Who are the user industries of your products? How are they faring? What are their prospects?

What is your current order book? Can you give break-up of your industry-wise order book? And also export and domestic order break up?

	In Rs. crore
Order Book	Forging	Parabolic	Leaf Spring
Domestic
OEM	1.40
Commercial forgings	1.70
Retailers	0.40
State Road Transport Undertakings			1.55
Exports	25.23	3.77

Is your export more focused to the developed countries or the emerging markets? Why?

The exports of Hand Tools are focused on developed countries whereas the parabolic and spring leaves have focused on the emerging market.

As stated above, the DIY kits are more popular in the developed countries as people rely on themselves for many jobs. As far as the parabolic and spring leaves are concerned the same is targeted on the replacement market in the emerging markets.

In Rs crore (FY 2010)

Division	Forging	Parabolic	Leaf Spring
Export	29.69	13.25	0.17
Domestic	40.10	9.03	21.01

Major Export Customers Forgings

CENTRAL PURCHASING ,LLC

STAR ASIA USA LLC D.b.a. TITAN

AMASH IMPORTS INC. DBA

MENARDS

ALLTRADE TOOLS LLC

WILMAR CORPORATION

GRIP ON TOOLS

CENTRUM ZAOPATRZENIA NARZEDZIOWEGO

M/S.VIC VAN ROMPUY NV,

THE INNOVAK GROUP INC.

SUNEX INTERNATIONAL

DIRECT DISTRIBUTORS INCORPORATED

EMIL LUX GMBH & CO. KG.

SOBOND FAR EAST LIMITED

G.HJUKSTROM LIMITED

GRIP WELL AUSTRALIA PTY LTD

FULLER TOOL CO.NZ.LTD

ALL TRADE TOOLS LLC

ALLIANCE INTERNATIONAL LLC,

ABBIRKO UK LTD

MAJOR CUSTOMERS DOMESTIC - FORGINGS

AURANGABAD AUTO ANICILLARY PVT.LTD.

SATHYA AUTO PRIVATE LIMITED

R.L.STEELS & ENERGY LTD. ( DR)

BAJAJ AUTO LTD (Waluj)

TAKSHI AUTO COMPONENTS PVT LTD

VARROC ENGG. PVT. LTD.

MARATHWADA AUTO COMPO PVT.LTD, E-63

GHAZIABAD PRECISION PRODUCT(PVT)LTD.

PIAGGIO VEHICLES (P) LTD.

AURANGABAD AUTO ENGG.PVT.LTD. WALUJ

SIDDHI ENGINEERING

MAHINDRA & MAHINDRA LTD.(NASIK)

SUPREME IRON (I) PVT.LTD. Unit No. 2

MAHINDRA & MAHINDRA LIMITED.(Mumbai)

UGC SUPPLY CHAIN SOLUTIONS PVT LTD.

BAJAJ AUTO LTD (Chakan)

MAHINDRA & MAHINDRA LTD. (Haridwar)

PAHARIMATA ENGINEERING PVT.LTD. DR.

MAHINDRA & MAHINDRA LTD. (Zahirabad)

G.P.ENTERPRISES

MAJOR CUSTOMERS – EXPORT PARABOLIC

ELWAFAA CO FOR CARS & SPRINGS,EGYPT

AKSAN OTOMOTIV SANAYIVE LTD,TURKEY

HAMID BOZORGI; THERAN IRAN

ALZER OTOM SAN TIC LTD STI.,TURKEY

EFE MAKAS SAN.TIC.LTD.,TURKEY

DERAKHSAN SETAREH ASEMAN CO; IRAN

AUTO ANCILLIARY MFG.,SHARJAH

AL-FAREED AL-AZZANI FOR TRADING,YEM

MAJID ALSHAMSI SPARE PARTS, SHARJAH

MAHMOOD HALAZZE, DAMASCUS, SYRIA

SAEED MOHAMED AL-SARARY,HODEIDAH

Major customers – Domestic - Parabolic

ZENITH SALES, INDORE (M.P)

GIRISH ENTERPRISES, NAGPUR

GANESH AGENCY,SINGRUALI(M.P)

