<p>A rare blend of diversified small-scale industrial user base and high criticality make Grauer &amp; Weil an interesting bet</p>

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Moat is a mighty subject in the investment space. Quite un-derstandably, any discussion around that is likely to be an animated one. The reason why it raises mercury in much of the debates is because it is so intangible and yet so powerful in its effect on financials and cash flow. While it is a highly debatable subject, in some cases such as consumer brands, moats are more obvious. But the flip side is, when it is more obvious, less is the opportunity for investors as it gets fully priced. Less-obvious moats are where one can spot hidden gems.

Some of the less obvious moats are: a) an industrial brand distributed by a vast dealer network to a diversified user base; highly critical product (by quality requirements), yet very low value in relation to the end product price; businesses which have a high proportion of replacement demand, are precision-intensive, or research-driven manufacturing with superior operational scale and efficiency.

Electroplating and surface treatment chemicals is one such business that possesses hidden moats because of the presence of a large number of unorganised and small-scale user industries in the buying value chain. Relative to the end product cost, though plating is a low-cost process, it is highly critical for the anti-corrosive property of the final product. This rare blend of a diversified small-scale industrial user base and high criticality has been the key for Grauer & Weil (GWIL) to build a powerful industrial brand (Growel) in this segment. Through its long operating history of over six decades since 1957, Growel has