ABOUT

TRL Krosaki is one of the leading refractories manufacturers & also an IMS certified company in India. TRL parent organisation is “Krosaki Harima Corporation” (77.62 %) which is a century old firm which carries a rich heritage, brings in reliable input & expertise that allows them to form synergy & complement each other.

About 70% of world refractories’ production is consumed by steel industry. In India steel industry consumes around 75% of refractories produced.

Products & Services

Basic Bricks, Dolomite, Fireclay & High Alumina, Silica, Flow Control, Monolithic, Engineering Services, RH Snorkel, Taphole Clay, Alumina Graphite.

TRL has approximately 70-75% market share in dolomite refractories in domestic market.

Financial Highlights

  • Revenue registered for FY’23 was INR 2,299.15 crore, up by 19%.
  • PAT accounted for INR 158 crore in FY’23, up by 53%.
  • The export revenue of the firm accounts for 14 percent & increased to INR 322 Crores from INR 312 Crores in the previous year. ICRA has reaffirmed long-term rating [ICRA] AA.
  • The strategy to supply small customers through stockiest is giving results and the revenue from stockiest sales has increased by 29 %. Revenue from identified Focus Products has increased by 18%.
  • EBIDTA margin improved from to 11.70 % from 9.50 % during this period.
  • Inventory turnover has been consistent & recorded as 4.92 for FY’23 whereas it was 4.72 during FY’22.

Key Financials (INR Crores)

DESCRIPTION Mar-23 Mar-22 Mar-21 Mar-20 Mar-19 Mar-18
Total Income 2,299.15 1,923.97 1,427.67 1,653.76 1,594.29 1,176.69
Total Expenditure 2,030.39 1,740.88 1,339.12 1,479.00 1,414.55 1,067.94
PBT 210.67 137.13 46.54 131.38 129.95 72.46
PAT 158.27 103.74 35.71 101.18 84.12 47.03
Debt to Equity 0.36 0.52 0.42 0.47 0.51 0.45
Current Ratio 1.4 1.37 1.43 1.56 1.37 1.36
EPS 75.73 49.64 21.28 48.18 40.53 22.50

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Industry

Refractories hold a vital position in the steel industry because of their direct relation and involvement in the manufacturing costs and product quality. As a result of rising user demands for higher product quality, refractory technology too has evolved & improved along with the development of steel manufacturing processes to endure harsh plant operating environments. Having said that durability, maintenance & furnace life extension to meet the needs for higher productivity and cost reduction is prioritized. The technology has also advanced to improve the diagnosis technique of internal furnace conditions and to effectively repair the damaged walls in the old furnaces or ovens. The required qualities of refractory ceramics in the furnace wall are becoming much higher than before in a wide range of processes.

For TRL turnaround will begin from the raw material prices that have drastically gone down from FY22 levels, and it is expected to bring better margins. At the same time, Investment in their R&D wing has poured in life & witnessed a substantial outcome in the development of new & improved product, improvement on product performance, redesigning, consistency, use of recycle material.

Major emphasis was given to the research in the field of iron making & steel making areas like Trough, Torpedo, Pellet Plant CDQ, Flow Control & CC, Steel Ladle, RH Degasser and BOF.

In stainless steel & non-ferrous area also continuous research work has been carried out to improve the performance of Dolomite, DBMC & High Alumina/Monolithic Products. Also, with huge capex budget allocated for development projects will provide an ample opportunity for TRL.

Outlook

With the current market size of Indian refractories close to around INR 12,000 crores & the projection on growth for infrastructure, automobile and other sectors will have a significant impact on the demand of refractories products. As the growth of steel & cement industries products is directly linked to the growth movement of the refractories & augurs well for the refractories products. It is prudent to believe that rising local demands & surging economy, Indian refractories market is anticipated to outperform their foreign counterparts. Also, initiatives and support from Government of India (GOI), such as, the Aatmanirbhar Bharat, The National Steel Policy, Mission-300, PLI Scheme etc. will give a major boost to the Indian Refractory industry in coming years.

TRL Krosaki has expanded over a period of time & has its fair share of presence in different parts of the world, such as, Asia, Southern America, Europe, Middle East, Africa, Australia & generates close to 15 percent of its revenue from foreign market. It understands the importance of the technology and invest on its research and development for future perspectives and for improving product quality.

Even though refractory industry is confined with a limited number of players and there is no affirmative collaboration within the industry for placing an order despite that TRL manages to add up major chunk of revenue for the firm due to monopoly on certain products like dolomite, alumina graphite & other clay products.

Strengths

  • Comprehensive line of products covering all grades and shapes for industries like steel, copper, cement, aluminium, glass and other non-ferrous industries.
  • TRL is among the largest manufacturers of dolomite refractories in the world and the only manufacturer of the same in India.
  • Improved top-line (revenue) and bottom line (profit) of the firm post covid.
  • Booming economy & huge government and private player spending in development projects generated a demand for refractories product.

Challenges

  • Intense competition within the industry from domestic and foreign players.
  • Volatility in the supply and prices of a raw material.
  • Dependent on the cyclical industry like steel, glass, cement & non-clay-based industries.

Client Base

  • Domestic Clients- Ambica, BHEL, Tata Steel, Essar Steel, JSL, Mittal Corp, Tata Metalinks, Synergy Steel, Usha Martin, Hindustan Zinc, Jindal Steel etc
  • International Clients- Rio Tinto, SMS Group, Anglo American, BHP, Boliden, Aurubi etc.

Associates & Partner Companies

TRL has the following associate companies.

