Kirloskar Pneumatic Company Ltd
Becoming a compression technology
partner for CNG infrastructure in India (from producing wells to distribution).
Being at the heart of the Indian cold
chain industry with its natural refrigerant compressor developing advanced technology
refrigeration systems for refineries and petrochemical plants in India.
Being a
one stop shop for air conditioning and refrigeration systems of ships manufacturing
High-end customized gearboxes for wind turbines and power plants, steel mills and
cement plants.
Manufacturing Railway brake compressors for diesel electric locomotives
reducing carbon footprint with efficient products
Segment Analysis from (ANNUL REPORT)
Company serves two business segments
Compression Products/ Systems and Transmission Products. Company offers a wide range
of products which include Air, Gas and Refrigeration Compressors, Packages and Systems.These products primarily serve Oil and Gas, Cold Chain and other industrial markets.Additionally Kirloskar Pneumatic Company Limited also serves defense needs of compression
systems
Oil
& Gas Business: Company offers refrigeration and gas compression
systems for refineries, petrochemical plants, CNG stations etc. Your Company
has proven to key customers like ONGC, Reliance, Jindal, BPCL, HPCL, Shell and
other companies its capabilities of design, procure, build & test high end systems.
Customers have time and again posed confidence on this capability and this
helps us to retain Market leadership in the segment.
Company
bagged and executed significant projects during the period 2010-13. This was
the time when oil and gas sector went in for modernization of the facilities
and capacity additions. However since 2013 there has not been any significant
investment in this sector by both the Government as well private sector. CNG
stations have not grown in the recent past due to infrastructure issues and
policy guidelines. Coupled with this oil and gas prices globally went down In-spite
of this subdued business environment
Company has
maintained market share in the Oil and Gas market. Your company is now
regularly receiving orders for indigenous developed CNG compressor. The drop
in oil prices has resulted in almost zero investments in this sector and only a
few minor projects for improvement and up-gradation are seen in the coming year.
Volatility and availability of gas in new cities is an issue which has affected
investment in CNG stations. Very few CNG stations were installed in India in
2014-15 and your company has however continued to retain its market share in
this business.
Cold
Chain Business: Company supplies ammonia compressor and packages
for the cold store units, dairy units and pharmaceutical plants. These
compressors are of reciprocating technology and offer excellent reliability.
Your company has a wide network of dealers who provide 24x7 services to the customers.
Your company is closely associated with various state level cold store
association and government nodal agencies and technical committees. KPCL enjoys
excellent market share in this segment However 40%
of this produce is wasted due to improper storage and transportation. India is
the largest producer of milk in the world with 100 million ton production.
However 10% of this milk gets wasted. With this in mind the Government of India
is aggressively pushing for the infrastructure development for cold chain. The Government
of India has set up NCCD - a national body to serve as a nodal agency to
promote and develop cold-chain in India. Government has also announced
incentives for infrastructure development in cold chain. With about
140 million ton of fruits and vegetable production, India is second largest
producer in the world.
As such
demand for compressors for cold stores is growing. During the year 2014-15
company has Grown this business by 14%.
In fact this business has grown consistently over last three years at a CAGR 10%. Company has developed
air cooled compressors which reduces system cost to the customer. This Also improves the efficiency
and running cost. To improve quality and delivery of refrigeration compressors
Company successfully installed sophisticated machining centers and
results are very encouraging
Industrial
Business: Your Company offers air compressors and packages of various
technologies. KPCL Has
distinction of over 10000 installations with reputed customers in cement, steel,
power, engineering and other markets. KPCL has integrated capability of
designing, manufacturing and servicing air compressors. Customers value
engineering and solution offering capability of KPCL.
The year
2014-15 was difficult year for this business. With slowdown in the private sector
investment over the last 2years, demand for compressors contracted by 40%.
There was no major investment in key markets like air separation, steel plants,
cement and power plants. With contracted demand competition was intense and put
pressure on margins. Additionally, there is an entry of low cost products from
Asian countries. There has been marginal improvement in demand from sectors
like rice mills, textile, tiles etc. All this has resulted into lower sales by32%
over previous year in the industrial business.
KPCL is
known in the market place for engineering capability and customized design.
Your company has Developed a
new series of compressors which will reduce noise and vibrations for the
customers. These Have
successfully been offered in the high pressure market like PET bottling market.
KPCL has entered into High speed
compressor market with development of centrifugal compressor. First production
unit is Installed
at customer. All these technological innovations will take us to next level of
growth
Defense
Business: KPCL serves defense sector with products like HVAC systems and
air compressor Packages.
KPCL has unique distinction of being preferred supplier status. This has been
possible with Relentless
efforts of our engineering team. Some of the prestigious installations include HVAC
system for
Warships
and submarines, cooling trolleys for aircraft and helicopter, air charging
units, refrigeration plants For food
preservation. This is a tender based business and includes new equipment as
well as service business. During the year 2014-15 this business dropped by 28%
owing to delays in finalizing orders.
Transmission
Products:
Your Company offers wide
range of product which includes – Traction Gears, Customized Gearboxes and Specialized Products. These
products primarily serve Indian Railways, wind power projects and other
industrial
Markets.
a.
