Key Highlights

Overall compressor business continued to remain sluggish in domestic market baring some sparks in demand for few products here and there. Due to lower rains, water related compressor was in some demand, but there is no clear trend at all in the market.

On YoY basis, at consolidated level, man power costs was higher by about Rs 4.2 crore due to increase in overall salaries while there was no significant change in headcounts, about Rs 3.8 crore was increase in costs due to rebuilding the entire team in US and about Rs 2.5 crore was forex loss largely from Brazil.

US operations continue be profitable in the world while problems on demand ex-US continue to remain. Biggest concern is the losses in Brazil, largely to do with currency.

Automotive business showed a growth of about 9% in H1 FY'16, but that was on a lower base of last year and sale of some new products. Management expects H2 FY'16 to be in similar line that of H1.

As per the management, the French acquisition Belair was not a good acquisition. Not only the timing was wrong, the size and scale is too low and is taking more time to ramp up. However, as per the management, lot of exercise has been done and some more are on their way. Hopefully, things should turn around by end of FY'16.

Italian subsidiary Rotair also did not perform well. One of the major customers from Algeria which contributes about 20% of revenue slowed down its offtake due to issues in Algerian economy. Otherwise the electric industrial compressor has grown in Italian market. There is significant improvement in costs in Rotair and scope further exists. But major improvement only from FY'17 onwards.

Middle East and Africa subsidiary continue to struggle. The company had big presence in Nigeria, which is in bad shape. Saudi Arabia and Oman has the same situation. However, some traction has been seen from Oct'15 onwards and management expects H2 should be better than H1 FY'16.

Far East market like Indonesia continues to be poor, while Australian market has seen some pickup in demand.

The company has temporarily shut down the entire manufacturing in China, it's a 3 years process to go back to manufacturing now, the China specific strategy is being reshuffled and rebuilt. As per the management, about China accounts for about 20% of world market in compressor and the company is transforming itself to adjust the local situation.

As per the management, the company's market share is about 1.2% of the globe. The company has about 90% of product lines and portfolio; however it needs a front end platform to put products in various markets. Management is working on it and only by FY'17 it will see further acquisitions.

Consolidated debt currently is around Rs 290 crore, which management expects to reach around Rs 230 crore by FY'16. Company aims to be a debt free company by end of FY'18.