  • TRL Krosaki Asia PTE – Singapore (who in-turn own TRL-China Limited)
  • Almora Magnesite Ltd- India.

Also, Nippon Steel is having significant influence over holding company: Krosaki Harima

Plants

Belpahar Plant, Salem Plant, TRL Jamshedpur, TRL MP, TRL Gujarat, TRL China

Peers

RHI Magnesita, Morganite India, Vesuvius India, IFGL, SEPR Refractories India

Major Shareholders

Shareholders Percentage
Krosaki Harima Corporation 77.62
SAIL 10.54
LIC 4.61
Others 7.23

Key Personnel

Mr. Hemant Madhusudan Nerurkar - Chairman

Mr. P B Panda - Managing Director

Mr. M V Rao - Chief Financial Officer

Conclusion

Refractories are the bedrock of heavy industries and move in tandem with them. Increase in infrastructural projects boosted by local demand, surging economy on the back of government and private entities spending under various projects, has created a thriving environment for refractories.

With policies like PLI, Anti-Dumping on metal imports must be celebrated by domestic producers. Having said that regular investment in development of refractories products is quintessential for enhancing the product quality or discovering substitute products. Apart from that monopoly on certain products gives extra leverage for TRL to capitalize on it.

Consolidated Financial Statements (INR Crore)

Balance Sheet

DESCRIPTION Mar-23 Mar-22 Mar-21 Mar-20 Mar-19 Mar-18
ASSETS
Non- Current Assets
Property, Plant & Equipment 457.23 392.65 300.70 240.65 202.44 194.76
Capital work in progress 46.83 65.83 107.16 69.35 19.14 5.24
Financial Assets 6.09 3.71 6.70 6.78 10.96 5.22
Non-Current Asset 2.91 2.58 1.52 10.29 9.55 10.55
Other Non-Current Asset 25.16 25.42 25.80 29.79 19.45 17.58
Others 53.05 53.08 51.92 61.78 40.44 38.83
Total Non- Current Assets 591.27 543.27 494.05 423.20 300.83 270.70
Current Assets
Inventories 337.26 299.01 356.60 314.01 359.34 265.25
Financial Assets 2.97 7.21 240.76 277.32 234.69 215.63
Other Current Assets 25.96 29.37 34.02 58.20 65.32 54.37
Total Current Assets 836.46 785.55 631.81 650.76 660.46 536.35
Total Assets 1,427.74 1,328.83 1125.87 1073.96 961.28 807.04
Liabilities
Total Non-Current Liabilities 100.19 149.49 167.77 144.58 38.29 41.05
Total Current Liabilities 598.31 574.99 443.04 417.17 483.09 394.30
Equity
Equity Share Capital 20.90 20.90 20.90 20.90 20.90 20.90
Other Equity 708.34 583.43 494.15 491.30 419.00 350.79
Total Equity 729.24 604.33 515.05 512.20 439.90 371.69
Total Equity & Liabilities 1,427.74 1,328.83 1125.87 1073.96 961.28 807.04

Income Statement

Description Mar-23 Mar-22 Mar-21 Mar-20 Mar-19 Mar-18
Revenue from Operations 2,295.01 1,920.90 1,423.92 1,652.91 1592.18 1190.22
Other Income 4.12 3.06 3.73 0.84 2.10 1.95
Total Income 2,299.14 1,923.97 1427.66 1653.76 1594.29 1192.17
Expenses
Cost of material consumed 1,002.25 803.18 617.69 716.83 693.34 540.14
Purchases of stock in trade 311.96 309.82 210.10 246.13 237.73 118.24
D&A 38.69 34.30 28.93 26.82 31.85 20.50
Other Expenses 578.11 509.29 367.70 402.86 405.96 343.23
Total Expenses 2,091.83 1,791.10 1380.47 1522.37 1464.33 1119.72
PBT 210.67 137.12 46.54 135.57 133.42 80.77
PAT 158.26 103.73 35.71 105.37 87.59 55.34
Total Comprehensive Income 156.25 102.65 33.15 103.04 84.83 54.17
EPS 75.73 49.64 17.09 50.42 41.91 26.48

Cash Flow Statement

Description Mar-23 Mar-22 Mar-21 Mar-20 Mar-19 Mar-18
Cash Flow from Operating Activities
Net Cash Flow from Operations 182.89 263.83 149.12 146.05 30.03 104.56
Cash Flow from Investing
Acquisition of Plants & Property -89.47 -98.71 -116.10 -129.23 -44.61 -25.42
Proceeds on sale of Property 1.74 0.17 0.39 0.23 0.15 0.13
FD with bank -0.06 3.40 -0.01 -0.51 -0.08
Interest received 0.70 0.31 3.74 0.41 0.81 0.22
Dividend received 0.01 2.06 0.01
Net Cash Flow from Investing -87.07 -94.57 -94.77 -123.83 -44.15 -25.13
Cash Flow from Financing
Proceeds from borrowing 103.49 145.31 59.75 139.38 78.18 64.53
Repayment of borrowing 103.49 145.31 -81.91 -126.66 -21.81 -117.27
Payment of lease liability -2.87 -2.58 -2.34 -2.17
Interest Paid -208.86 -145.15 -10.93 -14.34 -15.75 -13.93
Dividend Paid -313.50 -133.76 -30.30 -30.73 -16.62 -15.84
Net Cash Flow from Financing -992.05 706.12 -53.81 -33.00 24.90 -82.36
Net cash and cash equivalent -3.39 2.42 0.53 -10.77 10.78 -2.93

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