Carborundum Universal Limited (CUMI) announced that its Cyprus-based holding company, CUMI International Limited (CIL), has approved the voluntary winding up of its wholly-owned German subsidiary, CUMI AWUKO Abrasives GmbH (CAAG). The closure is due to continued underperformance, mounting losses, and prevailing market challenges like high energy costs. The estimated impact from the winding down is between Rs. 110 crores to Rs. 130 crores, subject to final asset realization.
Decision to Cease Operations for German Subsidiary
Carborundum Universal Limited (CUMI) has disclosed a significant step concerning its European operations. The Board of M/s. CUMI International Limited, Cyprus (CIL), the holding company of CUMI AWUKO Abrasives GmbH, Germany (CAAG), approved initiating a voluntary winding up process for CAAG on March 30, 2026.
CAAG, acquired on February 1, 2022, through an insolvency proceeding involving its predecessor AWUKO Abrasives Wandmacher GmbH & Co. KG, manufactures coated abrasives for wood and leather applications. The decision to liquidate follows persistent underperformance and the subsidiary’s inability to achieve a turnaround amidst challenging market conditions.
Reasons for Closure
The financial position of CAAG has remained difficult due to several interconnected factors:
- Intensified price competition against a backdrop of global overcapacity.
- Low utilization rates and increasing inventory levels.
- Significantly high input costs, including energy, wages, and labor, exacerbated by the ongoing geo-political crisis and macro-economic headwinds.
Despite the parent company implementing numerous turnaround plans, cost-saving measures, and investments, the subsidiary showed no signs of recovery, rendering its future viability highly uncertain.
Financial Impact Assessment
CAAG is noted as not being a material subsidiary, and CUMI believes the winding down will not adversely affect the main Company’s business.
Based on initial estimates, the financial impact arising from the cessation of operations and subsequent realization of assets and obligations is expected to be in the range of Rs. 110 crores to Rs. 130 crores. This estimate remains subject to change.
Contribution to Consolidated Figures (FY Ended March 31, 2025)
The Annexure details the contribution of CAAG prior to the announcement:
- Ownership: CAAG is a 100% wholly owned subsidiary of CIL.
- Turnover: The subsidiary contributed Rs. 93 Crores to revenue, representing 1.9% of CUMI’s consolidated Revenue.
- Net Worth: The Net Worth was reported at Rs. 74 Crores.
The expected completion date for the disposal/winding up is subject to the laws and formalities required for voluntary winding up in Germany. The transaction is not classified as a related party transaction, nor does it fall outside any Scheme of Arrangement.
Source: BSE