TRANSPORT SOLUTION INDIA P LTD.PUNE

SURYA AUTO, MANEWADI, PUNE

SHRI LAXMI AUTOMOBILES,KARIMNAGAR

SIDHI VINAYAK ENGINEERING,SHIRDHON

SHRI BHARAT AUTO AGENCY,VIJAYWADA

Domestic customers - Spring leaf

MSRTC

TNSTC

APSRTC

GIRISH ENTERPRISES , NAGPUR

JAI TRADING CORPORATION; AURANGABAD

METROPOLITAN TRANSPORT CORP,CHENNAI

N.M.M.T. NAVI MUMBAI

JAI HANUMAN MOTORS.AHMEDNAGAR

ASHWIN AGRO INDUSTRIAL PRODUCT

RAJ DISTRIBUTORS,BEED

What is the company's strategy in competition with numerable small scale / unorganized units? Any takeover plans? Or any plans to be taken over?

Our company has the largest variety of hand tools under one roof. This gives us a formidable position when it comes to supply of products. Further our company provides a life time guarantee for its products.

There is no take over plans as regards to the small scale/ unorganized units.

When it comes to pure commercial forgings, yes, the company does have certain plans for takeover of suitable units.

What kind of relationship do you enjoy with your export clients?

We maintain a very long term relationship with our export clients. Many of our export clients are with us for more than a decade.

What are your views on the phenomenal increase in automobile sales? How long do they look sustainable to you? Who are your OEM clients for the automotive forgings business, Leaf Spring and Parabolic Springs business?

The rejuvenated India is giving ample opportunity to the young Indians who are left with higher disposable income which is propelling the demand for automobiles. Given the support from the government the growth will remain for next 4-5 years minimum.

Ashok Leyland, Tata Motors, Bajaj Auto, Piaggio, Kirloskar are few OEMs we deal with.

Hand Tools	Commercial Forgings	Parabolic	Leaf Spring
Bajaj Auto Limited	Aurangabad Auto Ancillary Pvt.Ltd.	ALL	MSRTC
PIAGGIO Vechicles Pvt Ltd	Takshi Auto Component Pvt Ltd	Shree Lakshmi Automobiles	APSRTC
Kirloskar Oil Engines Limited (FOUR UNITS)	Ghaziabad Precision Products (Pvt) Ltd	Siddhi Vinayak Engineering	GSRTC
Greaves cotton Limited (6 units)	Paharimata Engineering P.Ltd.	Transport Solution India Private Limited	TNSTC
Mahindra And Mahindra Limited (12 UNITS)	Marathwada Auto Compo Pvt Ltd	Zenith Sales	NWKRTC
Force Motors Limited (3 UNITS)	Sathya Auto Pvt Ltd	Grease Enterprises	KSRTC
UGC Supply Chain Solution Private Ltd	Yashwant Forging Pvt. Ltd.	Mohta Auto Agencies	NEKRETC

What is the company's back up strategy for these divisions in case these surging auto sales start reversing?

Akar is well diversified into DIY Kits, forgings of machine parts as well as vehicle components and leaf springs. Company is planning to come up with expansion/ acquisition in the existing business.

How was the company impacted with the global meltdown of 2008? How has the situation been post global recovery?

The global meltdown of 2008 had a definite impact on all the businesses worldwide. We are not an exception into it. Hand Tools and commercial forging industry has recovered. However, the parabolic springs needs more time to recover from the slump. During the meltdown, because of Akar's diversified portfolio of products/ market, Akar was able to report profit.

Do you see the global economies recovering further or you see the process reversing once Quantitative Easing 2 ends in June? How will you be impacted?

We see that the signs of global economies are recovering further. There is no sign of reversing the recovery process.

What is the estimated outsourcing size for the automotive business? How much % of sales does outsourcing account for this business?

Booming automobile market within the country and recovery of developed market like USA is driving outsourcing of automotive business.

SALES FOR THE YEAR 2009-10 In Rs crore
	Forging	Parabolic	Spring
ENGINEERING	12.75
CARS	3.33
2 & 3 WHEELERS	5.58
4 WHEELERS	1.83	19.78	18.07
OTHERS	34.25
TOTAL	57.74	19.78	18.07

We supply forgings, hand tools to engine manufacturers like Greaves/ Kirloskar/ PM Diesal

Also update us on the future prospects on all of your separate business division.

The robust market in the sector in which Akar is present should be growing at not less than 25% on year on year basis.

Kindly enlighten us with information on your group companies. What kind of forward integration does Akar Tools enjoy with its group companies?

