At a time of global slowdown, higher interest rates, commodity
uncertainty, currency volatility and a looming eurozone crisis, the big
question is whether Gravita is adequately prepared.
The answer is that Gravita is competently placed to address the
challenges of the present and future. This is partly reflected in our
2011-12 performance: even as most global commodity companies were
affected by volatility and exchange rate fluctuations, our revenues
grew 5.83% to Rs268.49 crore, while our PAT increased from Rs14.75 crore
in 2010-11 to Rs15.04 crore in 2011-12.
A robust business model
Gravita is a one-stop provider of Lead products with a large product
basket and technological expertise to provide solutions. The Company''s
niche business composition - smelting and processing, equipment
manufacturing and trading - translated into business flexibility, with
an ability to capture every upturn in the sector leading to sustained
During 2011-12, Gravita strengthened its business model through the
following priorities: focus on efficient conversion, proactive
initiatives to hedge currency volatility and incremental capacity in
declining tenures. The result was that even though the business climate
turned increasingly challenging during the year under review, Gravita
reported a better- than-industry-average performance with the prospect
of a vigorous improvement as soon as conditions revive.
Besides, the Company leveraged its longstanding geographic diversity.
In this business, marketing the end product is not as challenging as
procuring the raw material to manufacture it in the first place. In
view of this, the Company selected to be present in regions enjoying a
relatively abundant access to raw materials on the one hand and a large
proximate market on the other. Thereafter, the Company strengthened
this strategy with the advantage of scale: the result is that the
Company now has five manufacturing operations outside India. The only
Indian Lead recycling company with a global presence across six
continents (Europe, Asia, Australia, Africa, North America and South
America) for sourcing its raw materials. Over time, we expect this
global footprint to leverage logistical advantages, report lower
production costs and enhance viability across markets, cycles,
countries and time.
In view of these realities, the Company worked with a plant breakeven
point of around 250 tonnes per month and an attractive plant payback of
12 to 18 months, making it possible for us to remain profitable in the
worst of markets while enhancing our profits during industry rebounds.
Despite testing business conditions in during the year, Gravita
strengthened its prospects through the following initiatives:
- We acquired two partnership firms in J&K for Rs3.21 crore, which
increased our overall production capacity by 10,800 MTPA
- Commissioned Lead manufacturing facilities in J&K, reaching optimum
capacity utilisation by the year-end
- Sold the Georgia unit
- Commissioned a world-class plant and machinery fabrication facility
at Mahindra SEZ (Jaipur), facilitating turnkey project and technology
- Acquired the license to import scrap batteries, which will reduce
our raw material cost around 10% and correspondingly strengthen our
- Commissioned rotary furnaces and doubled the production of smelted
Lead production in our Senegal and Mozambique plants
- Acquired Free Zone status in Mozambique which will result in
benefit of taxes on all Raw-Materials and income giving boost to
- Strengthened the manufacturing input-output ratio from 96.5% in the
past to around 98% through stringent processes and technology use
- Stretched the plants higher than the prevailing industry average of
40-50%; while the Indian plants reported an average capacity
utilisation of 43%, the overseas plants reported an average capacity
utilisation of 50%
Going the eco-friendly way
In line with our environment-friendly commitment, we undertook a number
of measures to conserve and optimise energy use at our manufacturing
- Replaced conventional burners with Automatic Ignition Oil Fired
Burner (AFB), which will facilitate better air-flow, improve efficiency
and reduce fuel consumption.
- Installed Variable Frequency Drive (VFD) for efficient speed
control of all driving motors. VFD are used for speed control by the
electronic method, optimising energy needed for motor operation
- Installed APFC for automatically adjusting maximum demand on the
power supply system, optimising the power factor and reducing reactive
The road ahead
The Company invested during the downturn to possess additional capacity
to capitalise on the rebound. The main producers of Lead metal are
China, Australia, the US, Peru, Canada and Mexico. These six countries
produce three- quarters of the world''s Lead output. In India, about 75%
of total demand is derived from the domestic battery industry, growing
at 6-7% per annum and is expected to grow in the years ahead.
India''s annual demand for Lead is nearly 1.60 lakh tonnes which is
presently addressed through mine production and recycling. At Gravita,
we foresee an attractive increase in Lead derived from scrap recycling.
The removal of restrictions levied by the government on scrap imports
and unorganised recycling players needed to mandatorily install
pollution equipment will enhance opportunities for organised players
like Gravita in the secondary Lead manufacturing segment.
Message to stakeholders
At Gravita, we are committed to perform better, backed by our people,
culture and stakeholders.
We would like to place on record our heartfelt gratitude to our valued
shareholders and all other partners and associates.
Dr. Mahavir Prasad Agarwal,