• Products Review

  • Bonded Abrasives

  • CUMI World 

  • Polishing Stones 

  • Chamak 

  • Coated Abrasives 

• Marketing

  • Industry Review

  • Market Scenario

  • Marketing and Distribution

• Manufacturing

• Outlook

Products Review

Abrasives are products used for material removal, polishing and finishing across a variety of applications. They find application in a host of industry segments, the principal being fabrication, automobiles, auto-components, construction, woodworking and general engineering industries.

CUMI’s product offering comprises bonded abrasives, coated abrasives and metal working fluids (lubricants and coolants used during grinding processes). CUMI offers more than 20,000 product varieties, resulting in the most extensive spectrum of bonded and coated abrasives in India. 

Bonded Abrasives

Mainly available as grinding wheels. Applications range from metal removal to finishing. User industries comprise automobiles, construction, fabrication, steel and bearings etc.

Coated Abrasives

Mainly used in light polishing applications. Principal use is in the automobiles, white goods, tannery and plywood industries. Other coated products comprise scrubber pads and sandpaper etc.

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Marketing

Industry Overview 

The Indian abrasives market is addressed largely by two leading players. They are followed by several smaller players who specialise in specific products. The industry is characterised by diverse user industries, an insignificant threat from substitute products, adequate raw material availability and extensive application support to customers. Quality, cost and delivery are critical for success in this industry. CUMI is the market leader in the Indian abrasives industry.

CUMI’s product offering comprises bonded abrasives, coated abrasives and metal working fluids (lubricants and coolants used during grinding processes). CUMI offers more than 20,000 product varieties, resulting in the most extensive spectrum of bonded and coated abrasives in India. Wendt (India) Ltd. (CUMI’s joint venture company) manufactures super abrasives.

The abrasives division has 5 plants located across India and also a windfarm for captive power generation.

The abrasives division has a government recognised R&D centre and also a state-of-the-art application development centre. These enable CUMI to meet the vast application development needs of customers and also carry out fundamental research in abrasives technology, which helps CUMI to keep abreast with technological developments in the abrasives industry.

Market Scenario 

During the year under review, the abrasives industry grew at a good pace as a result of strong offtake from several user industries which also witnessed good growth trends. Strong growth was seen in the fabrication segment, chemicals and pharmaceutical industry and equipment manufacturing industries. The construction industry and the infrastructure sector also performed well. The buoyancy in the revenues of these user industries translated into higher demand for abrasives, both bonded and coated.

In the channel sales segment, competition was severe and price pressure was intense. However, superior quality assurance and improved range of products enabled CUMI to retain market share.

During the year, major initiatives of the abrasives division included the following: 

• Investment in new machinery to create a wider range of products 

• Increasing supply capabilities 

• Increasing quality consistency 

• Strengthening marketing initiatives 

• A comprehensive branding exercise

In the export markets, sales registered a growth of 20 percent. This was made possible by: 

• Leveraging alliances with strategic partners

• Developing specialised products for key customers through enhanced application engineering 

• Improving supply capability and reducing lead time

These initiatives resulted in strong growth in markets such as USA, Europe and South East Asia. The company has also strengthened its position in the wooden floor polishing market in North America.

As a result of the above initiatives and aided by the market pull, sales increased to Rs.2734 million from Rs.2375 million, a rise of 15 percent.

Marketing and Distribution 

Several steps were initiated to improve visibility and proximity to the consumer and also to enhance capability for delivering products on time to customers.

The company has embarked on a direct marketing programme for selected products to make them more cost effective to consumers. Major initiatives in this direction are:

• Setting up experience centres under the brand ‘CUMI World’ 

• A greater emphasis on branding by standardising CUMI outlets across the country. 

• Newer delivery mechanisms such as Automatic vending machines. 

• Extending the concept of ‘CUMI Suraksha’, the unique user insurance scheme to more centres, and also settling the first claim under the same.

In addition, the company further strengthened its distribution set-up and also consolidated its logistics arrangements. Information technology tools are being deployed to facilitate better understanding of dealer performance and inventories.

These specific initiatives enabled the product availability index to improve to 96 percent.

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Manufacturing 

The company continues to follow prudent manufacturing practices in order to lower cost of production and enhance performance on quality and delivery parameters.

The touch-time concept introduced a few years ago has turned out as a productivity-enhancing shift. Further, the lean manufacturing practices introduced last year has helped in reducing WIP, throughput time and increasing on-time delivery.

A capital expenditure of Rs.184 million was incurred during the year for enhancing capability to manufacture specialised products and for setting up a new express line for exports. These investments are targeted at creating application specific capabilities, based on customer requirements.

The investment in upgrading existing machinery continues to be an area of focus. The modular experiment with the new, depressed centre wheel line in the previous year was successful. The company is planning more such investments in future with a view to retaining its competitive edge.

Quality assurance through TQM and Six-sigma programmes continue to yield positive results – lower rejects and wastages, increased uptime, enhanced productivity and greater consistency of products. In recognition of the progressive manufacturing culture at CUMI, Frost and Sullivan presented a special award to the company on “Growth through change” at the Indian Manufacturing Excellence Awards, 2004.

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Outlook 

Increasing infrastructure activity, booming construction and a flourishing economy in India brings with it signs of robust demand. Globally, the focus on cost cutting and value-for-money sourcing will enable Indian companies to establish a strong foothold. In order to capitalize on the growth opportunities, there are plans to have a presence in China and the Middle East.

The introduction of VAT is likely to benefit the company as product pricing will be more standardized across the country. The VAT regime would also help to curb grey market activities to a large extent. To reduce multiplicity in selling price the company has embarked on an initiative to reduce number of stocking points.

CUMI, with its vertically integrated operations, strength in manufacturing processes, stringent quality controls and wide distribution reach will maintain its domestic leadership and also emerge as a more visible force in the global abrasives market.

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