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Analyst Meet / AGM
23-Apr-13
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AGM
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Foseco India
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Margins will be better in CY'13
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The company held its AGM on 22nd April'13 and was addressed by Chairman Mr. Pradeep Mallick
Key highlights
- CY'12 was a very challenging year for the company. The demand for the company's products were slow due to general slowdown in investment activities and lower automotive growth in H2 CY'12. Higher raw material prices and rupee depreciation hurt the company's margins.
- Automotives constitute about 40% of user industry and rest is broadly divided among various user industries be it engineering, construction, infrastructure, ferrous and non-ferrous industries, minerals and mining, glass, special chemicals etc.
- As per the management, demand environment is challenging. So to increase sales would be a challenge. All depends upon how fast the investment climate improves.
- Operating margins for CY'12 went below 15%, not seen in past 5 years. Rupee depreciation and higher raw material prices, together with tough economic environment, resulted in overall higher operating costs. As per the management, the raw material price curve has already shown its downward trend and rupee already stable to appreciating mode. Management is hopeful of margin revival in CY'13 and the company will retain any advantage in terms of forex and raw material side.
- Although new MNC and large players are setting up their plants or have plans to set up plants in India, things are going at slower pace then what management had thought of. Lack of confidence is hurting in decision in investments.
- Top 10 customers constitute about 25% of total turnover of the company and all its customers are fairly equally dividend among various industries.
- There is no need for any immediate capex for the company. As per the management, they are ready and if the economy improves, then will go for some capex.
- Parent, keeps on looking at the Indian capacity for exports, in an event where locally things are moving very slow. So going forward, export will increase; though will remain a small proportion as compared to overall sales.
- Royalty constitute about 5% of total sales. Parent has no plans to change its policy.
- Overall, challenges for the company will continue in CY'13, but management is hopeful of better results as compared to CY'12.
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