Key Highlights

Company's business is divided into traditional standard steel converter business and a high value added products sale business which includes all kind of automobile tubes of all sizes serving almost all top OE customers, structures for boiler plants, forging structures for Oil and Gas, Infrastructure and Power sector , substation elements, transmission and telecom towers etc.

Traditional steel business offers higher volume but very thin margin. The company converts HR coils to ERW tubes and pipes and sells to various vendors locally. It accounts for about 60% of total sales.

High margin products now account for about 40% of total turnover as compared to about 33% last year. Going forward, management aims to increase this high margin product basket to more than 50%, thus thriving better Ebidta and PAT margins going forward.

Lower raw material prices and better product mix resulted in higher Q4 margins. While the trend in raw material prices is expected to remain lower, the company will surely be able to retain some of the benefits which will help in further increase in margins.

Management expects strong performance in FY'16, with lower raw material prices, new product and rising high value added product sales. However on demand side, the challenges continue to remain. The company is diversifying with adding more clients, more geographies and more user industries.

In international markets, the company is working very closely with the OEM customers in Automobiles, Engineering, and Infrastructure and Solar Energy space.

Exports contribute about 37% of total turnover and these are mostly high value added products. Going forward exports are going to increase. The company exports to more than 90 countries worldwide and deals with $ and Euro Currency.

The key growth driver of the company's business is the pickup in general engineering and infrastructure business as well as automobiles business in India. While automobile business internationally continue to do well and company is able to increase the number of OEM and more business from same OE customer.

Long term borrowing stands around Rs 90 crore with debt equity ratio of around 0.55. For next 3 years, the company would require funds of around Rs 200 crore for capex for addition of forging capacity, new capacities in structures business, new products and modernization etc. It will aim for raising debt and equity both as per the requirements.