Annual Report 2023 notes
Highlights
• Supplies to 8 out of top 10 global tyre companies
• Certified by IATF, ISO, EMS, OHSMS, REACH for EU Zone
• Exports to 60+ countries
• Globally, ESG as a framework continues to gain momentum.
Businesses
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Businesses centred around serving the mobility sector,
a) Reclaim Rubber (RR) business which has a 70% dependence on the automotive sector (tyre manufacturers, automotive component manufacturers)
b) Engineering Plastics (EP) has a 40% dependence on automotive OE supply chain
c) Rubber Composite (RC) has a 80% dependence on the transportation sector
d) Custom Die-forms (CDF) has a 40% dependence on agri and earth moving equipment. -
Reclaim Rubber (RR): Business has the capacity to process 72,000 tons per year.
Extended producer responsibility (EPR) regulation
a) Regulation mandates tyre producers to offset their production with purchase of EPR credits from recyclers, who’ll be entitled to receive credits for the production of specified materials from EOL tyre waste.
b) Likely to be implemented during the HI FY 2024
c) Will provide recyclers an additional source of income, which is intended for use in new technology development, offset costs associated with supply chain for sourcing EOL tyres
d) GRP shall be a major beneficiary of the regulation and help it generate additional revenue to help create an inclusive supply chain. -
EP business
• The company undertook expansion of recycling capacity from 2600 tons to 3600 tons and compounding capacity from 3,400 tons to 6,200 tons
• Business witnessing increased customer approvals and acceptance of the product portfolio.
• With several customer approvals in automotive, electrical and compounding industries, the overall non-RR business witnessed doubling of revenue, with EP leading the way with a 56% growth. -
Repurposed Polyolefins:
• Company at the forefront of development of materials from rigid EOL packaging waste based on Polyolefin materials (mainly Polypropylene, Polyethylene).
• Gained approvals from premier global petrochemical brand Mobil for use of its materials in their packaging.
• (From last Con-call) – Only supplier to Mobil, for use of the material in commercial pails made with 50% post-consumer recycled polypropylene.
• Engaging with several brand owners for product approval, and are fairly confident to be able to gain more prominence during the year
• Provides the impetus for other brand owners to work with GRP in establishing use of its products. The capacity for the business stands at 6,000 tons annually.
Industry dynamics
RR business
• The domestic tyre industry (measured by rubber consumption) grew at 4% YoY.
• GRP has been successful in growing its market share amongst the leading tyre companies and continues to develop alternate products for future use.
• Share of exports continues to remain around 35% and while the share of sales in India has dipped marginally to 16%, the share amongst tyre companies remains at around 30%.
• While the overall rubber consumption in India has grown by 4%, GRP sales in India has grown by 7% in CY 2022 over CY 2021. Global consumption of Rubber has witnessed a reduction by 0.8% vis-à-vis GRP export volume change of 7% from CY 2021 to CY 2022.
• In international markets, GRP continues to be recognized as the industry leader and brand owners are engaging with GRP to switch to cleaner technologies to produce high performance RR.
• Remain confident of being able to introduce improved technology to produce high performance RR during FY 2024.
(from last con-call) – Asset turns will be higher with this new technology compared to traditional RR business
Non RR
• Brand owners such as Kia, Hyundai, apart from other global brands have announced targeted use of 30% recycled plastics by 2025, providing much needed impetus.
• India continues to remain attractive for several large material manufacturers to invest in (Lyondell Basel, CPH Chemicals, Radici, Domo all setting up new capacities in India)
• GRP’s key strength is the backward integration to the source of EOL waste. This coupled with the focus on development has and will continue to bring growth for this vertical.
• The new facility for EP will be operational within H1 of FY 2024 and facility shall incorporate improved infrastructure and processes.
Opportunities
• With a large export customer base, company has access to low cost EOL materials from around the globe
• Approached by several global waste management companies for possible cooperation, joint collaboration and is evaluating those opportunities
• Tyre industry experts are expecting an uptick in Indian market for next 3 years owing to
- available new capacities
- anticipated economic and infrastructure growth
- internationally rubber consumption is expected to notably recover driven by expected growth in auto sector and rebound in China
Risks
• Restrictions for import of EOL waste could possibly lead to increased prices of key raw materials across all BUs
• Gujarat Govt has increased minimum wages by 25% through a recent notification, putting pressure to automate quicker
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