Key takeaways of the meet

The competitive environment got more challenging with the arrival of and scaling up by international players. Excess capacities and slow global growth increased price pressures further in 2012. The company has strived to retain its position in the market as preferred partner for welding and cutting solutions. It has consciously avoided pursuit of short term gains which in any manner would have resulted in compromising on core strengths or risk levels. It continues to benchmark with competition to look for avenues to improve.

There are some recent positives including softening of commodity prices and forecast of slight improvement in macro economic parameters but the impact of these in the short term is unlikely to be significant.

The outlook for the company in the short term looks challenging. The steel demand of India is forecasted to grow by 5.9% (to 75.8 million tone ) in 2013 by World Steel Association compared to 2.5% growth in 2012. Since steel growth being one of key business drivers of the company it will lead to better volume. The benefit of any growth in volume may not translate into sales in value terms as the price realization is under pressure due to softening of steel prices and competition.

The performance to a large extent also hinges on overall investment scenario and in the execution of overdue projects in the economy both on government infra spending and on private sector outlays on projects. With strong fundamentals of healthy balance sheet the company hopes to meet the challenges going forward.

The Indian welding market is valued at about Rs 4000 crore and the company will be having a market share of 12.5% with top players together accounting for about 36% of the market.

The company has to differentiate in service, quality and investment to sustain its leadership in the market.

There is further room for controlling cost and the company continues to focus on cutting down excess fab and productivity improvement. The company has reduced the head count to 683 at the end of Dec 2012 compared to 830 in Dec 2011 end.

There is marginal improvement in profitability of wires product group of consumables. Wires contribute about Rs 75-80 crore a year to topline.

Colfax for its global welding business looks at an operating margin in mid teens.

The payout on trademark and royalty is at the rate of 2% and 3% of net sales value.