Capitaline

Analyst Meet / AGM 23-Apr-11

AGM

Foseco India

The company will continue to focus on high value products and high end customers and thus the bottom line

The company held its AGM on 21/04/2011 and was addressed by Managing Director Mr. Sanjay Mathur
Key highlights

The company has strategic plans to exit low margin product businesses and to focus only on high value high margin products. Also the focus will be on high end customers and thus the profitability of the company.
The management is confident of ensuring the margins to remain stable, despite severe raw material pricing pressure as its focus will be only on high value products and to high end customers. The company continues to work very closely with bigger customers like say Tata Motors where it works closely with the company to increase the efficiency of castings that it uses. Thus indirectly Foseco India benefits from high technology and efficiency of its Parent which helps its customers to optimize the output.
According to the management, it is difficult to figure out the total market size of its specialized ceramic products used in casting in various metal industries. However the management has indicated that broadly, its market share will be around 30% of the organized market to which it caters to.
The royalty paid to the Parent Cookson group is very high because traditionally Foseco India paid high royalty to its promoter Foseco. However, from CY'11 onwards, the royalty will be rationalized through the entire Cookson group which thus will result in lower royalty payment to the Parent.
Overall, the company is confident of volume growth of about 12-15% every year. There is no major capex required to cater to such volume growth and a yearly capex of around Rs 4-5 crore is sufficient.

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