CUMI is a leading manufacturer of abrasives and allied products headquartered in Chennai, India. It is fully vertically integrated from mining raw materials like bauxite to manufacturing final products. CUMI produces a wide range of abrasives including coated, bonded, and diamond/CBN tools. It has operations globally and pursues vertical integration strategies through both backward integration like bauxite mining and forward integration like power generation projects. While vertical integration can achieve economies of scale and quality control, it also carries risks of higher costs and unsatisfactory returns if not properly implemented.

1. CUMI
(ABRASIVE
PRODUCTS)
BY
ABHISHEK KUMAR
P15FCO60

2. ABOUT CUMI
 In 1954 Incorporated as a joint venture between carborandum company, USA universal
grinding wheel company and Murgappa group India.
 Its headquarter is in Chennai.
 Market leaders in served segments including Abrasives, Auto Components, Cycles, Sugar,
Farm Inputs, Fertilizers, Plantations, Bio-products and Nutraceuticals.
 CUMI is fully vertically integrated from mining and calcination of bauxite to manufacture
of electro minerals, abrasives and refractories with operations in India, Australia, Canada,
China, Middle East, Europe and US.

3. TYPES OF PRODUCT
 Abrasives Products :-An abrasives is a hard, tough and wear resistant substance for
grinding and polishing operations. Manufactured through a complex and high technology
process, these abrasives are used in metal removal, cutting and finishing operations in
almost all industries.
 Allied Products:- It is a part from abrasives, CUMI also manufactures metal working
fluids for grinding applications. In the metal working process, the right combination of
machine, cutting tool and metalworking fluid is required to produce an acceptable part.
Therefore this product line is a logical extension of CUMI's abrasives

4. TYPES OF ABRASIVE PRODUCTS
 Coated Abrasive:- These are manufactured by depositing grains over a backing material like
cloth, paper or fibre. Depending on the requirement of the customer, the backing material and
type of grains will vary. There are various types of grains like sintered aluminium oxide,
silicon carbide, zircon, emery and flint. The grains are of varied sizes referred as 'grits' and
their sizes also vary from grit 12 to grit 2000.
 Bonded Abrasive:- These are divided into vitrified, resinoid and rubber products and
manufactured by mixing grains with bonding material, moulding them to shape and then
subjecting the output to firing or baking in high temperature and finishing the same to desired
dimensions.
 Tools of stones:- Diamond and cubic boron nitride (CBN) are known as Tools for Stones.
Wheels and tools made with these abrasives are used in high end applications.

5. PRODUCT PORTFOLIO OF ABRASIVE

6. WHAT IS VERTICAL INTEGRATION
Vertical integration is the degree to which a firm owns its upstream suppliers and its
downstream buyers with the goal of increasing the company's power in the marketplace. There
are three varieties of vertical integration:
 Backward, where a company controls products used in the production of its products such as
a car company owning a tire company.
 Forward, where the company owns the distribution and retailing of its products.
 Complete, or balanced, meaning a firm that controls all components from raw materials to
final delivery.

7. FORWARD INTEGRATION
CUMI
12 MW Hydel project at Maniyar, Kerala, India
Established a 5.5 MW natural gas based thermal power plant in Nallur,
Tamilnadu, India through SEDCO

8. BACKWARD INTEGRATION
CUMI
Second unit at Edapally for manufacture of Brown Aluminium Oxide grains
Cloth processing facility at Maraimalainagar, Tamilnadu
Acquisition of Eastern Abrasives Ltd, a Coated Abrasives manufacturer in Kolkata
Bauxite mining at Bhatia, Gujarat, India

9. PROS OF VERTICAL INTEGRATION
– Achieve economies of scale
– Create new profit centers
– Expand geographically
– Maintain quality control
– Protecting proprietary processes or recipes

10. CONS OF VERTICAL INTEGRATION
– Established distribution channels may be adversely affected
– Unprofitable outcome
– Obsolescence due to new technologies
– Higher cost due to lower volume
– Unforeseen labor issues
– Unsatisfactory return on invested capital