kirloskar ferrous industries ltd. … meet/100245_20050818.pdfkirloskar ferrous industries ltd....

ANALYST MEET – PUNE (18-AUG-2005) 1

KIRLOSKAR FERROUS INDUSTRIES LTD.


WELCOMES YOU

TO

BRIEFING OF FY05



CONTENTS

• Introduction

• Profile – Industry

• Economy scan

• Highlights for FY05

• Financials

• Operation review – FY05

• Outlook for FY06

• CAPEX



INTRODUCTION

Business : Pig Iron - Basic Grade

- Foundry Grade- S.G. Grade

Castings - FC (Grey Iron)

END USERSFOCUS :

EXPORTS WORTHY AUTOMOTIVE CASTINGS.

Indian Foundry Industry

Automotive, Tractor& Engine manufacturingSegment of Engg. Industry.

Utility :KFIL has its own Power Generation Plant.Power is generated by 2 Nos. Steam Turbines And Diesel Generating Sets.The total power generation capacity is 21 MW

Started in - 1994Total Share Capital - Rs.1769 MillionTotal Area - 720,000 Sq. Meters Covered Area - 350,000 Sq. Meters

• One of the largest foundry capacity in India• The only foundry in Asia with a Backward Integration to Pig Iron.• Global capacities to meet international high volumes• State Of The Art Facilities to meet the International Quality Standards• A TS16949 & ISO 14001 Company• Totally committed to Customer delight



PLANT LOACATION

LOCATIONAL ADVANTAGES :

Situated near “Iron Ore” rich belt of

Bellary Sandur.

‘JIT’ deliveries of excellent quality of Iron

Ore.

Minimum cost of transportation of this

major raw material which constitutes 1.78

times the weight of 1 ton of Liquid Metal.

Abundant availability of “Water” which is

being directly pumped from Tungabhadra

Dam. All the cooling requirements of the

plant effectively taken care of without any

interruptions.



MAJOR BUSINESS PARTNERS

PIG IRON

• ELECTROSTEEL CASTINGS

• TEXMO INDUSTRIES

• RAJKOT ENGG. ASSOCIATION

• LAXMI MACHINE WORKS

• MENON PISTONS LTD

• PUNJAB TRACTORS LTD

• SRIRAM PISTONS & RINGS LTD

• KALYANI STEELS LTD

• MUKAND LTD

FOUNDRYAUTOMOBILE• MAHINDRA & MAHINDRA• TELCO• MARUTI UDYOG LTD

TRACTOR• MAHINDRA & MAHINDRA• ESCORTS• CARRARO• TAFE• PUNJAB TRACTORS LTD

ENGINE• KIRLOSKAR OIL ENGINES• SIMPSON• SWARAJ ENGINES



INDUSTRY PROFILE - FOUNDRY

DIESEL11%

OTHER1% TRACTOR

52%

AUTO36%



INDUSTRY PROFILE – PIG IRON

Textiles8%

Pumps16%

Pipes & Fittings17%

Automobiles28%

Others17%

Fans5%

/EnginesCompressors

9%



PIG IRON – ECONOMY DIRVERS

Economy Drivers

Automotive,Tractor,Textiles,

Pumps /Spun Pipes

Major SegmentsEnd customer Engg. Industries

Primary Customer Foundry Industry

DriverCustomer 2 Steel Industry Steel Products

Influencing growth segments : 1. Automotive2. Tractor3. Steel



CASTINGS – ECONOMY DIRVERS

Economy DriversEngg. Industry

1. Tractor2. Automotive3. Engine transmissions

KFIL FOUNDRY

MBF Hot Metal

Influencing growth segments : 1. Automotive2. Tractor3. Steel



ECONOMY SCAN

• Indian economy on growth path

• Large public spending in

– Agriculture

– Infrastructure

• Automotive and Tractor segments in high gear

• India – A priority country for global sourcing by large

multinational companies



INFLUENTIAL FACTORS

• China’s policies for issuing licenses for coke export• China’s steel production Impact on iron ore prices• Monsoon Impact on tractor industry• International demand for steel

