Capitaline

Analyst Meet / AGM 22-Nov-10

Analyst Meet

Pix Transmission

Plans to raise about Rs 30 crore from QIP to reduce the debt

Highlights of the interaction with Mr. Amarpal Sethi, Chairman and MD of the company:-

Pix Transmission is engaged in manufacturing of Industrial, Agricultural & Automotive Belts (V-Belts) and High Pressure braided and spiral Hydraulic Hoses as well as Hose Assemblies and End Fittings. The company has 4 manufacturing locations in India and has subsidiaries and JV's in UK, Ireland, Germany, Middle East, China and Brazil who provide after sales and technical support. The company caters mainly to Replacement Market in its own Brand Name PIX.

The market size of V-Belts in India would be round Rs 600 crore which is roughly divided into domestic and export market into 50:50.

Pix produces an entire range of Industrial, Agricultural and Automotive Belts. It has present Capacity of about 16-mn p.a. and manufactures more than 10,000 sizes to cater to the customer needs. Pix has a market share of about 35% in India.

There is a transition happening within the industry with share of organized plater is rising and will rise continuously. The reason as pointed by the management is fall in excise and various other duties, which brings down the delta between organized and unorganized players, extreme volatility in raw material prices making smaller players difficult to survive etc. GST rollout will be a big advantage for this industry.

Generally the growth in V-Belts in India is linked to the manufacturing growth in India,. Thus gong forward, the growth for Pix will come from both rise in manufacturing growth and increasing the market share from unorganized players.

The company exports its V Belts to various countries including US, EU, UK, Africa and neighboring countries. No single country constitutes more than 10% of the total export market sale.

The market size for Hoses in India would be around Rs 800 crore and organized players are more in this market. The company manufactures wide range of High Pressure braided and spiral Hoses. It has present Capacity of about 18 mn. The user Industries includes Infrastructure, Agriculture, Automobile, Oil and Gas, Mining and Marine & General Industry.

Currently Pix has a market share of 15% in the Hydraulic segment with MNCs like Gates and Parker in the arena.

Of the total sales, normally 30% are from domestic market and the rest are exports. Nearly 20% of total Hoses sale in India is to OEM's and rest are the replacement market sales.

The growth for Hoses is expected to be in the range of about 15% in India. And the growth is very much dependent upon the industrial usage, industrial capex and construction, earth moving equipments, mining equipments growth. Although currently, while the construction, earthmoving and mining equipment industry players are not doing well, the company continues to do well, because of the demand from the replacement market and from the existing equipments. The life of hoses is less and thus the demand of existing equipments will continue provided, they are used. The new equipments manufacturing will increase further demand of hoses.

Internationally, the Hoses market was very bad last year, given the turmoil in manufacturing activities and was so for the belts. However, this year, say the automotive industry is doing well so belts are doing well. Like wise, manufacturing in EU is doing well, plus the cost effectiveness and quality effectives ensures better demand for Hoses for the company. Infact EU has banned hoses from China. Plus the company has tied up with some of the MNC companies for their Vbelts and Hoses requirements on long-term basis.

Rubber, Fabrics, Carbon Black are the major raw material for the company. The prices of all these raw materials are on continuous rise. The company has policy of price increase/decrease every quarter. In FY'10, the company was able to increase the prices by 10% fro the total full year average. From Jan'10 onwards, the company has increased the prices by 7%, thus offsetting the raw material price rise. The raw material constitute about 40% element in finished products and thus the rest of the margin will purely depend upon the economies of scale.

The company had incurred a capex of about Rs 100 crore in past 15 months and scaled its capacities for the future growth. About Rs 35 crore was spent on green field automation plant which is used to produce a mixture of Rubber compound which is an intermediary raw material for both V-Belts and Hoses. This will take care for next 20 years need for the company. About Rs 30 crore was spent on new high value range of Hydraulic Hoses which are 200 feet long and more than 60 meters wide. Such hoses are applied in Mining, marine, cement and Oil and gas industries. And the rest are for augmenting and automation of the existing capacities for V-Belts and Hoses. In this way, the company has created the capacities for upto FY'13.

The debt equity ratio is about 4:1. The company has no major capex for next couple of years and thus plans to reduce the debt every year. Further it has plans to raise about Rs 30 crore from QIP to reduce the debt immediately.

The company plans a top line of Rs.260 crore and Rs.350 crore for FY'11 and FY'12 with EBITDA of 22% and above.

Previous News

Board of Pix Transmission recommends final dividend
( Corporate News - 31-May-18 10:12 )

Pix Transmission to announce Quarterly Result
( Corporate News - 04-Feb-23 14:54 )

Pix Transmission to table results
( Corporate News - 05-Nov-22 11:06 )

Pix Transmission to hold board meeting
( Corporate News - 07-Aug-14 11:17 )

Pix Transmission to hold AGM
( Corporate News - 16-May-22 10:30 )

Pix Transmission
( Results - Analysis 11-Feb-23 09:31 )

Pix Transmission standalone net profit declines 50.67% in the March 2016 quarter
( Results - Announcements 29-May-16 16:03 )

Shares of Pix Transmission to list on NSE
( Corporate News - 22-Apr-22 17:09 )

Pix Transmission schedules AGM
( Corporate News - 04-May-19 16:29 )

Pix Transmission to conduct board meeting
( Corporate News - 07-Aug-21 17:41 )

Pix Transmission reports net loss of Rs 2.26 crore in the June 2009 quarter
( Results - Announcements 08-Sep-09 12:52 )