💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue grew 5% to INR 3,677 Cr in 9M FY25. Segment-wise growth: Ceramics grew 9%, Abrasives grew 4%, and Electro Minerals grew 3% YoY. Standalone sales for FY25 reached INR 2,783.7 Cr, a 7% increase from INR 2,593.2 Cr in FY24.

Geographic Revenue Split

Domestic operations contributed 57% of consolidated revenue in 9M FY25, while international markets accounted for the remaining 43%.

Profitability Margins

Standalone PBT margin was 15.3% in FY25, down from 17.9% in FY24 (a 14% adverse change) due to lower profits. Consolidated profit after tax decreased to INR 292.7 Cr from INR 461.3 Cr, impacted by a INR 104.1 Cr impairment at VAW and deferred tax charges at Awuko.

EBITDA Margin

Consolidated operating margin improved slightly to 15.4% in 9M FY25 from 15.1% in the previous year, supported by better subsidiary performance, though it is expected to stabilize at 14-15% due to the loss of high-margin contributions from VAW.

Capital Expenditure

Consolidated capital expenditure for FY25 was INR 277.6 Cr, primarily funded through internal accruals. Future annual capex is projected at INR 300-350 Cr for FY26, potentially rising to INR 500 Cr to support new growth areas.

Credit Rating & Borrowing

CRISIL reaffirmed 'AA+/Stable' for long-term and 'A1+' for short-term debt. Standalone finance costs dropped 96% to INR 0.2 Cr from INR 4.2 Cr as the company utilized surplus cash and maintained a low gearing of <0.10x.

⚙️ Operational Drivers

Raw Materials

Key raw materials include Silicon Carbide, Zirconia, and Brown/White Fused Alumina. Standalone material costs were INR 1,158.2 Cr in FY25, representing 42% of sales, a 12% increase YoY.

Import Sources

Sourced through integrated operations in Russia (VAW) and South Africa (Foskor Zirconia), though US sanctions on Russian operations have restricted USD/Euro transactions.

Key Suppliers

Primarily self-supplied through subsidiaries like Volzhsky Abrasive Works (VAW) and Foskor Zirconia Pty Ltd (FZL) as part of a backward integration strategy.

Capacity Expansion

Current focus is on debottlenecking and scaling monolithic refractories. Capacity utilization for Metallized Cylinders grew by 20% in the recent quarter.

Raw Material Costs

Raw material costs rose 12% to INR 1,158.2 Cr in FY25. The company uses backward integration to maintain a cost advantage, though realization is pressured by cheap Chinese imports.

Manufacturing Efficiency

Asset turnover stood at 1.68x in FY25 compared to 1.76x in FY24. The company is focusing on cost reduction through debottlenecking to sustain 14-15% margins.

Logistics & Distribution

Distribution challenges in Q1 FY26 led to a 9% degrowth in Rhodius sales (EUR 30.6M vs EUR 33.8M), though Q2 saw a 31.6% sequential recovery as logistics stabilized.

📈 Strategic Growth

Expected Growth Rate

4-5%

Growth Strategy

Growth will be driven by a INR 350 Cr investment in new areas, scaling monolithic refractories, and leveraging recent acquisitions like Rhodius and Awuko. The company aims to offset Russian sanction impacts (INR 83 Cr impact in H1) through standalone growth and expansion in Foskor.

Products & Services

Abrasives (bonded, coated, super), Ceramics (industrial, metallized cylinders), Electro Minerals (silicon carbide, fused alumina), and Monolithic Refractories.

Brand Portfolio

CUMI, Rhodius, Awuko, Pluss Advanced Technologies, Sterling Abrasives.

New Products/Services

Expansion into monolithic refractories and metallized cylinders (20% growth) are expected to be key revenue drivers.

Market Expansion

Targeting increased sales within Russia to offset export sanctions and scaling European operations through Rhodius and Awuko (20% sales growth expected for Awuko).

Market Share & Ranking

CUMI is one of the largest producers of abrasives and holds a leading market position in ceramics and electro minerals in India.

Strategic Alliances

Part of the Murugappa Group; maintains JVs and associates like Foskor Zirconia (South Africa).

🌍 External Factors

Industry Trends

The industry is shifting toward specialized ceramics and monolithic refractories. CUMI is positioning itself by investing in these high-growth, high-margin 'newer areas' to move away from commodity-grade competition.

Competitive Landscape

Faces intense competition from Chinese manufacturers who are aggressive on pricing in the Electro Minerals and Abrasives divisions.

Competitive Moat

Moat is built on deep backward integration into key raw materials (Silicon Carbide, Zirconia) and being part of the Murugappa Group, providing financial flexibility and a cost advantage that is difficult for non-integrated competitors to replicate.

Macro Economic Sensitivity

Global GDP growth is expected to slow to 2.8% in 2025 (from 3.3% in 2024), which may dampen international demand for industrial abrasives.

Consumer Behavior

Industrial demand is recovering sequentially in India, with standalone abrasives showing encouraging growth in Q2 FY26 after a flat H1.

Geopolitical Risks

The designation of VAW as a 'Specially Designated National' (SDN) by the US OFAC on Jan 10, 2025, is a critical risk, impacting cash flow and international trade.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to US OFAC sanctions (SDN list) which blocked VAW's access to USD/Euro deposits and receivables. Compliance with SEBI Listing Regulations (Regulation 31A) was noted for promoter reclassification.

Environmental Compliance

ESG profile supports credit risk; company received an ESG rating from CFC Finlease Private Limited in November 2025.

Taxation Policy Impact

Effective tax rate impacted by a deferred tax asset charge-off at CUMI Awuko Abrasives GmbH.

Legal Contingencies

Exceptional item of INR 104.1 Cr recorded in Q3 FY25 for impairment of receivables and assets at VAW due to US sanctions.

⚠️ Risk Analysis

Key Uncertainties

The duration and severity of US sanctions on Russian operations (VAW) could lead to further impairments beyond the initial INR 104.1 Cr. Logistics stability at Rhodius remains a near-term monitoring point.

Geographic Concentration Risk

57% of revenue is concentrated in India; however, the 43% international revenue is highly sensitive to geopolitical tensions in Russia and economic slowdowns in Europe.

Third Party Dependencies

Dependency on a new third-party logistics provider for Rhodius caused a EUR 2.2M loss in H1 FY26, highlighting execution risks in outsourcing.

Technology Obsolescence Risk

Company is mitigating this by investing in 'newer areas' and IT application controls (User Access, Patch management) to ensure digital security.

Credit & Counterparty Risk

Receivables at VAW are at high risk; the company already took a charge for receivables that cannot be collected in USD/Euro due to SDN listing.