– Impact on international steel prices– Domestic steel prices– Government policies

• Growth in automobile market• Addition of pig iron capacities• Growth in Indian foundry capacity



HIGHLIGHTS – FY05

• Increase in Sales 32%

• Decrease in Profits 24%

• Foundry business growth (value) 30%

• Pig Iron business growth (value) 34%

• Increase in other sales 27%

• Reduction in interest cost 61%



HIGHLIGHTS – FY05

• Iron ore prices increased dramatically due to Chinese exports.

• The tractor industry posted a positive growth after 3 years.

• Pressure on margins during the year

– 1st quarter Pig iron due to drop in market prices and increase in iron ore and coke costs. (stoppage of furnace for 3 months)

– 3rd quarter Cost pressures on the foundry business due to increase in raw material costs.

• Company received certification for TS 16949 QMS

• Company received “Honest Tax Payer Award” from Dept. of Commercial Taxes, Govt. of Karnataka.

• Commissioned water storage tank to cater to 90 days requirement of the Plant



FINANCIAL PERFORMANCE (Rs. – Lakhs)

Particulars FY05 FY04 % Change

Net sales 49701 37596 32

Other income 214 222 (4)

Consumption of raw materials 40761 26562 53

Staff cost 1198 1073 12

Other expenditure 4029 4686 (14)

PBDIT 3927 5497 (29)

Interest 899 2315 (61)

Depreciation 1163 1179 (1)

Profit before extraordinary items 1865 2003 (7)

Provisions no longer required written back 211 722 (71)

Profit before tax 2076 2725 (24)

Provision for taxation – Deferred 108 448

Profit after tax 2183 3172 (31)

Earning per share 2.38 3.75 (37)



SALES (Rs. – Lakhs)

Particulars FY05 FY04 % Change

Pig Iron 32532 24287 34

Foundry 12173 9364 30

Other Sales 4996 3944 27

Total 49701 37595 32



BALANCE SHEET (Rs. – Lakhs)

Particular FY05 FY04

Share holder’s funds 17691 17691

Loan funds 5343 6230

Total sources 23034 23921

Fixed assets 12849 13376

Net current assets 571 47

Deferred tax 2141 2033

Miscellaneous expenditure 60 162

Profit and loss account 7413 8303

Total applications 23034 23921



OPERATING RATIOS

Particulars FY05 FY04

Return on capital employed 19 % 33 %

Return on equity 21 % 34 %

Debt to net worth 0.52 0.68

Interest coverage 3.31 2.18



OPERATION REVIEW – FY05

• Pig Iron – Quantity sale dropped by 4% w.r.t FY04– Coke prices stabilized during second half of the year– Pig iron prices also stabilized in the second half of the year

• Foundry – The quantity sale grew by 9% w.r.t FY04– The demand for castings from both, automotive and tractor

industry increased– Foundry recovered part of increased cost through price

increase



OUTLOOK FOR FY06

• Automobile market will continue to grow• Tractor market is expected to grow with good monsoon• Multinational Engineering companies are focusing on

India for sourcing of castings for worldwide operations.• Focus on reduction in development time for new

castings.• Reduce manufacturing costs through investments• Improve productivity through investments• Focus on casting market development in Europe and

Japan for OE customers



CAPEX

• Capex envisaged

– Railway siding for logistic advantage & cost benefits

– MBF stoves to reduce coke consumption

– Casting handling system for quality and productivity

improvement

– ERP system and organization networking



CAUTIONARY STATEMENT

Statements in this presentation, particularly those which

relate to management’s views and analysis, describing the

company's objectives, projections, estimates and

expectation may constitute “forward looking statements”

within the meaning of applicable laws and regulations.

Actual results might differ materially from those, either

expressed, or implied.

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