMANCE

=The business environment for the first half of the year was challenging with continued increase in the price of commodities including metals
although the prices stabilised and to some extent, corrected during the second half of the year 2022-23.

=Capacity utilisation is 39% to 70% in different factories.
Mall ocupancy 91% march 31…94% on july 31…

A…Metal Finishing:

=Your Company continued to maintain its leadership position in metal finishing products and gross total revenue from
this sub-segment crossed the ` 527 crore mark despite growing intensity of competition from domestic and international companies.

B…Paints coatings:

=Performance in this sub-segment continued to be encouraging with a value growth of 29.27% over previous year.

=Strong orders from marine and industrial plants segments supported this sub-segment.

= However, the volume growth had been only 9% in this subsegment.

C…Industrial Lubricants:

=The Industrial Lubricant sub-segment reported a flattish performance as competition strengthened in this subsegment and oil prices remained challenging during the early part of the financial year.

D… Engineering Segment:

=The Engineering business for the first time in its history crossed ` 100 crore in revenue in financial year
2022-23 backed by strong order book from newer areas driven by the Government of India’s PLI schemes.

E… Mall Segment:

=Footfalls continued to remain a challenge whereas consumer spends reached full normalcy in 2022-23.

=Food as a category had excellent performance as consumer behaviour has shifted towards increased out-of-home food consumption.

=Many other brands in this segment experienced excellent growths.

=Some segments such as Entertainment, however, continue to remain sluggish.

F… Export

=Growth in exports had been relatively low during the year due to the shadow of global recession as well as the turmoil in Europe that
continues to impair consumer sentiment.

=This was quite unexpected given that globally, organizations are de-risking their supply chain
by reducing their dependence on China. However, such strategies have not yet been converted to additional Exports business for your
Company as yet.

=In Paint coatings, there had been no major opportunities for export this year. However, your Company will continue to explore the
opportunities for export to Middle East & Russia where paint demand is enormous.

2…Growel TechCentre

=Last year your Company committed an investment outlay of nearly 45 crores for its upcoming Growel TechCentre at Vasai.

=This state-of-the-art “innovation cum customer support” TechCenter will strongly supplement your Company’s efforts to introduce new and environment-friendly technologies alongside showcasing its capabilities to meet both existing and prospective customers’ surface finishing requirements under one roof.

=Whilst the Company’s R&D, product management, marketing & project teams were collectively busy in preparing a blueprint of this project, the legal & compliance teams worked with several authorities to take the required approvals to kick-start the project.

=The blueprint for Growel Technical Centre is already finalised and statutory approvals are being sought to start construction in current
financial year.

=We expect the Growel TechCentre to start its operation by middle of next financial year.


3…Capex

=It has planned a total capex of around ~Rs 130 Cr over next three years whereby the majority of the capex pertains to expansion of its capacity for industrial paints, setting up a research and development (R&D) centre, and expanding capacity of its electroplating chemicals with some minor capex at each of its manufacturing facilities. This capex would be funded by internal accruals and provides good growth visibility over near to medium term.
(Hdfc security report-march 2023)

=As per annual report “We are also working to expand our production capacities at Barotiwala, Jammu and Dadra to ensure that we meet the increased customer demand as a part of this long term strategy. Sustainability”

=As per AGM
-2 plants under construction - paints and electroplating.

-We have this year 3 new capex/projects in planning.

3 new factories - different parts of countries.They will start production by end of next year.

4…SURFACE FINISHING

=One stop shop for all surface protections .

=Chemical business is risk free…through dsitbrutors…payment on time/advance.

=Here moats are

A=Leading player
GWIL is a leading player in the electroplating industry with ~30% market share.

B= Wide array of chemical products

=It manufactures more than 600
chemicals which includes pre-treatment chemicals, general plating, conversion coating, speciality chemicals and basic chemicals.

=GWIL offers a wide array of chemical products which make it unique in electroplating industry.

C=Entire spectrum of electroplating.

GWIL is the only company in India and among the few companies in the world that are present across the entire spectrum of electroplating. Over the years, the company has diversified its portfolio which now includes an array of industrial lubricants and high performance protective paints/coatings.

=The competition from international
companies is intensifying; however, GWIL was able to effectively counter the competitive pressure.

D…New products
=New products introduced by the company met with good success

=In line with changing market dynamics the company has also tried to upgrade its offering to meet the changing
requirements of the customers.

E…Quality
=We are also the first Chemical Company in India to have received the coveted AS9100 Aerospace Certification, established by The Aerospace industry, which demonstrates our ability to satisfy DOD, NASA and FAA quality standards.

F …Technical collaborations and focused R&D spends leading to market share gains GWIL has several technical collaborations with many overseas companies.

=. Foreign collaborations not only help the company to gain more technical know-how but also help increase its footprints in the overseas markets. GWIL has been
placing a higher emphasis on exports for the last few years. Its export sales grew by approximately 10% CAGR
over FY19-22. We believe that several strong collaborations would continue to help the company grow its
business in domestic as well as overseas markets.

