Key highlights

• Current order book position stands around Rs 500 crore which was more or less flat on y.o.y basis. The company as promised earlier was able to even out the quarterly differences in results, wherein earlier years, nearly 75% of profits and sales get booked in Q4 of every year. The management has indicated that this process of even out of results will continue in future as well.

• Management was able to turnaround the Transmission gear business which last year was under losses. The momentum will continue in future as well. All sectors, except windmill are doing well.

• As far as outlook is concerned, Q4 FY'12 is not an issue for the company given the order book and execution details, although Q4 FY'11 has a high base, but nevertheless, management is not worried. But beyond that management has mentioned that it is difficult to comment as there is lot of uncertainties.

• The good news is that the enquiries are at unprecedented high level, but the conversion of those enquiries into delivery orders, are getting delayed by 3 months to 6 months. Hence execution and time line of execution is uncertain at this moment and hence management did not gave any guidance for FY'13, but hinted that they will grow and detail plan will be ready by Mar'12 end.

• On Air compression business, the general engineering industry is steady and orders are flowing. However there is a clear visible slowdown in power and steel sector orders as regulatory hurdles are affecting the conversions of enquiries into orders.

• On Gas compression market, KP is present in upstream, downstream and in distribution areas but is not present in the midstream or the pipeline compression market. The enquiries are very high but there is a clear evidence of slowdown as the orders are not getting confirmed. Policy paralysis and unavailability of gas are some of the major issues which the sector is dealing with.

• On CNG compressor ie the distribution side, KP has market share of about 45% and is clearly the market leader.

• Company has about a year and half back, entered into Screw compressor business where Atlas Copco is the market leader. Gradually, KP will penetrate this market as well.

• KP is clear leader in Submarine compressors and is a major supplier to Indian Navy. All these equipments are tailor made and KP has strong long experience with Indian Navy and Submarines.

• On Road Railers business, management has clearly indicated that it does not need any funds for this business nor the money intended to be raised via equity dilution was for this purpose. All it needs is land which it has at its Nashik plant and capex of about Rs 10-12 crore, as it needs to set up additional machine line, and it has all the necessary equipments. Road Railer project is on its way and the first Rack will be ready by end of June'12. KP will manufacture the Road Railers and will supply it to Kirloskar Road Railers Services company.

• The equity structure of Road Railers Service company is yet not confirmed. The only information that presently is shared is this company is formed with nominal capital of Rs 10 crore currently put in by KP. Government has allowed that minimum of 51% of equity contribution of this company has to come from Kirloskar Group and rest can be from any private equity. The group is still working on the plan of equity.

• As far as equity dilution was concerned and the whole purpose for money raising was for acquisition in Transmission line of business in EU country. However, with things not going the way planned by the management, the whole idea of fund raising and the acquisition has been cancelled henceforth.