Railways Business: Your Company is a strong player in this market. The
company, over the years has Developed capability of
manufacturing entire range of gear pinion requirement of Indian Railways. It
has Been approved as part 1
supplier for the new generation high speed locomotives. Your company serves
Locomotive manufacturing
units of Indian Railways.Over the last couple of
years, your company worked extensively in modernizing its gear plant. As such,
Deliveries from gear plant
improved dramatically. However demand for railways gears and pinions was Lower this year by 24%, due
to excessive inventory at locomotive works. Spares demand continued to be Similar to
previous year.
b.
Wind Turbine Gearbox Business : Your Company traditionally has been
manufacturing and selling gearboxes for wind turbines.
These gear boxes can be classified into kilowatt class and megawatt class.Company is a leader in
kilowatt class gearbox. With market moving to megawatt class, company has developed capability of
making megawatt class gearbox. It works with some of the leading companies in wind power industry. Gearbox
produced by KPCL is low noise and high reliability gearbox.For last two years new wind
farm projects are very few. With a change in the Government policy on wind power projects the demand
for gearbox has reduced substantially. In fact new wind power annual installations have
dramatically dropped as compared to 2011. In last couple of years a few of our
valued customers have actually gone
bankrupt and closed down. In this diminishing market KPCL has maintained its market share and
executed few orders for replacement of gearboxes in the sub megawatt class.
This market is
not expected to grow in the coming year.
c.
Industrial Gearbox Business: With a fluctuating demand in wind
turbine gearbox market, your company
strategically decided to work in the industrial markets with customized
gearboxes. These are planetary
gearboxes for sugar mills, cement plants, steel plants. To be successful in
this business
company
requires registrations with consultants and reference installations. This
process has been taken up
aggressively. As part of the strategy execution, KPCL has emphasized on
developing competency and bringing new talent in design and marketing. KPCL
proactively participated in the exhibitions which are specific tosectors like
cement, steel, power and engineering industry. KPCL is now registered with more
than 20 leading
consultants/contractors. With this, KPCL has successfully executed prestigious
orders from industry
majors. This will help your company grow in the long term.
Opportunities,
Threats and Concerns: Railways demand for traction gears may grow by 5% over
next three years.Indian Railways is working on developing multiple sources.
This may affect the growth opportunities for company.envisaged. Although central
government is working on promoting renewable energy, there are still many
bottlenecks at state level such as power purchase agreements etc. Future
direction for wind turbine business will be clear only towards end of 2015.
KPCL will continue to explore new opportunities and support existing customer
base.Company expects its entry into industrial gearbox market will open opportunities
for growth. company is also exploring opportunity for entering service business
for gearbox. KPCL planning to monitor the field performance of the gearboxes
supplied and enhance customer satisfaction. This will instill confidence in customer
about our reliability and service capability KPCL has developed
capability for faster delivery which will be a competitive advantage.Wind turbine market has
shown some sporadic movement in some parts of the country.
But no major thrust
is Gearbox business is solely
dependent on availability of engineering talent and adequate infrastructure.
Infrastructure has already been augmented with state of the art manufacturing
and testing equipments procured from global leading manufacturers. Engineering talent is being
inducted and training on various software and analysis tools is being enhanced.
3.
Other:
Company has worked on a new technology
offering the Road Railer for the logistics sector. This technology developed with the support
of Wabash Inc, USA is designed to offer quicker, safer and economical
transportation of cargo. Road Railer rake manufactured by your company has
successfully completed the EBD (Emergency Brake Distance) test. Your company is
now awaiting few clearances for commencing the operations.
| Quarter ended | Year to | Year ended | |||||||
| Date | |||||||||
| 201509 | 201409 | % Var | 201509 | 201409 | %Var | 201503 | 201403 | % Var | |
| (3) | (3) | (6) | (6) | (12) | (12) | ||||
| Sales | 126.17 | 91.26 | 38.25 | 223.81 | 162.98 | 37.32 | 440.96 | 509.93 | -13.53 |
| Other Income | 2.07 | 1.86 | 11.29 | 5.19 | 9.01 | -42.40 | 16.29 | 10.56 | 54.26 |
| PBIDT | 14.00 | 4.21 | 232.54 | 21.81 | 4.95 | 340.61 | 47.34 | 75.03 | -36.91 |
| Interest | NA | 0.01 | -100.00 | NA | 0.01 | -100.00 | 0.02 | 0.35 | -94.29 |
| PBDT | 14.00 | 4.20 | 233.33 | 21.81 | 4.94 | 341.50 | 47.32 | 74.68 | -36.64 |
| Depreciation | 3.89 | 4.64 | -16.16 | 7.97 | 9.17 | -13.09 | 18.90 | 13.21 | 43.07 |
| PBT | 10.11 | -0.44 | LP | 13.84 | -4.23 | LP | 28.42 | 61.47 | -53.77 |
| TAX | 2.84 | -0.46 | LP | 3.51 | -4.00 | LP | 5.84 | 22.64 | -74.20 |
| PAT | 7.27 | 0.02 | 36250.00 | 10.33 | -0.23 | LP | 22.58 | 38.83 | -41.85 |
| Equity | 12.84 | 12.84 | 0.00 | 12.84 | 12.84 | 0.00 | 12.84 | 12.84 | 0.00 |
BUY ON EVERY DECLINE ONE CAN EXPECT 30% RETURN ON NEXT 6 MONTHS
