Highlights of the CY 2008 AGM.
Indian Bearing market is estimated around Rs 57 billion, of which nearly 41% of the demand is met through imports. FAG's share in total Indian Bearing market is around 14%.
The company's fortune is largely dependent on automotive sector and to some extent on industrial sector. Although Indian commercial vehicle industry is going through rough patch, the growth in passenger vehicle industry helped FAG to scale through CY'08. The industry grew by 4%, whereas FAG grew by 16%.
The company is one among the prominent suppliers of gearings for Hyundai, Maruti, Tata Motors, M&M etc. Also since its plant is located in industrial zone of Baroda, many industries particularly power equipment industries, which have dominant presence in Baroda, procure their industrial bearings from the company. In NANO project of Tata Motors, the company will be supplying wheel bearings for the car.
Though situation in India started to get worse from Oct'08 onwards, the company had plenty of orders to scale through the last quarter. Hence performance of Dec'08 quarter was not affected.
However, subsequently, Jan and Feb 2009 were very sluggish, in essence there were no orders from industrial side and automotive industry as a whole was busy in reducing the inventory. Things started to revive in the month of March and company through all its efforts of its marketing team was able to increase its sales during the March month. Also the company captured some market share from the unorganized players during this crisis time, where they were finding it difficult to get credit. However, there will be a continuous pressure on margins as seen in Mar'09 quarter. Although the sales grew from Rs 171 crore to Rs 182 crore in Mar.'09 quarter, PAT was down by 30% to Rs 13.9 crore.
Although things started to revive from March, once again it cooled off in April. Now with elections due, most of the things are getting deferred. So it is very difficult to predict a firm pattern of growth for FY'10.
However, the company believes that it will continue to grow better than the industry and the growth will revive from the second half of FY'10.
Outlook for 2009 for the company will continue to be better than industry, but it will be very challenging for the company to grow at the same pace, as the company grew in 2008.
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