Capitaline

Analyst Meet / AGM 01-Feb-10

Conference Call

Sona Koyo Steering

Targeting a turnover of Rs 1000 core over the time frame of next 2 years

Sona Koyo Steering held a conference call on 1^stFebruary, 2010 to discuss quarterly results and future growth plans. Sunjay Kapur (Vice Chairman & Managing Director) addressed the conference call.
Financial Highlights

Quarter ended December 2009

For the quarter ended December 2009 the Total Revenues increased by 48% from Rs 150.79 crore to Rs 222.45 crore driven by increased off-take from domestic OEM's:

During the quarter ended December 2009 domestic sales increased 62% on Y-o-Y basis and stood at Rs 214.07 crore from Rs 132.53 crore during the corresponding period last year.

EBITDA during the quarter ended December 2009 stood at Rs 25.59 crore as against a loss of Rs 9.63 crore in corresponding period last year. EBIDTA margins improved to 11.5% during the quarter. Raw Material as a % of total revenues declined from 88.3% to 74.2% owing to stabilising foreign exchange market coupled with continuous rationalization of supply chain and localization efforts. Other expenses as a % of total revenues declined from 9.8% to 7.8% due to internal cost control measures

As a result for the quarter ended December 2009 the company achieved positive net income of Rs 6.89 crore (PAT margin of 3.1%) as against a loss of Rs 17.24 crore during the corresponding period last year.

Nine months ended December 2009

For the nine months ended December 2009 the Total Revenues increased by 22% from Rs 502.43 crore to Rs 612.06 crore driven by increased domestic demand:

During the nine months ended December 2009 domestic sales increased 33% on Y-o-Y basis and stood at Rs 587.45 crore from Rs 443.02 crore during the corresponding period last year.

EBITDA during the nine months ended December 2009 increased from Rs 6.05 crore to Rs 62.51 crore and EBITDA margin improved from 1.2% to 10.2% due to accruing benefits of the aggressive cost rationalisation measures undertaken in the past: The decline in Raw material as a percentage of total revenues declined from 80.3% to 75.8%, while other expense decline in Other expenses as a percentage of total revenues declined from 9.9% to 7.4%. This aided the growth in EBIDTA margins.

As a result for the nine months ended December 2009 the company achieved positive net income of Rs 11.47 crore (net income margin of 1.9%) as against a loss of Rs 26.20 crore during the corresponding period last year.

Highlights of the Call

The company did witness a notable increase in capacity utilization levels during nine months ended December 2009 in each of its products.

Steering products – Capacity utilization increased from 59% in nine months ended December 2008 to 69% in nine months ended December 2009. (During quarter ended December 2009 the capacity utilization levels stood at 76%).

Driveline products - Capacity utilization increased from 58% in nine months ended December 2008 to 69% in nine months ended December 2009. (During quarter ended December 2009 the capacity utilization levels stood at 76%).

Over the time frame of next 2 years the company is targeting a turnover of Rs 1000 core.

For the FY'11 the targeted EBIDTA margins is in the range of 11-12%

The major cutomer's and their share in the revenues are as follows:

Maruti's share stood at 54% (FY'09 – 50%).
Hyundai's share stood at 20% (FY09 – 18%),
Mahindra's share stood at 10% (FY'09 - 12%),

The company launched 2 new products viz

Started supplies of column to Tata World Truck during Q3 FY'10
Company plans to start supplies to Ford Motors, Fiat, Mahindra and Nissan in Q4 FY'10.

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