G…Diversified client base

=GWIL caters to a wide range of industries including automotive, electrical and electronics, space, defence,
hardware, jewellery, plating on plastic, marine, oil and gas and other heavy industries.

= Some of the GWIL’s customers across sectors include Tata, Hero Honda, Escorts, Yamaha, Crompton Greaves, L&T, HPCL, GAIL, Air Costa, BHEL, ISRO, BARC, HAL, DRDO, etc


5…PAINT

=In the area of Paint coatings, there are big opportunities in India due to huge investments in oil & gas, infrastructure and drinking water
segment. Your Company already has strong presence in these markets and will continue to pursue strongly in these market segments.

=Company offers highly specialised industrial paints where technology is the main driver unlike strength of
brand and distribution as in the case of decorative paints.

=The paints business works on approvals - becoming an
“approved vendor” is costly and time consuming. But once you are an approved vendor, orders are large in size.

=Over the years, the company has built strong clientele, and the unfolding economic and industrial scenario in
India may influence the level of growth that can be realised.

=In the area of Paints, the increase in capacity of oil
and gas segments and infrastructure provides an opportunity for growth in subsequent years.


6…Lubricants

=The potential market size here is ~Rs. 4000 Cr and company has less than 3% market share, providing good growth opportunities

=Paints and lubes are big size opporutnities. We have small share…

7…R and D

=100 people R&D …total expenditure 1.23cr capex…

8… FUTURE PROSPECTS

=The Company continued and refined its business strategy and continues to focus on Anodising, Plating over Plastics and Phosphating.

= Many new areas have been identified, both in Paints and Lubricants for horizontal expansion in 2023-24.

=In Paint coatings, with change in strategy and addition of newer segments, your Company hopes to keep the pace of its growth and with
a continued focus on its profitability.

= Your Company is focussing on new business opportunities in railways where it is having relatively low
presence and which will help the Company to tap opportunities in infrastructure segment which is growing rapidly.

=There are exciting opportunities ahead due to thrust of indian govt on semiconductors, EV and reneweables. They need significant metal finishing.
We have products in these segments. If we can participate in these segments, there could be exponential growth in the company.

=3 areas of big potential - semiconductor, EV, reneweables - electroplating plays big role.
There is a big opportunity.

=Electronics offers new opportunites and exciting time for our company

9…SCRUTTLEBUTT

Some scruttlebutt from my side

A…Chemical segment
( from distributor)

-He is associated with grauer and weil since 25 yrs

-Very nice company

-Distributors have to pay in advance

-Why grauer is preffered over other companies?

1…Brand
2…Consistent quality
3…Service

B…Paint segment

=New R and D centre will take 2-3 yrs
=Good growth ahead
=Here, products are given on credit of around 30-40 days

Disc…invested

9 Likes

Very nice summary !!. Thanks for the efforts and sharing.

Just one question - Did the management looked like having “hunger for growth” over the next 2-3 years? They have been around for very long time and always give a feeling of laid back company. Does this seem to be different in the body language during the AGM?

Regards,

Nikhil
Disc: invested - Small position

2 Likes

I had not attended AGM

But one thing ,i have noticed since my 5 yrs of investment is ,management is very conservative.

I believe that they are lacking hunger for growth.

They have annonced capex recently.
Now, lets see how it works out.

Disc…invested since 2018

3 Likes

Thanks for the detailed post. Some questions in my mind. If you can answer. TIA.

What kind of growth they are likely to see?
Based on the capex what kind of capacities are getting built up? I mean considering that they have around 40-70% capacity utilisation, why they are planning to do capex.
What kind of capacities and what could be the volumes or sales are likely to get added?

Any update on the above points - during the AGM?

1 Like

Grauer and weil(past growth and future growth triggers)

Grauer

1…PERFORMANCE

=Last 3 yrs
Sales growth@11% cagr
Operating growth@7%
Net profit@8%

=Last 1 yr(2022-2023)
Sales@33%
Profit@43%

=The business environment for the first half of the year was challenging with continued increase in the price of commodities including metals

2…FUTURE GROWTH
A-Growel tech centre

B-130 cr capex in next 3 yrs

C-Paints
=In the area of Paints, the increase in capacity of oil
and gas segments and infrastructure provides an opportunity for growth in subsequent years.

D-=3 areas of big potential - semiconductor, EV, reneweables - electroplating plays big role.
There is a big opportunity.

Disc…invested

5 Likes

Mumbai: Growel’s 101 Mall Gets Second Notice From BMC To Hand Over Land For Development In Kandivali (freepressjournal.in)

1 Like

Why it is showing different price and pattern in NSE and BSE

Bonus does not give any advantage to share holder except it increases liquidity of stock

“Bonus issue may increase the number of shares you are holding but the price of the shares would fall proportionally to the ratio, having no overall affect on the monetary value of your holdings.”

.disc…invested in grauer

1 Like

Agree with you. However Reserves and surplus is keep on increasing. Its showing management efficiency. Its also a one of the reason for providing Bonus.