The company held its AGM on 24 July 2018 and was addressed by Mr. Aditya Kowshik MD
Key Highlights
Around 90-92% of sales come from compression segment and rest from transmission segment.
The company has an order book of around Rs 525 crore, which is up by around 10% YoY. The order book is highest ever order book to begin a year. Most of these orders are fixed price in nature with a cushion of raw materials upto a certain point.
The company has made substantial investments in technology in the past and is geared up for the innovation. No major capex as such is expected except continuous investments in up gradation of technology and development.
There is a strong traction in the air compression and cold chain businesses. The Oil & Gas industry is expected to make substantial investments in refurbishment of refineries which would see higher demand of air compressor systems. While plans are made on drawing board, company is waiting for the execution of these plans. Normally, once the investment plans is made a go ahead for the refineries, it takes around 8-10 months time for ordering of the compression side.
The CGD business is more or less steady now. As a steady flow of orders come in from this division.
Demand for compressions systems in cold chains is growing at 10% every year. Company expects its order book to grow by around 10-12% every year from this segment.
Transmission product segment continues to be disappointing. However lot of measures have been taken to revamp the segment. No investments being made in wind segment have hurt the gear business. The company expects orders from customised industrial segments and metros for turnaround in this line of business. FY 19 should see a better year compared to FY 18, while the momentum will flow from FY 20 onwards.
While orders are flowing, a steady order flow is yet to be seen across the business segments. Some product orders which are for delivery of 3-6 months are missing which would have given more economies of scale to the company. Also due to execution of most of the orders in Mar quarter, often a substantial portion of revenue and profits is booked there.
Raw material price increase beyond a point can hurt the company. There is a possibility of economies of scale advantage if the orders get spread over all quarters and a steady increase in order book happens.
Competition remains high but with rupee depreciation and most of the countries in the world are going for local developments, competition can not be irrational.
Overall, the company is confident of its technology, its brand and its strong presence in compressor segment. It is awaiting for large investments to happen in Oil & Gas segment and other industries which will result in strong order book.
Overall expects better times to come with better order flows and execution.
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