Los mellores alimentos

1. A Formidable CPC player in Central
India
RI ( ‘Refratherm International Pvt. Ltd.’)
Information Memorandum
January 2023
Private and Confidential 1

2. All you need to know about CPC:
• CPC or Calcined Petroleum Coke, is a Critical raw material across a variety of user industries such as
Aluminium, Steel, Graphite and Cement; the quality specifications and the quantum of usage differs from
industry to industry but broadly the cement grade segment is more commoditized and has lower profitability
than the other grades.
• The base raw material for manufacturing of CPC is Raw Petroleum Coke or GPC (Green Pet Coke) as it is
referred to when imported from developed markets such as the USA; it is sourced as a bi product of oil
refineries from the basic oil refining process and the various grades are a result of the kind of Crude (sweet /
sour) that is processed.
• Globally, the CPC manufacturing capacity has been spread across end users (for captive consumption),
refineries (as forward integration) and independent producers such as Oxbow Carbon and CII Carbon (now
part of Rain); however, the 2008 global recession saw refineries and end users divest these divisions to
independent producers as non-core businesses.
• CPC being a polluting industry, supply has been constrained globally by environmental concerns and
therefore, incrementally a large portion of the capacities are coming up in locations like India.
Private and Confidential 2

3. RI’s Key Management Personnel
Founding family is very much hands on
S B Shaw (Metallurgical Engineer) has more than 40 years of experience in Kiln Manufacturing and
Process Industries. His expertise is in the field of Refractories, Calcined Pet Coke & Sponge Iron Units.
Krishnendu Shaw is a management graduate with 25+ years’ experience in project implementation
process engineering having work for major groups like Tatas, Sunflag, Sunvijay, Jindals. His expertise
is in Project Implementation, Process Engineering & Marketing.
Soumendu Shaw is a science graduate along with PGDBM with 20+ years’ experience in project work
having completed major projects for Tata, Dalmia, Mahakoshal Groups within stipulated time frame.
He is a very well known name in India in the field of Refractories and Pet Coke business in India.
Private and Confidential 3

4. Why the space looks exciting:
• While the CPC business is cyclical in nature in line with its user industries, it is a Critical raw material which
accounts for an insignificant portion of the cost of production, so there’s a fair amount of stickiness (buyers
are unlikely to change over their CPC supply source merely for price advantage) and a certain minimum
profitability is assured even at the bottom of the cycle as buyers can ill afford supply getting constrained for
viability reasons.
• Nonetheless, the CPC industry witnesses times of supernormal profits once every few years and after many
years of sluggish business conditions, one such supernormal profit phase has started, which according to
industry experts is likely to continue for the next 2-3 years at the least.
• Various demand shocks such as demonetisation and GST out of the way, growth in output from user industries
in India seems to be accelerating, also aided by the resolution of bad loans, driving demand for CPC.
Private and Confidential 4

5. RI Boasts Of Marquee Clients:
Private and Confidential 5

6. Target Clients After Production Scale-Up:
Private and Confidential 6

7. Some of RI’s Key Strengths:
• RI’s facilities have been built with great levels of capital efficiency owing to the fact that the plant design and
fabrication both have been done in-house; this helps them remain competitive even in cyclical downturns.
• RI owns 11 acres of industrial land at Butibori Industrial Estate in Nagpur and the constructed plant is on 5
acres only, leaving enough scope to double the production capacity by adding another 150 TPD of capacity.
• The plant is strategically located with a large number of user industries (including potential biggies like
Hindalco and NALCO) within a 500 km radius.
• The present configuration of the plant (read smaller furnaces) helps achieve much lower induction loss (25%)
as compared to large scale plants with larger furnaces (30-35%) and therefore higher input-output ratio.
• RI has constantly strived to innovate to meet customer needs and has introduced product variations such as
Dry Petroleum Coke etc. which have helped key customers plan their production schedules better.
Private and Confidential 7

8. Strength / Opportunities
• In July 2018, the Supreme Court excluded CPC manufacturing as an eligible end use industry for sourcing of
RPC through imports in place (given quota) which comes to approx. 10 Lac Ton Per Annum and effectively
resulted in a supply squeeze for the Indian market.
• Rain, which is a 100% import based plant and Goa Carbon, which imports nearly 50% of its requirements
through imports, are witnessing heavily depleted RPC inventory position, leaving them scrambling for other
sourcing arrangements through traders and other smaller manufacturers, who have tied up quantities with
India-based refineries.
• This has also caused jitters among key clients who have been hunting for alternate supply sources.
• Against this backdrop, RI stands on a very solid wicket as it has sourcing tie-ups with committed quanties at
IOC Baroda, IOC Barauni, BPCL Mumbai, Reliance Jamnagar, to cover more than its total sourcing
requirements.
• RI has a manufacturing license that covers refractories as well and therefore, they can legally import RPC even
today, thereby giving them a lot more flexibility than its larger peers, Rain and Goa Carbon.
• Post funding and a stronger balance sheet, RI will have a golden opportunity to capitalize on this situation.
Private and Confidential 8

9. Current Infrastructure Details:
• 11 acres of land at Butibori Industrial Area on long lease from MIDC, with over 82 years lease period
unexpired, current market valuation of this land is over INR 24 Cr.
• For this land and the shed with constructed area of 62440 sq. ft., an independent valuation has pegged total
estimated fair market value at INR 23 Cr.
• Manufacturing facilities located on 4-5 acres of land, with two rotary kilns, a 60 TPD one that was
commissioned 8 years ago and a 90 TPD one that was commissioned 3 years back.
• These rotary kilns and other plant and machinery such as elevators, conveyor, Cranes, chimneys, compressor
etc have an estimated replacement cost of INR 9 Cr. (with remaining life of over 15 years).
Private and Confidential 9

10. Multiple Drivers Once Working Capital Eases:
• Currently, RI buys RPC from refineries on spot payment basis in trucks (as the unit requirements are small in
line with working capital availability); however, it is more efficient to source by rail by booking a rake, which
costs ~INR 6 Cr per unit but cuts delivery time by up to 20 days.
• RI has direct and indirect access to refineries overseas, such as Pertamina refinery in Indonesia, which
provides much higher quality material at a lot more cost efficient price but has a minimum supply quantity of
20000 tons per shipment. With improved working capital availability, it is possible to source through imports.
• RI currently sells CPC at a discount of as much as 10% to traders and 20% to Rain / Goa Carbon / India
Carbon as the key driver has been quick / spot payments; it can start realizing at least 20% higher price
realizations, which straightaway flow to the bottom line.
• RI is currently unable to cater to aluminium customers as their minimum order quantities are typically larger
than what they it can currently manage given the working capital constraints; once capital is available, it will
open up this segment too and add economies of scale.
Private and Confidential 10