Key Highlights

The company manufactures vacuum products, evaporators, effluent treatment plants and entire air solution products in engineering segment. It's a niche market which is largely dependent on general capex and industrial production.

There has been a lot of shift within the user industry. Power sector ie thermal power plants and Nuclear power plants constituted around 50-55% of total sales 3 years back and now constitute around 5-8% of total sales. Pharmaceuticals, agro chemicals, food processing, refinery, specialty chemicals etc are now some of the major user industries of the company and others include sectors such as textiles, dyes, pigments, FMCG, metallurgy and general engineering.

There are no large orders in engineering sector that the company has received in domestic market. The company is trying for few large orders in international market. Most of the domestic orders are smaller in size.

The general sluggishness continues in engineering sector in India, and company's order book for past nearly 6 months of FY 18 is more or less stagnant.

Due to lower volumes and execution, the margins in engineering segment is hovering around 20% which otherwise could have been around 24-25%. However some small orders have better margins and they can give overall higher margins in this segment.

The company had purchased land for further expansion in engineering segment in FY 17, but the project is now on hold and will take a call only as and when things improve.

The company can achieve a turnover of around Rs 140 crore in engineering segment from the existing unit itself.

In foods business, lot of restructuring exercise has more or less been complete. 2 new products have been introduced and some products have been withdrawn. Essence, food colours continue to dominate this segment while chutney, instant drinks are picking up well.

Some additional marketing and distribution costs and forex movements had affected the margins in this segment. Overall margins will remain around 18-20% in this segment on a normalized basis.

The company is expanding in food business and has got good response from some of the markets. The new capacity will further give volumes and higher reach for the segment.

Overall, the company aimed to reach net sales of around Rs 150 crore in FY 18, but looking at the market, it will reach to around Rs 120 crore only. Expects to reach net sales of around Rs 150 crore in FY 19 now as compared to earlier target of around Rs 180 crore.

The company is cash rich and has parked funds in debt and mutual funds and will be used for expansion as and when things improve.