Carborundum Universal proposes a capex of ₹350 crore in FY25 as the Murugappa Group’s abrasives and industrial ceramics maker plans new capacities. The company expects its consolidated revenue to surpass ₹5,000 crore in FY25.
The proposed capex for this fiscal is higher than the ₹195 crore average annual capex over the past 5 years, with FY23’s capex at ₹219 crore on a consolidated level.
Silicon carbide facility
The company intends to establish a 6-tonne per month high-purity silicon carbide facility in Kerala, targeted for completion within 18 months. This facility aims to serve semiconductor wafer manufacturing and technical ceramics for industries such as defence, electronics and electric vehicles.
During the last fiscal, Carborundum acquired the assets of Dronco, a German abrasive products manufacturer that had gone bankrupt. “We acquired the assets, brand and technology of Dronco. We have relocated the assets to India and plan to set up the facility here, which will take about two years,” said Sridharan Rangarajan, Managing Director of Carborundum Universal, during the company’s Q4FY24 earnings call. The facility in India is expected to produce 50 million thin wheels annually, contributing approximately ₹250-300 crore to the company’s revenue, starting from FY27.
Additionally, the company is planning IT infrastructure and safety-related capex for this fiscal year. “We are cautiously optimistic about our key markets and sectors. Given this outlook, we anticipate a 9-11 per cent growth on a stable currency basis, with consolidated sales expected to be in the range of ₹5,100-5,200 crore, up from ₹4,628 crore in FY24,” Rangarajan added.
For FY25, the company forecasts 11-12 per cent growth in the abrasive business, 12-14 per cent in ceramics and 5-6 per cent in electrominerals. Abrasives’ growth will be driven by the Indian business (expected to grow at 9-11 per cent), RHODIUS, and AWUKO.
The company’s German arm Rhodius Abrasives posted a profit of €0.6 million in the March 2024 quarter. On a full-year basis, the loss after tax was €1.5 million against a loss of €3.7 million in FY23. Excluding the PPA write-off of €2.8 million on a full-year basis, Rhodius achieved a profit before tax of €1 million in FY24, with sales totalling €63.3 million (€64.5 million in FY23).
Awuko Abrasives, another German arm, is expected to break even at the EBITDA level in this fiscal year, with a projected loss of €0.7-€1 million in FY25, and sales estimated at €17-18 million. It recorded net sales of €9.13 million in FY24, down 3 per cent from FY23, with a loss after tax of €2.3 million compared to €3.7 million.