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The company held its conference call on 17 October 2018 and was addressed by Mr. Hemant Luthra Chairman and Mr. K Jayaprakash CFO
Key Highlights
The company has decided to close down the Stokes operations in US. It expects machineries to shift to India as a restructuring exercise and also the clients will accept the exports happening for them from Indian operations. The entire operations will be over in next 18 months.
Indian operations grew by 20%, because of new orders executed in Sep 18 quarter. The company grew better than the industry due to new clients and higher exports. Forex gain of Rs 9 crore in Bill Forge Mexico
Strong margins in Indian operations due to better economies of scale and product mix.
Margins in EU got affected due to stock reductions in Aug holidays. This is seasonal in nature. The company shuts down and does stock reductions for 2 weeks in line with shut downs of major auto units like Ford, BMW, Benz worldwide. However the impact was not seen in Sep 17 quarter due to better optimum capacity utilization from German forging division due to new orders from some customers. But this time, some effect was seen. Management is confident of receiving those orders in Dec 18 quarter.
Sep 18 month also was a different month due to changes in norms in EU market which created some problems for some car makers. This is solved and some loss of order flow will come back.
Some room of margin improvement in Germany
Overall EU saw a 16% adjusted to exchange rate growth in sales in Sep 18 quarter. This was driven by new orders from Caterpillar and Truck orders.
The company is full of orders for next 6 months and outlook is good. However some slowdown in EU is seen as its not growing up to the mark.
Capex for first 9 months stood at Rs 421 crore
Overall broad outlook for CY 19 will be declared by Dec 18
Expects current trend of growth to continue specially in India due to new business and new capacities
Optimistic about Indian operations in future and margins looks sustainable.
Talks with customers regarding Trade war. Nobody expects big impact in next 12 months atleast. But if the war continues then it can have some impact in medium to long term.
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