Our group company R L Steels is manufacturer of high quality alloy steel long products. R L Steels produces about 12000 MT of steel every month. The value added products are manufactured at Akar and RL Steels is more focused in production of steel. Akar is positioning itself as the forward integration part of the group covering value added products be it in the engineering, hand tool, commercial forging or the spring leaves.

Being in a manufacture company how has Akar Tools used technology? I mean how sophisticated are its plants and various machineries?

Akar uses the latest available technology in the respective plants be it in the design or manufacture or the quality assurance.

Your net profit for the December 2011 quarter has been the lowest in the current FY so far. Any comments?

The appreciation of rupee verses USD in recent times was one of the reasons for lowering the profit margins in the 3^rd quarter of FY 2011.

Your NPM (net profit margin) has gradually and steadily fallen from 3.1% in FY 2001 to 1.8% in 2010, the second lowest in past 10 years (lowest being 0.4% in FY 2009). What is the reason for this declining NPM?

Akar was consolidating during the last decade. This has resulted in lower net profit margins over the years. FY 2009 and FY 2010 was exceptional due to the global meltdown which has impacted everyone in the business.

What factors will drive long-term growth of the company? Any long-term targets?

Infrastructure development coupled with growth in automobile and engineering goods will drive the growth of Akar.

What are your sales and profitability projections for the FY March 2011 and 2012?

We have achieved sales of Rs. 97.78 cr up to Dec 10 and PAT of Rs.3.27 cr during the period.

The annual achievement will be Sales Rs. 130 Cr and PBT Rs.5.45 cr. At the prevailing market conditions and considering the new business from commercial forgings we expect sales of Rs.178 crore and PBT of Rs.7.41 crore for FY 2012.

Since we are supplying to OEM's and to their vendors, the price rise is given to us with a time lag.

Further, Company has undertaken expansion of commercial forgings unit and the same will be completed by June 2011 which will improve the value addition and profitability in the next financial year.

What will be your strategy with regards to merger & acquisition and joint ventures?

Akar is keen on acquiring commercial forging unit as it feels that the growth will be coming from the automobile sector. Akar is also considering acquisition/ joint venture with units located in the developed countries for the inorganic growth plans.

Any major capital expenditure plans for FY 2011 and FY 2012

Capex plan out lay of Rs. 25 crore for setting up machining shop is actively considered for the year under review.

Your debt equity ratio has been steadily rising from 0.57 in FY 2004 to 2.30 in FY 2010. Reason? Any strategy to bring this down?

We have completed 2 minor and one major expansion of capacities in the last few years. This has resulted in increasing the DER. With repayment of loan and plough back of current year profits, the DER will come down. Akar is planning for bringing in additional long term funds.

Any diversification plans?

Diversification is a necessity in the business world to stay float. Akar has long term strategy to diversify into new areas.

Can you please elaborate?

In the past, the company has converted itself from manufacturer of hand tools to producer of Hand Tools, Conventional Spring Leafs, Parabolic Springs and Commercial Forgings. The company has made a policy to diversify into the areas which are related to the existing operations to get more synergy. As far as the likely diversification we can say right now that the areas will be looking for is machined automobile parts as well as in the existing products of commercial forgings in the near future.

In view of rising steel prices and the flagship company RL Steels being primary source of supplier to Akar Tools, do we expect squeeze in margins for Akar for the benefit of RL Steels?

Akar is sourcing raw material from R L Steels on pure commercial terms and on the prevailing market rate. Due to the proximity of raw material availability, Akar is benefited with short notice deliveries and savings in logistics costs.

Any plans to increase equity or buy-back?

Yes, increasing equity is an option weighed by Akar.

Any plans of promoters to increase stake through creeping acquisition?

No. The promoters are holding about 75% of the equity.

The promoters holding as on 31/3/2011 is 75.35% or 4064333 shares. As per the listing agreement with BSE we have to bring down the promoters stake to 75%. To adhere to the rules the promoters holding has been brought down to the level of 75.35% from 78.59%.

What will be your dividend policy?

Akar is paying dividend for many years. Our motto is to maintain the return to the investors.

Any message for the shareholders and or to our readers?

Akar is trying its best to enhance the value of share holders and coming up with new businesses. Akar will maintain the growth to enrich the stake holders and shall ensure decent return to all the stakeholders associated with the company.